Separatist Movements: The Case of Catalonia

Separatist Movements: The Case of Catalonia October 30, 2017

Generated By: Cameron Torrens Cierra Chong Vanessa Hayford Chris Tomalty-Moeller About Us The Global Risk Observatory (GRO) is a student organization that monitors traditional and nontraditional risks to the public-sector, private-sector, and civil society. As Master of Global Affairs candidates and alumni at the Munk School of Global Affairs, we seek to cultivate the expertise and professional competencies of our peers by publishing risk analyses, facilitating debate, hosting events and conducting industry outreach. In so doing, the GRO will bridge the gap between social science and quantitative modelling, and change the conversation around risk governance. For questions, comments or concerns, please contact us at: globalriskobservatory@gmail.com. Legal Disclaimer The contents herein remain the Intellectual Property (IP) of the authors. Commercial reproduction or distribution may occur only with the prior written consent of the IP holders. This document is an academic exercise only, and should not be treated as professional advice or consultation. The Global Risk Observatory and its members cannot be held liable for the consequences of business, personal or policy decisions inspired and/or informed by this brief or its contents, including but not limited to financial or strategic losses. By accessing and/or reading this document, the reader(s) absolve the authors, the Global Risk Observatory and/or its members, and the Master of Global Affairs Students Association of any liability associated with the use of this document or any other related materials. All Rights Reserved, 2017. 1

EXECUTIVE SUMMARY This risk brief will analyze and expound upon the nature of the Catalonian separatist movement vis-à-vis financial institutions, the associated risks that emerge, and evaluate avenues to build resiliency and manage the emergent risks. The risk brief is outlined as follows: Risk Environment The financial sector is poised to face disruptions in Catalonia due to heightened domestic political uncertainty and a fragile global world order going forward. This section includes: An introduction to the risk A categorization of the risk Explanation as to how the risk impacts current financial institutions and practices Risk Measurement Qualitative evidence is gathered and analyzed to measure the perception of independence movements and how they affect a multitude of industries. The section includes: The social perceptions surrounding the risk Graphic outlining vulnerabilities and resiliencies of key stakeholders Risk Evaluation: Scenario Assessment Evaluation of the risks associated with Catalonia based on our probabilistic approach to outcomes Based on the GRO Risk Matrix, we describe and prioritize three likely scenarios: Continued union in the Kingdom of Spain; Persistent unrest; Independence Risk Governance Identifying the duality of risk is essential when utilizing risk governance strategies. This section includes: Mitigation Strategies & Risk Opportunities: diversify financial portfolios; move headquarters or set up an EU-based subsidiary; prepare contingency plans; invest in tourism if the euro declines Conclusion The authors believe that as countries become more diverse and trust in national institutions continue to diminish, it is likely that stronger movements are on the horizon, resulting in heightened risk and uncertainty for financial institutions going forward. 2

RISK ENVIRONMENT Key Takeaway: The independence push following a controversial referendum on October 1, which has met resistance and violence from Madrid, is driven by fears that Catalonia's distinct culture and language are under threat. Although separatist movements are nothing new, heightened uncertainty under a fragile global world order is something that needs to be monitored extensively going forward. The Catalan parliament unilaterally declared independence following a banned referendum on Oct. 1. This move would not have any immediate legal effect because it would be blocked by Spain s constitutional court. 1 But an eventual break from Spain would leave Catalonia (see figure) 2 outside the European Union and the consumer protections it offers a source of uncertainty and fear in the minds of some financial institutions. At the same time, independence could be possible because Catalonia has a diversified economy. Manufacturing and market-related production services account for more than half of the region s employment and gross value added, 66.8% of employment is in the tertiary sector, 26% in manufacturing, 10.2% in construction and 2.2% in agriculture. 3 Previous attempts of a Catalan separatist movement, in 2010 and 2015, has not had a significant effect on the stock returns neither of Catalan nor Spanish Firms. 4 The Catalan separatist movement has not been perceived as credible because Spain is a modern democracy that belongs to a strong institutional structure such as the European Union. 5 In this context, investors can believe that Spain has the capability to handle with this conflict in a reasonable and inexpensive manner. However, this time seems to be different. Spanish Prime Minister Rajoy triggered Article 155 of the constitution, which is the first time since Spain s return to democracy that the central government has used its powers to seize control of a regional administration. 6 The regional parliament s speaker, Carme Forcadell, said she would not accept Madrid s move and accused Rajoy of a coup. Some executives are not waiting to see what happens next, and have protectively moved their headquarters out of Catalonia. Some of the biggest firms on the move include CaixaBank, Banco Sabadell, Abertis, Cellnex, Colonial, Gas Natural Fenosa, Dogi International Fabrics, and Oryzon Genomics. 7 Separatist movements feel as if they are the new global epidemic. With enhanced globalization, many countries are increasingly vulnerable to domestic movements. Clearly, there is a section of the population that feels oppressed and neglected, whether that be from historical, economic, political, social, or cultural factors. As countries become more diverse and trust in national institutions continue to diminish, it is likely that stronger movements are on the horizon. Although separatist movements are nothing new, heightened uncertainty under a fragile global world order is something that needs to be monitored extensively going forward. 3

RISK MEASUREMENT Key Takeaway: Many questions are left unanswered as Catalonia doubles down on its independence pledge, with low voter turnout, little future economic clarity, and an unclear relationship with the EU. Separatist movements are on the rise and financial institutions must be cautious of the Catalan spillover effects, especially in the Basque region. Perception With 90% of voters voting in favor of separation, there is a clear and expressed desire for Catalan independence. However, this desire was not reflected in the voter turnout, which hovered around 43%. 8 A low voter turnout may suggest that there are divisions within Catalonia itself, which could further manifest if the region were to secede. The spillover effects of the Catalan independence movement may not bode well for the EU. Other regions with low rumbles of separatist movements may be looking to Catalonia as a beacon of hope for their own movements. Countries such as Belgium, Italy, Germany and Scotland are all experiencing whispers of separatist sentiments, and such movements negatively impact the stability of the EU. The recent global rise of separatist movements could be intrinsically connected to four perceptions of 21 st century politics. First, excessive and unregulated globalization leaves the ordinary citizen lost, unrepresented, and with no identity. Many seek a new sense of belongingness in a small, newly independent country, favoring localism over globalism. 9 Second, nation states are increasingly multinational and diverse. Minorities which feel oppressed in such states, are tempted to seek a divorce, set up their own nation, where they are will then be the majority and perhaps, in the process, exact revenge on their former tormentors, now in the minority. Third, people believe that there is a worldwide failure of national governments and institutions who seem to be chronically unable to deliver on their promises. Fourth, there is simple self-interest. 10 Rich provinces, in a country, whose constitution obliges the redistribution of wealth, may want to keep all the money for themselves. The Catalonian case encapsulates the last three perception factors. Resiliency Assessment The events that have ensued after Catalonia s secession movement have significantly reduced the resiliency of Catalonia s autonomy. The region enjoys the most self-rule out of all the regions in Spain, which gives the government the freedom to preside over crucial matters like policing. 11 However, with Article 155, Spanish law allows for Catalonian autonomy to be revoked. After this attempt at secession, it is difficult to assess whether Catalonia will ever regain self-rule, particularly after the removal of key government officials. It could be argued as well that the events in Catalonia have also demonstrated that the resiliency of Spain s democracy is questionable. Rajoy s use of Article 155 has triggered the worst constitutional crisis in the country since the death of Francisco Franco, and the fate of Spain s decentralized government system is questionable. 12 Spain s economic resilience will likely be negatively impacted because of Catalonia s separatist movement. The uncertainty that has arisen from the political instability in the country has already caused slight drops in the Spanish economy. 13 These drops could be a threat to the economic resilience of the EU as well, as Spain is a considerable economic player in the Eurozone. However, Spain s economic clout alone could 4

ensure that the resilience of the economy remains unchanged in the wake of Catalonia s secession movement. Spain s quarterly growth slipped by 0.1%, but the country s economic confidence measures actually increased despite the crisis. 14 Spain s economic resilience may also be reinforced as the banks and businesses that have moved from Catalonia to other parts of Spain adjust to the economic climate. Sector Government Exposure and Vulnerability The Spanish government: high exposure and vulnerability as Spain risks losing a significant portion of its economy and its prominent status within the EU. The Catalonian government: Significant risks to the political stability and legitimacy of the region now that the Spanish government has revoked the region s autonomy through Article 155 of the Spanish constitution. Risks of a trade boycott The EU: Moderate risk of similar separatist movements occurring in other member states, such as Belgium, Italy, and Scotland. 15 Banking Banks in Catalonia are particularly vulnerable in the event of separation, as they would lose the benefits of the EU s protective regulations. They would also lose the ability to do business in EU member states. 16 Tourism Small and large businesses Spain s tourism industry is vulnerable to separation as it risks losing Barcelona, which brings in 10 million visitors per year. 17 Catalonia itself is also vulnerable to significant losses in tourism revenue, given that the political instability in the region may deter potential tourists from visiting the area. Catalan businesses and businesses across Spain with exposure in the region are vulnerable to the uncertain political situation and have experienced drops in share prices. Separation of Catalonia could result in a highly volatile economy as the region decides how to manage and organize its financial affairs outside of Spain and the EU. Such volatility could contribute to further slumps in share prices and reduced economic opportunities. 5

RISK EVALUATION Key Takeaway: There are three scenarios that are the most likely to transpire. Continued union within the Kingdom of Spain: Catalonia has experienced two separatist movements in 2010 and 2014 to no avail. No independence and civil unrest: confusion over legitimacy and Article 155 spells chaos in the short term for financial institutions. A form of independence: mass exodus by financial institutions connected to the EU with the potential of the Basque region declaring independence as well. Risk Matrix Probability Governments Banking Tourism SMEs A 49% 3 2 1 2 B 88% 5 5 2 3 C 35% 5 5 3 3 Probability Premised upon a rigorous evaluation of the available qualitative evidence, analysts shall attach a subjective probability measure to distinguish uncertainty and indicate a confidence level for the reader. Figures shall be expressed as a percentage chance that a given scenario transpires. Impact Scale Very high (5) High (4) Medium (3) Low (2) Very Low (1) Scenario A: Continued Union within the Kingdom of Spain Background Catalonia s exit from Spain is by no means certain: both the Government and the main Opposition parties in Madrid have expressed commitment to a policy of pursuing national unity. Catalonia is relatively prosperous and its participation is seen as essential to nurturing an economic recovery in Spain. This section assumes that Catalonia will remain a part of Spain, in some capacity, in the foreseeable future. Impact Should Catalonia stay within Spain and be free of endemic conflict, there is relatively little risk for the financial sector. Catalonia may reach a deal with the political centre for more autonomy, though the region already exercises many levers of power associated with autonomous regions. In the medium term, it is likely that Spanish control over the region will be maintained through the use of Article 155 of the Spanish Constitution, which gives Madrid broad powers to reign in districts which are [acting] in a manner seriously prejudicing the general interest of Spain. 18 Prime Minister Rajoy, in concert with his Government and Opposition partners, has made it clear that Madrid s goal is institutional 6

continuity, and that their exercise of that constitutional prerogative would be limited to administering the region until new elections can be held in early 2018. 19 During this period, financial institutions will maintain access to the Spanish and European financial system, including the European Central Bank. As Madrid has indicated that their goal is institutional continuity, the Government is likely to plot a conspicuously regular course, trying to avoid changes or the perception of changes with regard to the administration of Catalonia before new elections. Despite this, the fifth largest Spanish bank, Sabadell, has already relocated elsewhere in Spain, and CaixaBank is considering leaving as well. As fears of immediate separation died down, shares in Sabadell recovered from a previous post-move slump, 20 indicating that even after moving elsewhere in Spain banks would hurt in the wake of independence. This position could be achieved, according to some Catalan lawmakers, by mirroring the position taken in the Basque Country, which enjoys greater control over taxation and revenue than Catalonia. 21 Tax arrangements are credited with fostering peace in the once violently separatist region. Since further devolution, the Basque Country has become a bigger institutional voice for Spanish unity, though it has cost the Spanish treasury dearly and it s not clear that such a deal for wealthy Catalonia would be financially viable. Scenario 2: Persistent Unrest Background The international community has, of late, been focused on very visible public protests and the referendum held by the Catalonian Generalitat. During the referendum, federal authorities interfered in both the casting and counting of ballots, and the Spanish government was subjected to an international outcry about the treatment of citizens of a democratic state. 22 While 90% of participants voted for independence in the referendum, the turnout was only about 42%, with many supporters of Spanish unity boycotting the vote and suggesting deep divisions in Catalonian society. Protests are now almost constant, and the Spanish state s repressive behaviour during the voting process is thought to have turned many marginal supporters of unity against Madrid. Strikes are being used as a form of protest against the Spanish authorities, which have had a marked impact on the area s business and tourism. 23 While there has been very limited violence, it is clear that tensions are high in an environment with significant citizen buy-in for the concept of an independent Catalan state. It is not clear that the Spanish government can unilaterally return the area to order. Impact Persistent unrest would damage the legitimacy of the post-franco regime and hobble the recovering Spanish economy. Following the transition to constitutional monarchy from the Franco dictatorship, the Spanish constitution gave autonomous regions, including Catalonia, significant latitude to develop domestic policy independent of Madrid as part of the post-regime settlement. While the invocation of Article 155 of the Spanish Constitution, combined with cross-partisan buy-in, may give Madrid cover to pursue policies to establish 7

institutional continuity, the use of police-state tactics can be easily described as similar to the Franco regime - especially in Catalonia. If unrest were to persist following the establishment of an Article 155 administration, businesses in Catalonia could expect decreased activity and trade with the rest of Spain and Europe as protests decrease production and control from Madrid tightens. The risk of violence would convince marginal investors to take their money elsewhere and deprive the region of capital. A decrease in economic health in Catalonia would also imperil Spain s economic recovery. The economy of Catalonia is relatively healthy, and the region contributes a disproportionate 20% of the kingdom s budget. 24 In preparation for independence, the Generalitat has been expanding its capacity to collect taxes, 25 exacerbating the likelihood that tax receipts would decline precipitously if there were unrest and deliberate non-cooperation between authorities in Barcelona and Madrid. Persistent conflict could also sour the chances for re-election of Prime Minister Rajoy, though scheduled elections in 2020 are far enough off that his party could recover in time. If the Article 155 administration proves disastrous, however, it could mark the potential for a change in the composition of Spanish government. With a minority government, Rajoy relies on the support of the Basque Nationalist Party. 26 The Basque region becomes exponentially important situation to monitor, as the region shares similar separatist sentiments to Catalonia, and may end up withdrawing support depending on Rajoy s handling of the current situation in Catalonia. Scenario 3: Independence Background Carles Puigdemont, regional President of Catalonia, had vowed to declare independence under Catalan law following the October 1st referendum in which the vast majority of voters opted for separation. In response, the Spanish government condemned the vote as illegal under the Constitutional Court. 27 Ultimately, Madrid seized control of the region, effectively dissolving Catalan parliament, jailing members of the former government on charges of rebellion and sedition, and issuing an arrest warrant for Puigdemont and four other representatives who fled to Belgium. 28 This calls into question whether an independent Catalan state would be recognized. If so, what changes can be expected regarding legal, political, and economic institutions, and what are their ramifications. Impact In the hypothetical scenario of Catalan independence, it is important to outline what this shift would look like because in the event of a separation, Catalonia s economy could contract by up to 30%. 29 While Catalonia does possess many characteristics of a self-sufficient state - President and parliament, police force, foreign embassies to promote trade and investment, public schools and healthcare - there are still a number of roadblocks in the way of independence. Namely, Madrid controls the borders, customs, defense, and the central bank. 30 Assuming independence would mean having to account for each of these necessary responsibilities. Economically, Catalonia is home to 16% of the Spanish population, while it contributes to 19% of its GDP, and a quarter of all exports. The region is disproportionately wealthy due to tourism, booming ports in 8

Barcelona, and Europe s largest chemical hub located in Tarragona. 31 Furthermore, Catalans pay more taxes than are redistributed back into the region, a point that helped fuel the separatist movement. Although Catalonia has agreed to take responsibility of its portion of the debt, their separation would push Spain into a nearly 7% budget deficit. 32 In the days after the referendum, there was an immediate dip in the Euro and the Madrid stock market opened uncharacteristically low. 33 Additionally, there has been speculation over mass exodus of bank headquarters in Catalonia and set up in more stable regions such as Alicante and Madrid, with predictions that the trends will continue as long as there is uncertainty about Catalonia s future. 34 While banks are resilient and subsidiaries can be located throughout Europe to provide greater security, more troubling is the potential loss of the Euro as Catalonia s currency. It is important to note that virtually no international actors have publicly supported the idea of Catalan independence, namely for fear of emboldening separatist groups within their own borders. Even if Catalonia could demonstrate its compliance with EU rules and standards, strong economic and political institutions, as well as domestic support from citizens, they would also need the explicit support of all other EU member states - including Spain. 35 By separating from Spain, Catalonia loses both EU status and access to the European Central Bank, meaning it is uncertain if the region would be permitted to reenter the Eurozone. In select cases, countries such as San Marino and Vatican City have been allowed into the Eurozone even though they are too small to be considered for EU membership. Others such as Kosovo and Montenegro simply use the Euro without the permission of the EU or access to the European Central Bank. 36 While the previous scenario is less likely, it would be much less disruptive to Catalan operations. The latter would increase costs associated with trade, impact the willingness of neighboring countries to maintain high levels of exports from Catalonia, and further incense Spain. 37 RISK GOVERNANCE Key Takeaways: Given the amount of legal and political uncertainty under the December elections, financial institutions should consider diversifying their financial portfolios; move their headquarters or set up a EU-based subsidiary; prepare contingency plans if independence succeeds; invest in tourism if the euro declines. Overall, the option of secession is clearly contingent on how the pending legal proceedings against Puigdemont move forward, as well as the December elections. Should independence ever be granted, major institutional, political, and economic adaptations would have to be made. The structure of these adjustments would heavily depend on relations with Spain, EU membership, and whether Catalans lose or retain the Euro. Listed below are a few strategies we believe financial institution should consider given this uncertainty. Diversify financial portfolio With uncertainty surrounding the status of Catalonia and thus Spain s fiscal health, firms should diversify so they don t face excessive exposure to the Spanish market. Specifically, firms should be wary of holding 9

Spanish government bonds and investments in industries which are subsidized by the Spanish government lest Madrid cut those subsidies in a bid to right their budgetary ship. Move headquarters to Madrid or another financial Centre A key risk for financial institutions is finding themselves stranded outside of the European Union following a Unilateral Declaration of Independence by Catalonia. Without the ECB as a lender of last resort and a well-established Catalonian central bank, their financial integrity could be compromised. This could be mitigated by moving shop to Madrid, or even another European financial hub like Frankfurt. Prepare a contingency plan for working with a new Catalonian state In all cases, financial institutions should have policies in place for how they might work with a new, sovereign government in Barcelona. A new government will have outsized financial needs, especially without recourse to the European Central Bank and other European financial institutions. This presents both danger and the opportunity for reward, and prudent planning could allow financial institutions to take advantage of uncertainty while avoiding potential downsides. While the planning will heavily depend on any terms reached between Spain and Catalonia and their post-independence diplomatic relationship, by acting now firms can hedge their bets about the most dangerous outcomes - such as being cut out of the European financial system - while preparing to offer Catalonia services and guidance it could desperately need. Invest in exports and sectors of the economy which would benefit from a Catalonia without the Euro Without the Euro and ECB membership, Catalonia will face a serious monetary threat. While a likely scenario is that Catalonia pegs a new currency to the Euro or continues to use the Euro as its official currency, export sectors will likely command lower prices in a post-spain Catalonia. The major exception to this is goods heavily exported to the European Union, which may face a significant rise in tariffs. If the euro falters tourism will become more viable given Catalonia s economic reliance on tourism. A new Catalonian state would need to maintain Catalonia as a top-tier tourist destination, thus making the industry able to withstand shocks. CONCLUSION The situation between Catalonia and Spain can be classified as extremely risky for financial institutions in the short-to-medium term. The decision by PM Rajoy to utilize Article 155 and call for new parliamentary elections was ill-advised, which will further the persistent unrest domestically and create uncertainty internationally. The magnitude of this movement cannot be understated, as the potential impact of the EU s economic well-being over self-determination will be at an all-time high. The strength, legitimacy, and resolve of Spanish democracy is in question, with the international community paying close attention to the outcome. 10

Endnotes 1 Catalonia independence: Puigdemont will not accept Rajoy plan, BBC, October 22, 2017. http://www.bbc.com/news/world-europe-41710873 2 Reiss Smith, Catalonia: where is Catalonia and why has it declared independence from Spain, Express, October 28, 2017. https://www.express.co.uk/news/world/861739/catalonia-map-where-is-catalan-referendumindependence-spain 3 OECD Review of Higher Education in Regional and City Development. Catalonia, Spain. 2015. https://www.oecd.org/edu/imhe/46827358.pdf 4 Ivan Duran and Francesc Trillas, Is Something Really Happening? Separatist Movements in Modern Democracies and the Stock Market: The Case of Catalonia, February 2016. http://pagines.uab.cat/appliedeconomics/sites/pagines.uab.cat.appliedeconomics/files/dur%c3%a1n,%20ivan_pape r.pdf 5 Ibid. 6 Catalonia independence: Puigdemont will not accept Rajoy plan. 7 David Reid, Revolution is not a joke: banks leaving Catalonia is no surprise, says Spain s ruling party, CNBC, October 6, 2017. https://www.cnbc.com/2017/10/06/banks-leaving-catalonia-no-surprise-says-spains-ruling-partyon-independence.html 8 Petroff, Alanna; Riley, Charles. These banks and businesses are leaving Catalonia. CNN Money, October 10, 2017. http://money.cnn.com/2017/10/09/investing/spain-catalonia-banks-companies-independence/index.html 9 Valaskakis, Kimon. Separatism Everywhere: The New Global Epidemic. Huffington Post, May 29, 2014. https://www.huffingtonpost.com/kimon-valaskakis/separatism-everywhere-the_b_4977800.html 10 Ibid. 11 Serhan, Yasmeen. Is Catalonia Testing the Resiliency of Spanish Democracy? The Atlantic, October 9, 2017. https://www.theatlantic.com/international/archive/2017/10/is-catalonia-testing-the-resiliency-of-spanishdemocracy/542364/ 12 Ibid. 13 O Brien, Fergal. Spain s Economy Wobbles as Catalonia Uncertainty Takes a Toll. Bloomberg, November 6, 2017. https://www.bloomberg.com/news/articles/2017-11-06/spain-s-economy-wobbles-as-catalonia-uncertaintytakes-a-toll 14 Khan, Mehreen. Eurozone economic confidence surges to highest level since 2001. Financial Times, October 30, 2017. https://www.ft.com/content/f3a7305e-bd70-11e7-b8a3-38a6e068f464 15 https://www.cnbc.com/2017/10/06/if-catalonia-goes-independent-these-places-could-be-next.html 16 http://money.cnn.com/2017/10/09/investing/spain-catalonia-banks-companies-independence/index.html 17 https://www.nytimes.com/2017/10/20/world/europe/catalonia-barcelona-separatism.html 18 "Constitution." Accessed November 18, 2017. http://www.congreso.es/portal/page/portal/congreso/congreso/hist_normas/norm/const_espa_texto_ingles_0.pdf. 19 Badcock, James. "Spain to force elections in Catalonia in Article 155 crackdown on independence leaders." The Telegraph. October 20, 2017. Accessed November 18, 2017. http://www.telegraph.co.uk/news/2017/10/20/spainforce-elections-catalonia-article-155-crackdown-independence/. 20 Duarte, Katie Linsell Esteban. "Catalonia banks prepare to move amid fears of customer exodus." The Independent. October 06, 2017. Accessed November 18, 2017. http://www.independent.co.uk/news/business/news/catalonia-banks-move-location-independence-catalan-protestsfear-customer-deposits-a7985951.html. 21 Dowsett, Sonya. "The Basque Country: Spain's effective but expensive antidote to secession." Reuters. October 10, 2017. Accessed November 18, 2017. https://www.reuters.com/article/us-spain-politics-catalonia-basquesanal/the-basque-country-spains-effective-but-expensive-antidote-to-secession-iduskbn1ce2g6. 22 Jones, Sam. "Spain: government apologises for policing of Catalan referendum." The Guardian. October 06, 2017. Accessed November 18, 2017. https://www.theguardian.com/world/2017/oct/06/catalan-government-press-aheadreferendum-debate. 23 Burgen, Stephen. "Thousands protest and strike over Catalonia referendum violence." The Guardian. October 03, 2017. Accessed November 18, 2017. https://www.theguardian.com/world/2017/oct/03/catalonia-holds-generalstrike-protest-referendum-violence. 11

24 Rosenfeld, Everett. "Catalonia isn't Scotland 2.0 it's worse for Spain." CNBC. October 06, 2015. Accessed November 18, 2017. https://www.cnbc.com/2015/10/05/catalonia-is-critical-contributor-to-spains-economy.html. 25 Berwick, Angus. "From new tax office, Catalonia hopes to grab billions from Madrid." Reuters. September 21, 2017. Accessed November 18, 2017. https://www.reuters.com/article/us-spain-politics-catalonia-tax/from-new-taxoffice-catalonia-hopes-to-grab-billions-from-madrid-iduskcn1bw10a. 26 Kollmeyer, Barbara. 5 things investors need to know about Catalonia s independence referendum. MarketWatch, September 30, 2017. http://www.marketwatch.com/story/5-things-investors-need-to-know-aboutcatalonias-independence-referendum-2017-09-28 27 Ciaran Giles, Here's what would happen if Catalonia won independence, Business Insider, October 3, 2017, http://www.businessinsider.com/ap-a-look-at-what-might-happen-if-catalonia-goes-it-alone-2017-10. 28 BBC News, Catalonia crisis: Spain issues warrant for Puigdemont, BBC, Novembers 3, 2017, http://www.bbc.com/news/world-europe-41865121. 29 Bosch, Sofia. Here s how bad economically a Spain-Catalonia split could really be. CNBC, September 21, 2017. https://www.cnbc.com/2017/09/21/heres-how-bad-economically-a-spain-catalonia-split-could-really-be.html 30 BBC News, Could Catalonia make a success of independence? BBC, October 10, 2017, http://www.bbc.com/news/world-europe-41474674. 31 Ibid. 32 Dhara Ranasinghe and John Geddie, Spain creditors size up cost of Catalan independence bid, Reuters, October 10, 2017, https://www.reuters.com/article/us-spain-politics-catalonia-bonds/spains-creditors-size-up-cost-of-catalanindependence-bid-iduskbn1cf1p7. 33 Ryan Vlastelica, Spain ETFs fall sharply after chaotic independence vote, Market Watch, October 2, 2017, http://www.marketwatch.com/story/spain-etfs-fall-sharply-after-chaotic-independence-vote-2017-10-02. 34 Katie Linsell, Esteban Duarte, and Rodrigo Orihuela, Catalan banks weight moving headquarters to reassure clients, Bloomberg, October 4, 2017, https://www.bloomberg.com/news/articles/2017-10-04/catalan-depositorstorn-on-who-to-bank-with-amid-secession-fears. 35 European Commission, European Neighbourhood Policy and Enlargement, European Commission, December 6, 2016, https://ec.europa.eu/neighbourhood-enlargement/policy/conditions-membership_en. 36 BBC News, Could Catalonia make a success of independence? BBC, October 10, 2017, http://www.bbc.com/news/world-europe-41474674. 37 Ivana Kottasova, Spain loses 20% of its economy if Catalonia splits, CNN, October 2, 2017, http://money.cnn.com/2017/09/29/news/economy/catalonia-independence-spain-economy/index.html. 12