Financial Times

August 17, 2014 1:23 pm

Pujol scandal fractures Catalonia’s ruling coalition

By Ian Mount in Barcelona

Jordi Pujol©Reuters

Jordi Pujol

Jordi Pujol, the first democratically elected President of Catalonia after Franco’s death, embodied the economically powerful and politically awkward region of Spain.

The inventor of a popular antibiotic ointment and imprisoned by the Franco government for singing in Catalan and passing out anti-Franco leaflets during Spain’s dictatorship, he combined an astute business sense with hard work and pride in a heritage beloved by Catalans.

“He’s the man that directed the recovery of self-government and he governed Catalonia as a nation, not a region,” says Josep Rull, the recently named general co-ordinator of Convergéncia Democrática de Catalunya (CDC), the centre-right nationalist party that Mr Pujol founded in 1974. “As a thinker and a statist, he will have an important place in history.”

After being elected president, he struck deals with both the rightwing Partido Popular and the left-leaning Socialists to maintain his grip on power, which lasted for 23 years until 2003.

But Mr Pujol’s brand of canny pragmatism suffered a critical blow when he announced on July 25 this year that, for 34 years, he had been keeping undeclared funds outside Spain.

He said that the money was an inheritance from his father, but speculation quickly turned to whether the money had come from his son Jordi, also known as Junior, who is under investigation for charging illegal commissions on contracts awarded by the regional government. The scrutiny is set to intensify when the younger Mr Pujol and his ex-wife testify in a Madrid Court on September 15.

Since Mr Pujol’s announcement, people have been forced to ask if the father of Catalonian politics was just like the corrupt politicians in Madrid derided by many Catalans. But more importantly, it has raised the question of whether the scandal could derail the drive for Catalan independence from Spain.

Artur Mas, Mr Pujol’s political heir and current CDC head and Catalan president, is under growing pressure in the build-up to this November’s referendum.

Frustrated by Madrid’s unwillingness to give Catalonia more economic and cultural autonomy, Mr Mas broke with historic CDC policy when in 2012 he announced that Catalonia would hold a non-binding independence referendum.

Many Catalans feel that the Madrid government does not respect their language and culture, but the biggest point of contention among the region’s 7.4m residents is money.

Catalonia’s €192.5bn a year economy accounts for about 19 per cent of Spain’s gross domestic product. Unemployment is below the national average and average earnings are among the highest in Spain.

The Catalan government says the region pays much more in taxes than it receives – Barcelona says between €11bn and €15bn a year while Madrid says €8.5bn – and that it should control its own finances and €26bn annual budget.

He’s the man that directed the recovery of self-government and he governed Catalonia as a nation, not a region. As a thinker and a statist, he will have an important place in history

- Josep Rull, CDC

“Spain abuses Catalonia economically,” says Liliana Pinacho, a shopkeeper in Barcelona’s Gracia neighbourhood who supports independence.

For Toni Rodon, a Stanford University political science researcher, while the scandal could turn off undecided voters, it is unlikely to change the minds of pro-independence ones. According to opinion polls about half of the population supports independence.

“From the beginning we’ve said that the scandal won’t affect the process,” says Jaume Marfany, vice-president of the Assemblea Nacional Catalana, a group that organises annual September 11 pro-independence events. “We’ve always said we wanted to construct a new country to get a better state. Our movement, among other things, is to finish with that sort of corruption inside politics.”

The real effect of the so-called Caso Pujol, as the scandal has become known in Spain, may be to politically weaken Mr Mas and damage his ability to advance the gains made by Mr Pujol in the pragmatic way their party is known for.

Just days after Mr Pujol’s announcement, Mr Mas presented Spanish prime minister Mariano Rajoy with a list of 23 political and financial demands including an overhaul of Spain’s regional financing system, in which Catalan tax revenues subsidise poorer regions.

Negotiating an agreement on those financing, infrastructure and cultural issues and presenting the new deal alongside independence in a postponed referendum is one option, says Mr Rull, the CDC general co-ordinator. That would sit well with the CDC’s moderate base and the local business community.

“The street is much more radical than the offices,” says Ignacio Lago, a professor of political science at Barcelona’s Pompeu Fabra University.

But working on an compromise that would leave Catalonia inside Spain does not please some members of Mr Mas’s uneasy coalition government. There is already evidence of tension, as one of its partners, the left-leaning pro-secession party Esquerra Republicana de Catalunya (ERC), has threatened to join with opposition parties to force Mr Pujol to testify in parliament if he does not do so voluntarily.

That tension exploded when Mr Mas’s vice-president Joana Ortega said on Tuesday that the referendum could be postponed if Madrid did not give its permission. An ERC deputy tweeted the Mas government had, “decided to commit suicide,” and the general secretary of Ciutadans de Catalunya, an anti-independence opposition party, called Mr Mas a “political cadaver”.

If the Pujol scandal drags on and further fractures Catalonia’s ruling coalition, the lack unanimous support will weaken Mr Mas in his negotiations with Mr Rajoy, says Mr Lago, the political scientist. That in turn could lead to a worse deal for Catalonia, if Mr Mas and Mr Rajoy manage to strike one.