Armstrong Economics Blog/European Union
Re-Posted May 26, 2017 by Martin Armstrong
QUESTION: Mr. Armstrong, when you were here in Barcelona, you said that Catalonia would vote to separate from Spain. Most thought you would be wrong. I myself confess I was not sure you would be right. Well you were right, or your amazing computer was correct, and the fever to separate only grows bolder. Do you still see this and the ultimate end of the EU?
ANSWER: Yes, but this is a process that is slow. The speed will being to pick up next year and it appears to be increasing in velocity between 2018 and 2022. El Pais ran a story: “Catalonia to immediately declare independence if no referendum held” with the leaked excerpts from what appears to be the Catalonian regional government’s road map to independence. The secret document included a plan where the region would unilaterally break away from Spain if Madrid tried to prevent its citizens from holding a referendum on independence in the fall. The proposed question is straight forward:
“Do you want Catalonia to be a state that is independent from Spain?”
I reported back in 2015 that Barcelona was preparing to issue its own electronic currency. Since then, the city is still moving forward with a plan to introduce its own currency, despite warnings from Spain’s central bank. The new so-called “social currency” would be used to buy local goods and services at a discount while having a one to one parity with the euro. This is plan B in order to set up for separation. Catalonia is the richest region in Spain and is supporting the rest of the country. So it is very much like Margaret Thatcher once warned, that Socialism works until you run out of other people’s money. That is exactly what is taking place in Spain. They have been bleeding Catalonia dry.
The real question is what will Spain do? Spain is the Eurozone’s fourth largest economy. It is distinctly on the verge of breaking up. Spain and the EU seem intent upon not letting that happen. If there is any attempt by force from Madrid under the pretense of a police action, then the gloves will come off.
Madrid will take drastic actions, including that will most likely first attempt to invoke article 155 of the constitution, which will effectively put an end to all forms of Catalan self governance. Will the people tolerate that? This will not merely strengthen the resolve of Catalan separatists, it could very well lead to a civil war erupting between 2018 into 2020, but the latest we should see the separation is by 2022.
The previous Spanish Civil War took place between 1936 and 1939 lasting about 3 years. It broke out when the Spanish army in Morocco led by General Francisco Franco, rose up against the democratically elected Republican government, presided over by Manuel Azaña. Typically, there will be a divergence and split within the military. That is how these things erupt. We may see this in the USA also around 2022, which may be a contagion at that time. The potential for the collapse of the EU looms on the horizon for 2022.