This weekend the deteriorating situation in Spain only grew exponentially worse. Spanish Prime Minister Mariano Rajoy on Saturday stunned political observers when he outlined his intentions and concrete plans to dismiss the whole separatist cabinet based in Barcelona. He pledged to assume command and control of all critical institutions in the Catalan region including the region’s police force the Mossos d’ Esqadra and all public media outlets.
That same weekend, the chief prosecutor of Spain announced that if Catalan Regional President Puigdemont does declare his independence, then he will be looking at up to 30 years of jail time and facing immediate arrest. The situation is quickly spiraling out of control as the Catalan response was a vow to not accept the national orders to dissolve their regional government.
What this means for the wider world is becoming clearer. We are not far from seeing the might of the Spanish army deployed on the streets of Barcelona and other Catalan towns and cities in as little as a week or two. Spain’s economy had just begun to pull out of the devastating recession dealt the country by the Global Financial Crisis a decade ago and the European Sovereign Debt Crisis five years ago. Spain’s economy feeds through to that of the whole Eurozone, of which it is the fourth largest and a key member.
Ultimately, problems for Europe equal problems for your investment and retirement accounts. This is why you have to take serious what gold goes in an IRA. The crisis in the heart of Europe is all the reason you need for why a gold IRA. Get some of the yellow metal now before we see martial law imposed on the second largest city in Spain which also just so happens to be the 14th most visited city in the world.
Superstate Spain Strikes Back
It is important to understand how we came to the brink of civil war in Spain after four decades of a peaceful and exemplary constitutional monarchy democratic history. Prime Minister Rajoy of Spain has been attempting to put down the Catalan population’s drive for independence that has been slowly but surely gaining traction since he assumed the highest elected office in Spain back in 2011. Unfortunately, the situation has grown so severe that it is now dividing the country and tangibly harming the Spanish national economy.
Yet by the weekend, the final hurdle to Prime Minister Rajoy assuming command over all Catalan government functions and institutions will be finally removed when the Senate he controls votes to give him these far-reaching and sweeping constitutional powers. International attention is quickly shifting to the way that Madrid will be able to take control of all the institutions of the renegade province in light of promised continued secessionist opposition. The British Aston University Lecturer of Spanish and Politics Caroline Gray touched on the most sensitive point with:
“The big question for me, really, is how Madrid is actually going to implement its proposed actions in Catalonia. Catalan government officials and many within the Mossos and Catalan media are not just going to stand down without a fight.”
In fact the contest for the future of the region has already begun in earnest as the Catalan secessionists are meeting today to come up with their response to the national government and Rajoy in light of the unprecedented arsenal of weapons he has announced to impose governmental authority over the rebel province. The leaders of the regional governing parties are planning their next local Parliamentary meeting.
They have only days before the Regional President Carles Puigdemont becomes ousted from office by the national government. This is why he is calling for a special legislative session early this week. His allies are telegraphing that he might declare the region’s independence this very week.
Meanwhile, Prime Minister Rajoy is patiently but steadily advancing his plans to gain absolute power over Catalonia according to the Spanish Constitution of 1978’s Article 155. This will give him full authority to force central governmental control over the restive region and rebellious Barcelona the regional capital. His stated goal is to re-institute normalcy and order to the breakaway province that has been defying the Spanish Constitutional Court for over six weeks now. He promises to hold regional elections again in six months or less.
How Will Spanish Prime Minister Rajoy Survive This Crisis?
The weak point in Rajoy’s master strategy was revealed by the El Periodico Catalan daily newspaper opinion poll published recently. It showed that new elections would only return the separatist parties to power with the same 48 percent share of the vote which they garnered in 2015. This would not be an absolute majority, but it would be close enough for them to gain a working majority again in the provincial legislature. The survey was taken following the National Court’s action of jailing the two foremost separatists (after Puigdemont), which enraged secessionist supporters and galvanized them still further.
This means that Rajoy dissolving the administration in Barcelona and even the Parliament there would only lead to more of the same after a several month cooling off period in Catalonia. The same secessionist claims that their illegal referendum has won them the right to declare their own republic will most likely still prevail in a new Parliament and administration. Rajoy suffered another weekend of embarrassing Barcelona-based protests that saw 450,000 Catalans standing with Puigdemont in protest to the national government plans.
Some analysts have observed that as Rajoy levels more severe force on Catalonia, he is only further straining his own complicated web of national support and international approval that keep him in power. Several cracks in that international and national unity have already begun to appear over the weekend. In Belgium, the Prime Minister Charles Michel broke the solidarity of the EU when he suggested that Spain should submit to international mediation of the aggravating situation.
Meanwhile the minority government which Rajoy has so far successfully led suffered a severe challenge when the Basque Nationalists refused to approve his spending and budget for next year in protest of his handling of the regional crisis. This is not only threatening the political future of Rajoy, but the economic certainty, stability, and recovery in Spain the fourth largest economy of the Eurozone. Saturday, the Basques came out firmly in the camp of Barcelona with their Regional Leader Inigo Urullu’s Tweet:
“The measure is extreme and disproportionate. It is blowing up bridges. The Catalan government has our support to seek a constructive future.”
This statement was not shocking given that the Basques have their own separatist movement they have wrestled with over the last fifty years.
How Will Catalan Regional President Puigdgemont Survive This?
Though Rajoy may face challenges, his positions is so far relatively secure. It is instead his arch-nemesis Puigdemont whose future looks increasingly like it will be one spent behind bars for the next several decades. The Catalan government spokesman Jordi Turull stated on Sunday that the session of the regional parliament will make the decision that enforces the so-called “mandate” with which the illegal October 1st referendum provided them.
Turull told the RAC1 radio that Rajoy so far has no immediate plans to preempt the Madrid strategy by calling for new regional elections himself before the Senate confirms the Article 155 powers this weekend. Instead they branded the prime minister with the accusation of staging a “coup d’etat.”
The Rising Danger to Spain’s Economy is a Threat to the Economy of the Eurozone and the Global Markets Alike
This latest geopolitical firestorm has already threatened the over one trillion dollar Spanish economy. Only last week, the national government in Madrid had no choice but to slash its 2018 growth forecast. Besides that, over a thousand Catalan-based companies have begun moving their registered headquarters to other regions of Spain in an effort to avoid the trouble that this power struggle in the region will likely create. The biggest Barcelona-based bank CaixaBank SA is the leader of these fleeing firms.
Evidence of the disruption this is all causing internationally is starting to appear as well. The euro dipped .2 percent down to $1.1764 as the dollar showed across the board gains on perceived safe-haven flows. Macro funds were busily selling off the Euro in Monday morning early Forex trading as they fear that the secessionists will refuse to back down from Rajoy’s measures.
They are right to be concerned about the potential breakup of Spain, and you should be too. Next week you could easily be watching Spanish tanks and troops marching down the promenade of Barcelona on the news. Gold offers insurance and protection during market turbulence. It is your only historically proven, best line of defense against these kinds of deteriorating Black Swan scenarios. Time to review how to invest in gold.