With all the drama over Brexit, we’ve lost sight of just how dysfunctional Europe is. But the weekend fixed that nicely.
In Catalonia, the independence referendum turned into quite a spectacle yesterday. A last-minute poll showed a huge surge in support for leaving Spain. The reaction was swift.
Spanish national riot police shut down a quarter of polling stations according to the Catalan government. Or half according to the Spanish national government.
The police dragged some voters out by their hair, as well as beating and attacking others with rubber bullets. The Catalan health ministry, hardly reliable in the circumstances, says 761 people were injured. That’s terribly precise.
Many families turned themselves into hostages by occupying vote counting stations for a night of movies and dances. Lawyers were briefing parents on their rights under arrest while their children kicked footballs against school walls.
Last week, writing from Barcelona, I mocked the protesters for chanting “democracia” in a democracy. Now I get the point about being allowed to vote.
Although perhaps they should take a hint from how their current democracy is treating them. Ironically, the proposed Catalan constitution bans independence referendums for the regions of Catalonia.
Labour leader Jeremy Corbyn tweeted support for the Catalans. There was a protest outside the EU offices in Edinburgh too. Barcelona’s football club announced it supports the voters. Everyone is calling on violence to stop.
Nobody wants violence. But it seems to happen rather often in Europe.
I’ve argued that the easiest way to end the Catalan independence movement is obvious: publish the line-up of Catalonia’s potential national football team versus Spain’s (minus the Catalan-born players) on a billboard at Las Ramblas. The only problem is, a bit of research shows they match up rather well…
Nobody knows quite what to make of the whole debacle yet. Violence by an EU nation state against its own citizens’ attempt to hold a democratic but illegal vote for independence is a bit of a conundrum. What matters most? Democracy? The law? Violence? Cultural aspects? Financial consequences?
My bet is the last one will carry the day. The Spanish prime minister had to withdraw his proposed budget from parliament because of the drama. Catalonia’s independence threatens Spain’s financial stability thanks to its prosperity and net contributions to the national budget.
It’s not just Spain
Speaking of proposed government budgets, the French one is causing a drama too. It’s President Emmanuel Macron’s first. And he’s been accused of favouring the rich.
Nothing is confirmed until it is officially denied. And so the French finance minister’s denial is important. He told RTL Radio, “We made a choice in favour of wealth creation and investment. It’s totally false to say it’s a budget for the rich.”
Nobody has yet mentioned the surprising similarities between the proposed Donald Trump and Macron budgets. Perhaps they explain the surprisingly similar approval ratings. If you read the mainstream papers it’s clear that lower taxes will create growth in France, but not the US.
Both leaders are also targeting unfair competition from foreign corporations who abuse the rules. Macron outlined a “turnover tax” which would tax revenue instead of profit for certain “Anglo-Saxon” technology companies who “do not respect the rules of the game” by avoiding tax. Fixing the tax system instead of proposing new taxes wasn’t mentioned.
According to Macron, Google destroyed 90% of the market share of European competitors when it entered the price comparison business. It then gave favouritism to its own affiliates.
It’s odd to see a French president fighting for competition instead of nationalisation or restrictions. Suddenly the free market is the front-line defence of the government against corporations.
What the French must learn next is that, if Google is dominant in a market, it’s probably because it’s better than European rivals at serving customers. Abusing its position just creates profit opportunities for European rivals who handle their customers better by not manipulating results. If they still can’t compete, they must be rubbish.
Macron’s policies have the backing of large EU countries
Small ones know the key to economic prosperity lies in less tax, not more. The Financial Times quotes the Irish prime minister’s reply to Macron:
“If we want Europe to become a digital leader and we want faster innovation then the solution is not more taxes and more regulation but the opposite,” said Mr Varadkar. He added that Ireland had the support of the Netherlands, Luxembourg and the Nordic countries against any EU tax offensive.”
Funnily enough, EU rules require unanimous support on issues of tax policy. For now.
Having spent the last week in Barcelona and Paris, I feel the need to warn you that something may be brewing in Belgium and the UK, where I’m heading next.
In Austria, where I began my European tour, the “burka ban” came into effect yesterday. Women wearing the burka face an on-the-spot fine of €150. The fashion police are now real.
This image from the Vienna newspaper Die Presse, featuring a clown, says it all. It explains what dress is allowed in row 1, what is allowed under certain circumstances in row 2 and what is now banned in row 3.
I don’t know whether to laugh or cry.
Stuck in the UK
While the US, France, Austria and Germany wobble to the right, Theresa May has shuffled left. She’s promising all sorts of things to younger voters.
Homeownership programs and freezing tuition fees are top of the agenda. Somebody needs to tell the prime minister that the election was a few months ago.
The Telegraph has accused her of taking “dictation” from EU officials on key pledges in her Florence speech. It was supposedly the key to breaking the negotiation deadlock. The government spokesperson confirmed the story by denying it.
The premise of Brexit assumed that Britain would do a better job of running its own affairs than the EU could. Taking dictation from foreign powers and promising money as though it need not come from somewhere is not a good sign.
The economic growth of a nation isn’t so much determined by its existing policies, but by the direction of policy change. Former communist countries are becoming less so, leading to economic growth. The US is becoming increasingly collectivist, leading to poor growth. Europe can’t make up its mind, leading to mediocre growth.
Where will the UK decide to be?
The answer is a rather surprising one.
Until next time,
Nick Hubble
Capital & Conflict
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Category: Geopolitics