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Guest Commentary: Catalan Elections- Also a Blow to Austerity Policy

Guest Commentary: Catalan Elections- Also a Blow to Austerity Policy

2012-11-27 19:30:00
Yohay Elam, ForexCrunch,

The focus of the elections in Catalonia was about the question of independence from Spain. The results are mixed and leave a bit for every side: on one hand, the pro-independence parties command a majority in the new parliament, yet the main nationalistic party that called for elections actually lost a lot of votes.

Another aspect that didn’t top the agenda was the question of austerity policy: here, the right wing bloc suffered significant losses. Is this a hint for all of Europe?

Some numbers:

  • Seats: There are 135 seats in the Catalan parliament, making 68 the magic number needed for an absolute majority.
  • Pro-independence reshuffle The ruling center-right nationalistic CiU party, led by Artur Mas, had hoped to gain seats and even achieve an absolute majority, yet instead of gaining seats, it lost no less than 12: falling from 62 to 50 seats. This was worse than opinion polls and even worse than exit polls. However, other pro-independence parties gained, with the Republican Left (ERC) jumping from 10 to 21 seats.
  • Pro-independence majority: CiU (50) + ERC (21) + CUP (3) reach 74 seats, more than 68 that makes a majority.
  • Bigger majority for a referendum: The ICV-EUiA party supports a referendum on independence, and it advanced and took 13 seats. So, the pro-referendum bloc has 87 seats, 64.4% of parliament.

So, the main nationalistic party that brought forward the elections was dealt a blow (giving Spanish nationalists reasons to be cheerful), but the strive for independence continues at full speed.

Austerity in Austerity Camp

Now, let’s look at the austerity camp: this is comprised of CiU, which made significant cuts in Catalonia, and Partido Popular (PP). PP is a center right party that controls Spain, after winning a landslide victory in November 2011.

Similar to CiU, PP decided to make significant cuts and also raised taxes in order to combat the budget deficits and comply with demands from the EU. The wide support it received in the general elections disappeared quite quickly, especially after it made a full U-turn and raised the VAT. The significant increase that came into effect in September, was already badly felt in retail sales recorded in that month.

PPC, the PP’s Catalan branch, has always opposed independence. Its election campaign slogan was “Catalonia yes, Spain also”. Despite the differences in the approach to independence, CiU and PP have cooperated in various occasions. They both share the same economic policy.

Both parties combined, had 80 seats in the Catalan parliament. They now have only 69.

Both parties combined, had 80 seats in the Catalan parliament. They now have only 69.

However, it seems that CiU will rather seek a coalition with other pro-independence parties and not with PP. So, in order to promote independence, CiU will have to compromise on economic policy with left wing ERC, which came in second.

Many left wing voters across Europe thought that the election of Françios Hollande as the president of France would change the political landscape in Europe, and stop the German led austerity policy in favor of growth policies. This did not happen – while Hollande doesn’t have a cozy relationship with Merkel, his policies have changed quite quickly, and he left many disappointed in the left.

Nevertheless, the anti-austerity camp saw some gains in Catalonia, and could see gains in Italy next year.

Further reading: Is the IMF Ready to Leave Troika and Greece?

By Yohay Elam, ForexCrunch

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