Nationalist politics and regional financing systems in the Basque Country and Catalonia

Abstract

Across Europe, the 21st century has witnessed a rise in demands for political sovereignty from nationalist parties that had previously seemed reconciled to seeking greater devolution rather than full independence. Spain is a particularly interesting case where pro-sovereignty movements have gained traction in both the Basque and Catalan regions, yet with important differences in the objectives pursued. Both the Basque Nationalist Party (PNV) and Democratic Convergence of Catalonia (CDC), the traditional mainstream nationalist parties in each region, have sought a fundamental reconfiguration of their respective territories’ relationship with Spain at different times since the late 1990s. What explains the differences in the nature and timing of their shifts away from accommodationist politics within Spain and towards pro-sovereignty agendas? This study investigates the different regional financing systems in Spain as a significant factor influencing the evolution of the nationalist parties’ territorial strategies and behaviour. While Catalonia forms part of the common financing system (régimen común de financiación), which gives the regions relatively limited tax-raising competences and involves substantial revenue transfers from central government, the Basque region raises almost all of its own taxes under a separate system of extensive fiscal autonomy (the Concierto Económico or Economic Agreement). Spain thus offers the opportunity to compare two different models of fiscal decentralisation and their significance for the political evolution of two contrasting nationalist movements.