Madrid takes control of Catalonia’s finances in order to halt independence referendum

Government auditors must submit a weekly report to the Spanish Treasury. Otherwise cash transfers to the regional government will stop.

MARIONA FERRER i FORNELLS
3 min

MadridMariano Rajoy’s government has taken further measures to prevent Catalonia’s referendum on independence from going ahead at all costs. For the first time and in an unprecedented move, Madrid has stopped hiding behind the courts and has taken the initiative to try its hardest to prevent the 1-O [1 October] vote from being held, no matter what. The Delegate Commission of the Spanish Government for Economic Affairs (CDGAE) has approved a measure ordering all Catalan ministry auditors, the Catalan government’s other financial managers, the general director of Budgets and the general director of Finance, Social Security and the Treasury, to submit weekly reports —proof of payment for expenditure— to Madrid to prove that not one euro is being spent on 1-O.

If they fail to comply with the order, the Spanish Treasury will withdraw the Regional Liquidity Fund (FLA, in Spanish), the funding scheme that ensures the Catalan government’s finances stay afloat in the absence of the reform of an out-of-date system of financing Spain’s regional governments. Referring to the FLA, the Spanish government’s spokesman, Íñigo Méndez de Vigo, declared that the state has used it to pay out more than €63 billion since 2012, with a further €3.6 billion planned for this year. According to Méndez de Vigo, the Spanish government hopes the measure won’t be necessary but, if it is, "the Catalan authorities will be held accountable in front of the Catalan people".

The announcement came during the press conference held after Friday’s cabinet meeting in Madrid. The Spanish vice president Soraya Sáenz de Santamaría, informed the press of the decision the government made during its weekly meeting at the Moncloa. In Méndez de Vigo’s words, "not one euro of Catalan money will be spent on an illegal referendum that only a few people actually want. There will be a weekly audit of the entire budget to ensure those responsible provide the Treasury with the relevant information".

A "preventative" measure

With its latest decision, the Spanish government is placing all those responsible for the Catalan government’s finances directly in the firing line. Méndez de Vigo was reluctant to go into detail as to the possible penalties they might have to face. He insisted that, more than anything, it is a "preventative measure to safeguard the Catalan people’s prosperity and welfare", to ensure that the Catalan government’s funds are spent on key services. However, sources close to the Spanish government suggest that the officials will face fines if they fail to send their weekly reports or if these include funds earmarked for the referendum, regardless of whether the relevant minister has signed off on them.

According to the same sources, the initiative originated from within the Treasury, who are convinced that it as a measure by which they finally have the Catalan government where they want them before the summer recess. The measure had not been mentioned until now and, in practice, implies a full takeover of the Catalan government’s finances. Two years ago, Madrid’s oversight of the expenditure of money originating from the FLA was tightened with monthly checks. Now, however, the "surveillance" extends to all government accounts, on a weekly basis.

Budget takeover

In an official statement about its decision, the Spanish Treasury stated that "Recent events highlight the need to strengthen control over Catalonia’s financial information". In the event of the "failure to provide the information requested or if the content of such is shown to have directly or indirectly financed the referendum, the committee may decide to take the appropriate measures in order to impede the execution, continuation or repetition of this activity and undertake any measures it sees fit, including the suspension of the corresponding funds transfer, in order to restore Catalonia’s financial status to lawfulness”.

This measure will remain in place until "the general situation of risk comes to an end in Catalonia, in order to guarantee the provision of public services in the region".

The first report, next week

The agreement will be published in the Official State Gazette (BOE) tomorrow, so that Catalan government officials can prepare the first report next week. The measure not only affects ministries, but all public bodies. The Spanish authorities have decided to react in this manner to what it views as a change in the attitude of Carles Puigdemont’s government, which it sees as having taken a more "authoritarian", "radical" turn. It arrives just two days after the Court of Adutors’ ruling that those who were banned from office over the 2014 vote will have to personally foot the bill of the unofficial independence ballot. It is yet another means to frighten Catalan government employees and cabinet ministers.

The Spanish government argues that its decision stems from the Constitutional Court’s ruling which annulled additional item 40 of the Catalan government’s budget for 2017, in other words, the funds earmarked for the independence referendum.

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