By Christian Takushi, Macro Economist & Geopolitical Strategist, 21 Oct 2017 – Switzerland.
( we are monitoring underestimated developments in the Middle East, South Asia, Far East and Europe. We have said since early 2017 that a US Tax Reform is more likely than not, now consensus is joining our view. It is not a done deal though )
Spain could surprise with bad outcomes as hardened positions prove more than just posture
Monitoring developments in Spain this weekend, we see growing signs that point to Madrid making not only preparations to invoke Article 155 – imposing direct rule over Catalonia, but also to use police and military force if necessary. All options are been readied. Apart from the fact that the outcome of the Constitutional Crisis in Spain is hard to predict, it is noteworthy that many in Europe and around the world are struggling to understand how Spain could end up here. risking a chaotic showdown and even a deadly clash that could inflict a lasting damage to its image and cohesion. Spain’s political-military history can help explain some of the lasting entrenched positions though.
A quick solution is off the cards after Brussels was seen as taking sides for Madrid – Brussels is worried about the potential clashes and the use of force, and how that could further damage the EU’s image in and beyond Europe. Paris and Berlin are exasperated by the fact that Spain’s Crisis has weakened their hand against Britain. The crisis erupted just as May’s administration was under siege by pro-EU factions and big business lobbies in London. Switzerland is being voiced as mediator, but Madrid is convinced that any dialogue validates the independence bid.
I reiterate my assessment ..
- The somewhat half-hearted approach and lack of charisma of the Catalan President. Unless freedom fighters are willing to fight and die for their cause, they barely stand a chance. Spain has in the past never given independence to any territory that was strategically vital to them (see below how the traumatic history of Spain is catching up with it). The majority of Catalonians are unlikely to join a revolution or uprising against Madrid. Simple demographics: Historically, a median age below 22 years would be ideal for a popular uprising, Catalonians’ average age is between 40 and 45 though.
- Big businesses are already siding with Madrid – The economic cost could be steep. In average, Catalonians earn 18% more than their Spanish counterparts. Will they risk a temporary erosion of that edge?
- No foreign power has come to Catalonia’s aid. Not even a small nation in Europe has officially offered recognition. Even self-portrayed neutral Bern, Switzerland, fears Brussels’ anger if it is seen as sympathetic to Barcelona.
Consensus may be caught wrong footed – it overlooks history
While an armed clash (civil war) is likely to be averted, the likelihood of a bad outcome is unfortunately not insignificant. The unyielding positions exhibited so far can be traced to the history of Spain, which had to sustain very costly uprisings in Latin America and a Civil War at home. There are parallels in both struggles that saw so much human suffering. Even after Argentina, Chile and Colombia defeated Spanish forces and closed in on to liberate Peru, Spain refused to grant independence to Peru (the old Viceroyalty of Lima). Finally Argentinian-Chilean armies under General San Martin and Colombian-Northern forces under General Bolivar helped Peruvian forces defeat the Spanish armies in the decisive battles of Junin and Ayacucho. My point is this: There were 53 years to review the strategy since the major indigenous uprising of Tupac Amaru in 1780 shocked the empire, but all along Spain rejected other strategic options and ended up with the worst possible outcome.
Here some underestimated factors/scenarios
History could help understand Madrid
Spain’s 53 year struggle to wipe out independence movements in Latin American and its 15 year long war against Peruvian separatists, in particular, probably best illustrates the self-detrimental tendency to unyielding attitudes among Spanish rulers. Peru was strategic, because Lima had been the capital of the Spanish Empire’s American Vice-Royalty for centuries. Spain and Portugal both occupied South America for centuries. Just as the Viceroyalty of Peru (Lima) was strategic for Spain three centuries ago, so is Catalonia strategic for Spain today. It is seen by many as the wealthy economic engine of the country.
Temporary and lasting effects likely
Who is benefitting from the recent geopolitical developments?
Christian Takushi, Macro Economist & Geopolitical Strategist, 21 Oct 2017 – Switzerland.
General Disclaimer for all our research: We provide geopolitical-political analysis only. Global Geopolitical Macro Analysis is highly complex and subject to sudden changes. No analytical method is without certain disadvantages. We may change our outlook within less than 3-6 hours following an event. Global Geopolitical Macro Analysis can be extremely time-sensitive. No comment should in any way be taken as an investment advice or suggestion. One and the same assessment at the geopolitical or macro level can lead to very different rational reactions, because every nation, company or portfolio has different risk tolerances, assets, goals and restrictions.