nationalist coalition party CiU (Convergència i Unió) and separatist ERC (Esquerra Republicana de Catalunya) announced that they would arrange a referendum on independence in 2014. While known as the Catalan independence referendum, it was rebranded the “citizen participation process on the political future of Catalonia” after the Constitutional Court of Spain suspended the original vote. The ballot gave two questions: “Do you want Catalonia to become a State? (yes/no)” and if the answer is in the affirmative, “Do you want this State to be independent? (yes/no)”. The estimated turnout was around 40 percent, and the results were overwhelmingly pro-independence with 80.8% of votes for Yes-Yes, 10.1% Yes-No, and 4.5% No. President Artur Mas announced in January 2015 that his intention was for 2015 election vote to be turned into an alternative vote on the independence of Catalonia given the inability of Catalonia to hold a legal referendum on the issue. June 2015 marked the dissolution of the CiU coalition due to fragmentation in separatist ideology. For the Catalan parliamentary election of 2015, five parties ran together—including the CDC—under an ideology of Catalan independence in a coalition called Junts pel Sí, while the UDC ran independently. Junts pel Sí won the majority of parliamentary seats with 62 seats and 39.6% majority of the votes. III. Theoretical Framework: The Political Economy of Secession This study adopts a theoretical framework based on literature on the political economy of secession to examine the ongoing separatist movement of the autonomous region of Catalonia of Spain. According to this theory, regions operate based on a wealth maximization calculation; they secede, merge, or maintain the status quo based on the existence, or perceived existence, of a disparity between their current economic performance and optimal economic performance. Separatism becomes preferred when there is centralized economic policy making, but there are
be funded by taxes levied and collected by these governments and not by grants afforded by the central government, 2) changed equalization schemes that rectify horizontal and vertical fiscal imbalances by matching expenditure needs with potential tax resources, and 3) increased regional input in statewide decision making (Castells 2014). A ‘special deal’ for Catalonia would likely have the same demands without calling for nationwide reform. It would be a deal similar to that already achieved by the Basque Country and Navarre. Secession, while eliminating the negative fiscal flows problem and granting full fiscal and political autonomy, has the consequences of a potential decline of sales to the Spanish market, allocation of a share of Spanish debt, and a potential exit from the EU and/or Eurozone (Castells 2014). The Spanish market is the main customer for Catalan exports, and the border effect resulting from independence can significantly dampen trade. However, Ghemawat, Llana, and Requena (2010) found that while Catalonia trades much more with the rest of Spain than the rest of the world, there also has been a slow but steady increase in its openness ratio to foreign markets. The comparative importance of international trade has increased since the mid-1990s, and that of interregional trade has lessened. Catalonia exports much more to the rest of Spain than it imports: it is the international import hub for the rest of Spain. Relative to other Spanish regions, Catalonia leads in both international and interregional trade volumes. The border effect caused by seceding is suggested to be a substantial 9% in Catalan GDP (Bell 2014), but, relative to the rest of Spain, Catalonia is in a much better position to transition into an independent nation based on trade flows. On the other hand, EU and EZ membership is a deciding factor for secession; costs of abandoning the Euro and exiting the simplified trade flows within the EU would be astronomical and, probably, conclusive in deciding the vote.
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