1
00:00:00,120 --> 00:00:04,680
Speaker 1: How do you create a state from scratch? Secession can

2
00:00:04,760 --> 00:00:07,520
Speaker 1: feel pretty good, and every nation needs to have a

3
00:00:07,600 --> 00:00:12,280
Speaker 1: sense of itself, its identity and where it comes from.

4
00:00:12,280 --> 00:00:16,280
Speaker 1: But that doesn't make a state. Currency needs to be

5
00:00:16,360 --> 00:00:20,360
Speaker 1: issued and printed. Revenue needs to be collected, Bills need

6
00:00:20,400 --> 00:00:24,079
Speaker 1: to be paid, Armies need to be raised at a

7
00:00:24,079 --> 00:00:28,280
Speaker 1: more mundane level, Trash needs to be collected. How does

8
00:00:28,360 --> 00:00:32,840
Speaker 1: all this stuff get done and how many breakaway movements

9
00:00:32,920 --> 00:00:37,920
Speaker 1: actually give it much thought. Catalonia, a region of Spain

10
00:00:38,159 --> 00:00:40,640
Speaker 1: that's seeking to go its own way, is a good

11
00:00:40,680 --> 00:00:54,080
Speaker 1: case study. Welcome to Benchmark, a show about the global economy.

12
00:00:54,320 --> 00:00:57,960
Speaker 1: I'm Daniel Moss from Bloomberg View in New York, and

13
00:00:58,000 --> 00:01:01,560
Speaker 1: I'm Scott landman and economics editor with Bloomberg in Washington.

14
00:01:02,240 --> 00:01:05,760
Speaker 1: The plumbing of a potential news state, how the machinery

15
00:01:05,840 --> 00:01:09,640
Speaker 1: of government would actually work might seem pretty mundane in

16
00:01:09,680 --> 00:01:13,160
Speaker 1: the midst of a heady nationalist campaign, but it's the

17
00:01:13,240 --> 00:01:18,559
Speaker 1: stuff that determines whether a country succeeds or fails. Joining

18
00:01:18,640 --> 00:01:21,920
Speaker 1: us is Maria today O, a Bloomberg News reporter who

19
00:01:21,959 --> 00:01:27,080
Speaker 1: has been covering the Catalan independence scene. And Max seems Spy,

20
00:01:27,200 --> 00:01:31,960
Speaker 1: an economist for Bloomberg Intelligence in London. Let's bring in

21
00:01:32,000 --> 00:01:35,840
Speaker 1: Maria first, where she is on the scene in Barcelona. Maria,

22
00:01:36,080 --> 00:01:38,959
Speaker 1: there's been a lot of developments on this story lately,

23
00:01:39,000 --> 00:01:40,800
Speaker 1: but if you can just take a step back and

24
00:01:40,840 --> 00:01:43,800
Speaker 1: sit and and tell us a little bit about why

25
00:01:44,280 --> 00:01:49,440
Speaker 1: the Catalans, or why Catalonia wants to declare independence, or

26
00:01:49,480 --> 00:01:52,200
Speaker 1: why they're moving in this direction or they have been

27
00:01:52,200 --> 00:01:54,960
Speaker 1: moving in this direction for several years. A lot of

28
00:01:54,960 --> 00:01:57,240
Speaker 1: people would tell you to have to do with identity,

29
00:01:57,480 --> 00:01:59,120
Speaker 1: how to do with the fact that they have their

30
00:01:59,120 --> 00:02:01,720
Speaker 1: own language, their own history, and the fact that it's

31
00:02:01,720 --> 00:02:05,720
Speaker 1: always been a very distinct region within Spain to this

32
00:02:05,840 --> 00:02:07,680
Speaker 1: ghost center is back, So a lot of people would

33
00:02:07,720 --> 00:02:10,280
Speaker 1: tell you that's where it starts. Having said that, you'd

34
00:02:10,280 --> 00:02:12,680
Speaker 1: also get an argument that, you know, there's kind of

35
00:02:12,720 --> 00:02:15,240
Speaker 1: started in two thousand six when they were meant to

36
00:02:15,240 --> 00:02:17,840
Speaker 1: have new regional powers and a new regional kind of

37
00:02:17,960 --> 00:02:21,120
Speaker 1: framework for the way regional powers are inactive in Spain,

38
00:02:21,560 --> 00:02:25,560
Speaker 1: and then uh that prompted a backlash from Madrid who said, look,

39
00:02:25,560 --> 00:02:28,160
Speaker 1: they're going too far. They're kind of presented themselves as

40
00:02:28,160 --> 00:02:31,520
Speaker 1: a nation and we have to water down to the bill, right,

41
00:02:31,760 --> 00:02:33,079
Speaker 1: So a lot of people will tell you that's when

42
00:02:33,120 --> 00:02:35,760
Speaker 1: it started, and obviously the real frustration kicked out in

43
00:02:35,880 --> 00:02:38,880
Speaker 1: two thousand and twelve, when obviously the crisis in Spain

44
00:02:38,960 --> 00:02:41,960
Speaker 1: really began to fight, and it began to fight hard

45
00:02:42,080 --> 00:02:45,240
Speaker 1: and the Catalan administration's pockets. Now, they would tell you

46
00:02:45,280 --> 00:02:47,200
Speaker 1: this is unfair for us because we pay a lot

47
00:02:47,240 --> 00:02:50,480
Speaker 1: of taxes to Madrid, which then get distributed to the

48
00:02:50,480 --> 00:02:52,320
Speaker 1: rest of Spain, but we don't get a fair deal

49
00:02:52,400 --> 00:02:54,960
Speaker 1: because we're putting way too much money in Then we

50
00:02:55,400 --> 00:02:58,200
Speaker 1: get back in terms of infratchurch to expending and more

51
00:02:58,240 --> 00:03:00,200
Speaker 1: investment in the region. So a lot of people tell

52
00:03:00,240 --> 00:03:02,480
Speaker 1: you have to do with history, but also the fact

53
00:03:02,480 --> 00:03:05,760
Speaker 1: that there's been a series of maybe political issues lately,

54
00:03:05,800 --> 00:03:07,840
Speaker 1: and obviously the fact that there was a crisism. This

55
00:03:08,040 --> 00:03:11,920
Speaker 1: is a man it's very essence question about money. Now,

56
00:03:12,040 --> 00:03:17,000
Speaker 1: there are many parts of individual countries that have unique culture,

57
00:03:17,440 --> 00:03:21,000
Speaker 1: unique language, unique way of looking at the world. That

58
00:03:21,080 --> 00:03:24,840
Speaker 1: alone doesn't give you the building block of a state.

59
00:03:25,400 --> 00:03:28,360
Speaker 1: You can see yourself as a nation, but you also

60
00:03:28,480 --> 00:03:31,520
Speaker 1: need to have a state. How much thought has gone

61
00:03:31,520 --> 00:03:34,920
Speaker 1: into what the state would look like and how it

62
00:03:34,920 --> 00:03:38,800
Speaker 1: would work. That's a great question. And in fact, you

63
00:03:38,840 --> 00:03:41,040
Speaker 1: can look at Spain and see other regions that also

64
00:03:41,120 --> 00:03:44,200
Speaker 1: have their own language, that also have their own history,

65
00:03:44,560 --> 00:03:47,040
Speaker 1: and that you know, have had a very strong regional

66
00:03:47,040 --> 00:03:51,200
Speaker 1: identity for century. So obviously within Spain, Catalonia is not

67
00:03:51,280 --> 00:03:53,440
Speaker 1: an exception. You can say there's other regions that also

68
00:03:53,520 --> 00:03:56,040
Speaker 1: are the same case would apply. Now the question is

69
00:03:56,360 --> 00:03:58,760
Speaker 1: how do you become a state and most brutantly, who

70
00:03:58,880 --> 00:04:02,640
Speaker 1: is getting to recognize your state? Well, so far Catalonia,

71
00:04:03,080 --> 00:04:06,320
Speaker 1: you know, there's basic infrastructure and basic structures that they

72
00:04:06,480 --> 00:04:09,360
Speaker 1: lack and they've admitted to this, like having their own

73
00:04:09,360 --> 00:04:12,880
Speaker 1: tax agency. The money the taxes are collected to the

74
00:04:13,080 --> 00:04:16,520
Speaker 1: central government's tax agency, so again that's something that Madrid

75
00:04:16,560 --> 00:04:18,800
Speaker 1: has powers over. Then you know, if you look at

76
00:04:18,800 --> 00:04:21,760
Speaker 1: things like territorial and border control, that's something that Madrid

77
00:04:21,800 --> 00:04:24,560
Speaker 1: has control over. So again it's a question of do

78
00:04:24,600 --> 00:04:27,479
Speaker 1: you have the fundamental infrastructure that you need. The Catalan

79
00:04:27,480 --> 00:04:30,120
Speaker 1: government will tell you we do. However, they've never been

80
00:04:30,160 --> 00:04:32,240
Speaker 1: tested or friend to the test, so there are question

81
00:04:32,279 --> 00:04:35,560
Speaker 1: marks to whether they would ever work. So I, as

82
00:04:36,040 --> 00:04:39,719
Speaker 1: an Australian and an American, if I wish to travel

83
00:04:39,880 --> 00:04:43,520
Speaker 1: to the country to the state of Catalonia. Do I

84
00:04:43,600 --> 00:04:46,800
Speaker 1: need a visa? What currency should I take with me?

85
00:04:47,160 --> 00:04:50,440
Speaker 1: What's the banking system like? Do they have any relationships

86
00:04:50,480 --> 00:04:53,679
Speaker 1: with banks here in the United States? Has anyone thought

87
00:04:53,720 --> 00:04:57,839
Speaker 1: about this? Yeah, that is a good point, and essentially

88
00:04:57,839 --> 00:05:00,640
Speaker 1: what the Catalan government will tell you. It's like, there's

89
00:05:00,680 --> 00:05:02,159
Speaker 1: no way we're going to get kicked out of the

90
00:05:02,200 --> 00:05:04,400
Speaker 1: European Union. We're going to get to give the euro

91
00:05:04,520 --> 00:05:06,480
Speaker 1: and you won't need a password to get in and

92
00:05:06,480 --> 00:05:10,400
Speaker 1: out of California because we would be a European country.

93
00:05:10,800 --> 00:05:13,360
Speaker 1: Now the point that here is no one from the

94
00:05:13,360 --> 00:05:17,960
Speaker 1: European Commission, which is you know with obviously exercises power,

95
00:05:18,040 --> 00:05:19,679
Speaker 1: has come out and said this would be the case.

96
00:05:19,720 --> 00:05:22,360
Speaker 1: In fact, we're a getting the opposite, the commissioners saying,

97
00:05:22,400 --> 00:05:24,880
Speaker 1: look as a dance the law that prevails in the

98
00:05:24,880 --> 00:05:27,840
Speaker 1: Spanish Constitutional Court and and we don't think this is

99
00:05:27,839 --> 00:05:30,279
Speaker 1: a valid rerough erendum. Again, this all goes back to

100
00:05:30,400 --> 00:05:33,440
Speaker 1: the very basics of it, is this a legal vote?

101
00:05:33,440 --> 00:05:36,040
Speaker 1: And as do they have legal mandate? So far we

102
00:05:36,160 --> 00:05:38,800
Speaker 1: don't think that's the case because no one has recognized this,

103
00:05:39,320 --> 00:05:41,600
Speaker 1: and have they put tho into this. Yes, But again,

104
00:05:41,680 --> 00:05:43,880
Speaker 1: what you hear from the Catalan administration is that they

105
00:05:43,920 --> 00:05:46,840
Speaker 1: think life would go on as normal as they're guarantee

106
00:05:46,880 --> 00:05:49,000
Speaker 1: that that would be the case at this point, not really.

107
00:05:49,160 --> 00:05:53,920
Speaker 1: If Catalonia were actually to become independent from Spain, given

108
00:05:54,160 --> 00:05:56,880
Speaker 1: catalonious role in the Spanish economy, like you were just

109
00:05:56,920 --> 00:06:00,400
Speaker 1: talking about, you know, it's basically a more prosperous area

110
00:06:00,480 --> 00:06:03,720
Speaker 1: than the rest of the country, would it be pretty

111
00:06:03,720 --> 00:06:08,839
Speaker 1: devastating for the economy of the rest of Spain. Yeah,

112
00:06:08,839 --> 00:06:12,039
Speaker 1: I would obviously have an impact on the Spanish economy

113
00:06:12,080 --> 00:06:14,040
Speaker 1: and sent there's no no one can deny that business,

114
00:06:14,040 --> 00:06:18,159
Speaker 1: the powerhouse economy, their rivals Madrid essentially and the bad

115
00:06:18,240 --> 00:06:21,320
Speaker 1: country too, And obviously it would have an impact on

116
00:06:21,440 --> 00:06:24,799
Speaker 1: the broader nation, there's no question. But again the question

117
00:06:24,839 --> 00:06:27,680
Speaker 1: markets what could happen to an endependent Catalonia. You need

118
00:06:27,720 --> 00:06:29,680
Speaker 1: to keep in mind that a lot of the businesses

119
00:06:29,760 --> 00:06:32,440
Speaker 1: that you know are based in Catalonia actually do a

120
00:06:32,480 --> 00:06:34,440
Speaker 1: lot more business with the rest of saying that they

121
00:06:34,520 --> 00:06:37,760
Speaker 1: do with you know, inside Catalonia. And also this opens

122
00:06:37,800 --> 00:06:40,760
Speaker 1: up a broader question, which is, well, they get to

123
00:06:40,920 --> 00:06:43,760
Speaker 1: keep the same trade relationship with the European Union if

124
00:06:43,760 --> 00:06:46,080
Speaker 1: they were to separate and that is obviously a much

125
00:06:46,120 --> 00:06:48,839
Speaker 1: bigger question. Now you can live without Spain, but without

126
00:06:48,839 --> 00:06:51,880
Speaker 1: access to the European market, that's a much broader issues,

127
00:06:52,760 --> 00:06:56,280
Speaker 1: right because Catalonia would be a separate country. Therefore it

128
00:06:56,320 --> 00:07:00,359
Speaker 1: would have to go through EU entry procedure is and

129
00:07:00,600 --> 00:07:02,840
Speaker 1: until that time it would not be in the EU,

130
00:07:02,960 --> 00:07:06,440
Speaker 1: which means they can't use the Euro, which means they

131
00:07:06,480 --> 00:07:09,600
Speaker 1: don't have a trade relationship in the Single Market, which

132
00:07:09,640 --> 00:07:11,880
Speaker 1: means they have to use the w t O, which

133
00:07:11,920 --> 00:07:14,760
Speaker 1: means they'd be subject to tariffs. What will they call

134
00:07:14,840 --> 00:07:17,680
Speaker 1: their currency? Who will run their central bank? I just

135
00:07:17,760 --> 00:07:21,320
Speaker 1: get the impression no one's really thought with any intellectual

136
00:07:21,400 --> 00:07:25,600
Speaker 1: rigor about this. Well, that's a good point, and again

137
00:07:25,680 --> 00:07:28,360
Speaker 1: it's a it's a question that you're never actually able

138
00:07:28,400 --> 00:07:31,240
Speaker 1: to get a clear answer from the Catalan administration because

139
00:07:31,240 --> 00:07:35,040
Speaker 1: they insist that there's going to be no need to

140
00:07:35,080 --> 00:07:37,480
Speaker 1: return back to an old currency. Again, if you remember

141
00:07:37,560 --> 00:07:41,080
Speaker 1: before the europe Catalonia has a Spanish perseta. So the

142
00:07:41,160 --> 00:07:43,160
Speaker 1: question is would you go back to an old Spanish

143
00:07:43,240 --> 00:07:45,880
Speaker 1: currency or would you create your own? And the factor

144
00:07:46,040 --> 00:07:49,600
Speaker 1: is in the Canal administration doesn't really have answers to

145
00:07:49,600 --> 00:07:52,080
Speaker 1: these questions because they always insist we're not going to

146
00:07:52,200 --> 00:07:54,640
Speaker 1: get get out and we're not going to be forced

147
00:07:54,640 --> 00:07:56,160
Speaker 1: out of the years, and so we're going to get

148
00:07:56,160 --> 00:07:58,840
Speaker 1: to keep the euro. Obviously, when you look at the

149
00:07:58,960 --> 00:08:02,120
Speaker 1: market reaction and businesses here, they think the answer may

150
00:08:02,120 --> 00:08:04,320
Speaker 1: not be as clear cut, which is why we got

151
00:08:04,320 --> 00:08:07,280
Speaker 1: more than twenty companies leaving the region since the referendum

152
00:08:07,320 --> 00:08:09,800
Speaker 1: take place, and why two of the region's biggest banks,

153
00:08:09,840 --> 00:08:12,520
Speaker 1: Cash A Bank and Sava Day decided to move their headquarters,

154
00:08:12,680 --> 00:08:14,640
Speaker 1: like if they wanted to send a strong message to

155
00:08:14,680 --> 00:08:17,080
Speaker 1: the market that no matter what happens, we're going to

156
00:08:17,200 --> 00:08:19,680
Speaker 1: be a US and bank backed up by the European

157
00:08:19,760 --> 00:08:22,560
Speaker 1: central banks. Precisely because we don't have a concrete answer

158
00:08:22,640 --> 00:08:24,520
Speaker 1: on this, and what would happen if you're trying to

159
00:08:24,560 --> 00:08:27,360
Speaker 1: have this conversation with the people in the square waving

160
00:08:27,360 --> 00:08:31,120
Speaker 1: the flags, carrying the candles, what's a central bank, what's

161
00:08:31,120 --> 00:08:34,400
Speaker 1: the currency, what's a tax? Exactly? This is this is

162
00:08:34,440 --> 00:08:38,719
Speaker 1: a very emotional uh topic of conversation here in Catalonia.

163
00:08:38,800 --> 00:08:41,480
Speaker 1: There are people who would say, look, we have obviously

164
00:08:41,480 --> 00:08:43,080
Speaker 1: it's not going to be easy, but we think we

165
00:08:43,080 --> 00:08:45,040
Speaker 1: can get it done. And again go back to the

166
00:08:45,040 --> 00:08:47,079
Speaker 1: point that we're not going to get it out from

167
00:08:47,080 --> 00:08:49,720
Speaker 1: the European Union. Some other people just don't question it.

168
00:08:49,760 --> 00:08:51,880
Speaker 1: They think, look, it's it's it's not going to be fine.

169
00:08:51,920 --> 00:08:54,000
Speaker 1: And actually, if we did have to play a price,

170
00:08:54,040 --> 00:08:55,400
Speaker 1: it might be worth it. You know, we're going to

171
00:08:55,440 --> 00:08:57,480
Speaker 1: be an independent nation and this is what we want.

172
00:08:57,920 --> 00:09:00,240
Speaker 1: It might mean the yet times again if you're rough,

173
00:09:00,360 --> 00:09:02,679
Speaker 1: but actually it's worth it in the end. There are

174
00:09:02,720 --> 00:09:06,200
Speaker 1: some others today, especially the business community doesn't certaintly. We

175
00:09:06,280 --> 00:09:08,719
Speaker 1: don't like it. There's lack of clarity, we don't like it.

176
00:09:08,960 --> 00:09:11,679
Speaker 1: And again the business community reached out to the cattle

177
00:09:11,720 --> 00:09:14,520
Speaker 1: Original president Carlos such A mornents that we need to

178
00:09:14,559 --> 00:09:16,680
Speaker 1: find a middle way to get uh, you know, an

179
00:09:16,720 --> 00:09:20,240
Speaker 1: altitude this issue and the cattle in issue, because again

180
00:09:20,320 --> 00:09:23,640
Speaker 1: for the business community, it's really not clear cut. The

181
00:09:23,720 --> 00:09:27,040
Speaker 1: business would go on as usual. Maria. It's an interesting

182
00:09:27,080 --> 00:09:30,160
Speaker 1: story with many more dimensions than we can even cover

183
00:09:30,320 --> 00:09:32,560
Speaker 1: on day to day basis. Thank you so much for

184
00:09:32,720 --> 00:09:34,800
Speaker 1: taking the time to talk with us. I'm not to

185
00:09:34,880 --> 00:09:38,760
Speaker 1: worry any time. Let's go now to maxim As Bohy.

186
00:09:39,000 --> 00:09:43,640
Speaker 1: He's an economist with Bloomberg Intelligence in London. Maxine, thanks

187
00:09:43,640 --> 00:09:46,120
Speaker 1: for joining us today. Thank you for inviting me. I

188
00:09:46,200 --> 00:09:49,040
Speaker 1: read a piece that you and your colleagues at BI

189
00:09:49,160 --> 00:09:54,400
Speaker 1: wrote recently and pretty down bet on how Catalonia would

190
00:09:54,720 --> 00:09:58,120
Speaker 1: function or the challenges that they would face as an

191
00:09:58,160 --> 00:10:01,280
Speaker 1: independent nation. You I was really struck by a line

192
00:10:01,320 --> 00:10:05,680
Speaker 1: that you said that Catalonia could find itself combining trade

193
00:10:05,800 --> 00:10:09,760
Speaker 1: arrangements worse than those of post Brexit Britain, with a

194
00:10:09,800 --> 00:10:14,120
Speaker 1: monetary system more like Kosovos. That doesn't sound too good.

195
00:10:14,160 --> 00:10:16,439
Speaker 1: Can you tell me a little bit more? It sounds

196
00:10:16,480 --> 00:10:18,720
Speaker 1: a bit scary, yes, indeed. Um, So in this piece,

197
00:10:18,760 --> 00:10:21,760
Speaker 1: what we did is actually trying to see what an

198
00:10:21,800 --> 00:10:26,040
Speaker 1: independent Catalonia would look like economically. So our central scenario

199
00:10:26,240 --> 00:10:30,040
Speaker 1: is that Catalonia won't declare independence, or as soon as

200
00:10:30,040 --> 00:10:33,160
Speaker 1: they really do, the Spanish governments in Madrid is going

201
00:10:33,200 --> 00:10:35,800
Speaker 1: to say his power by triggering Article on the fifty

202
00:10:35,880 --> 00:10:38,360
Speaker 1: five of the Spanish Constitution. But in this piece, what

203
00:10:38,400 --> 00:10:42,719
Speaker 1: we wanted to see is if Catalonia wins independence, how

204
00:10:42,800 --> 00:10:45,120
Speaker 1: is it going to look like on an economic angle?

205
00:10:45,520 --> 00:10:49,920
Speaker 1: And since they would probably exit the Eurozone, the European

206
00:10:50,040 --> 00:10:54,400
Speaker 1: Union and they have no World Trade Organization membership, they

207
00:10:54,400 --> 00:10:58,800
Speaker 1: would from day one, end up having no regulation, having

208
00:10:59,320 --> 00:11:02,480
Speaker 1: no possibility teas of actually doing trade with the rest

209
00:11:02,559 --> 00:11:05,319
Speaker 1: of the world. They would lose all the membership cards

210
00:11:05,360 --> 00:11:09,200
Speaker 1: that Spain enjoys, and this would amount to being like

211
00:11:09,280 --> 00:11:11,640
Speaker 1: in a situation like cost of all because of is

212
00:11:11,679 --> 00:11:14,360
Speaker 1: using the Euro as a currency, but it's absolutely no

213
00:11:14,480 --> 00:11:18,079
Speaker 1: influence on the monetary policy of the Eurozone. And at

214
00:11:18,080 --> 00:11:22,280
Speaker 1: the same time, Brexit would actually be quite similar in

215
00:11:22,320 --> 00:11:24,880
Speaker 1: a sense that all these trade agreements would from the

216
00:11:25,040 --> 00:11:28,200
Speaker 1: one just disappear and you would end up having to

217
00:11:28,240 --> 00:11:31,960
Speaker 1: go to the World Trade rules. But again Catalunia doesn't

218
00:11:32,200 --> 00:11:35,640
Speaker 1: belong to the World Trade Organization, so even that would

219
00:11:35,679 --> 00:11:40,320
Speaker 1: be not available for them, Unlike Brexit. The United Kingdom

220
00:11:40,360 --> 00:11:44,120
Speaker 1: of Great Britain and Northern Ireland is a country that exists.

221
00:11:44,160 --> 00:11:46,120
Speaker 1: It's a member of the u N, it's a member

222
00:11:46,120 --> 00:11:47,760
Speaker 1: of the i m F, it's a member of the

223
00:11:47,800 --> 00:11:53,320
Speaker 1: World Bank. It's a thing exactly. There is no country Catalonia.

224
00:11:53,600 --> 00:11:57,800
Speaker 1: So they're much worse. If they go their own way

225
00:11:57,920 --> 00:12:01,360
Speaker 1: then the UK is now that's truth. They would they

226
00:12:01,360 --> 00:12:05,840
Speaker 1: would have basically no international statues. There's a lot of

227
00:12:05,880 --> 00:12:07,960
Speaker 1: state that. I mean, if you look at Kosovo, for

228
00:12:07,960 --> 00:12:09,839
Speaker 1: example that happened two thousand and eight in the still

229
00:12:10,240 --> 00:12:14,160
Speaker 1: the vast majority of states don't recognize Kosovo Catalunia. It

230
00:12:14,160 --> 00:12:16,440
Speaker 1: would be it would be probably the same thing. They

231
00:12:16,440 --> 00:12:19,120
Speaker 1: would have to go through a very long process if

232
00:12:19,120 --> 00:12:21,480
Speaker 1: they if they would like to re enter the European Union,

233
00:12:21,520 --> 00:12:23,480
Speaker 1: if they would like to re enter the euro Zone,

234
00:12:23,760 --> 00:12:26,280
Speaker 1: you lose access from one day to the other, but

235
00:12:26,280 --> 00:12:29,960
Speaker 1: then it takes years, I mean really years. Bulgaria, for example,

236
00:12:30,000 --> 00:12:32,720
Speaker 1: has been waiting since two thousand seven to enter the

237
00:12:32,760 --> 00:12:35,679
Speaker 1: euro Zone. So it's a very long process that you

238
00:12:35,679 --> 00:12:39,079
Speaker 1: would have to go through. As soon as you declare

239
00:12:39,080 --> 00:12:42,679
Speaker 1: independence from Spain. Have the people in California, or at

240
00:12:42,720 --> 00:12:46,559
Speaker 1: least the leaders that are sort of pushing the independence movement,

241
00:12:46,679 --> 00:12:49,600
Speaker 1: do they have this infrastructure set up already for the

242
00:12:49,640 --> 00:12:52,040
Speaker 1: state ready to go if they declare independence or are

243
00:12:52,080 --> 00:12:55,280
Speaker 1: they basically starting from scratch if if they were actually

244
00:12:55,280 --> 00:12:59,280
Speaker 1: to become independent from Spain. So that's that's a good question.

245
00:12:59,320 --> 00:13:02,080
Speaker 1: I think I think we should ask them the question. Obviously,

246
00:13:02,400 --> 00:13:04,440
Speaker 1: I don't think that the state is fully prepared to

247
00:13:04,480 --> 00:13:07,160
Speaker 1: do that, and I don't think that the citizens, when

248
00:13:07,160 --> 00:13:11,280
Speaker 1: they voted in this very controversial referendum that the citizens

249
00:13:11,480 --> 00:13:15,959
Speaker 1: exactly know what was at stake here. Declaring independence is

250
00:13:16,000 --> 00:13:18,360
Speaker 1: one thing, but then telling the citizens if we do that,

251
00:13:18,679 --> 00:13:22,280
Speaker 1: you will lose maybe your currency, you will lose, all

252
00:13:22,280 --> 00:13:25,040
Speaker 1: the trade agreements, you might lose also obviously the all

253
00:13:25,040 --> 00:13:28,320
Speaker 1: the travel freedom in Europe. I think there's much more

254
00:13:28,400 --> 00:13:30,760
Speaker 1: at stake than what was on the ballot. And this

255
00:13:30,840 --> 00:13:33,320
Speaker 1: is also why it's very controversial in Catalonia this referendum.

256
00:13:33,360 --> 00:13:37,120
Speaker 1: The fact that only participated and the fact that there's

257
00:13:37,160 --> 00:13:41,839
Speaker 1: a minority maybe or fifty fifty of the population that

258
00:13:41,880 --> 00:13:47,080
Speaker 1: doesn't want independence. Right now, that's a revelation. The impression

259
00:13:47,200 --> 00:13:52,840
Speaker 1: one gets from watching international TV channels, reading international newspapers

260
00:13:53,040 --> 00:13:55,800
Speaker 1: is that this is a slam dunk as far as

261
00:13:55,920 --> 00:14:00,040
Speaker 1: people in Cattle Larnier are concerned. You're saying only a

262
00:14:00,120 --> 00:14:03,680
Speaker 1: minority five or breaking away. Well, if you look at

263
00:14:03,800 --> 00:14:06,079
Speaker 1: the result of the referenum, so the referenum was illegal.

264
00:14:06,440 --> 00:14:08,960
Speaker 1: So you have ninety percent or ninety percent saying they

265
00:14:09,000 --> 00:14:13,040
Speaker 1: wanted independence, but only full percent voted during that referendum.

266
00:14:13,240 --> 00:14:15,679
Speaker 1: So if you add up the figures, it's a minority.

267
00:14:15,800 --> 00:14:18,360
Speaker 1: That doesn't mean that if more people had voted that

268
00:14:18,480 --> 00:14:21,280
Speaker 1: the result would be different. But they're coming independent on

269
00:14:21,360 --> 00:14:25,720
Speaker 1: such a small illegal, not legitimate, I would say, basis

270
00:14:25,960 --> 00:14:29,920
Speaker 1: is questionable obviously, and we've seen some protests actually two

271
00:14:29,960 --> 00:14:33,640
Speaker 1: weeks ago of the anti independence movements and there were

272
00:14:34,400 --> 00:14:36,960
Speaker 1: i would say hundreds of thousands of people in the

273
00:14:37,040 --> 00:14:40,400
Speaker 1: streets on Sunday for people just with the Spanish black

274
00:14:40,440 --> 00:14:42,920
Speaker 1: saying we don't want to have independence. One must keep

275
00:14:42,960 --> 00:14:46,800
Speaker 1: in mind that the regions in Spain already enjoy some autonomy.

276
00:14:47,080 --> 00:14:50,440
Speaker 1: Catalonia as his own government, his own police, It has

277
00:14:50,520 --> 00:14:53,760
Speaker 1: his own taxes, also national ones, but obviously more regional ones,

278
00:14:54,160 --> 00:14:58,440
Speaker 1: so it or it is already enjoying some kind of autonomy.

279
00:14:58,480 --> 00:15:00,440
Speaker 1: Obviously not enough for the people that want to push

280
00:15:00,480 --> 00:15:02,960
Speaker 1: for independence. For example, they think they are giving too

281
00:15:03,000 --> 00:15:05,440
Speaker 1: much money to the central state. There are net contributors

282
00:15:05,480 --> 00:15:08,840
Speaker 1: to the national budget. But the bottom line here is that, yes,

283
00:15:08,880 --> 00:15:11,080
Speaker 1: there are a lot of people in Catalonia that don't

284
00:15:11,080 --> 00:15:13,960
Speaker 1: want to have independence. And this is why I think

285
00:15:14,000 --> 00:15:16,680
Speaker 1: the best way to solve this problem would be to

286
00:15:16,760 --> 00:15:19,800
Speaker 1: have a real vote, an actual vote in the good conditions,

287
00:15:20,040 --> 00:15:22,760
Speaker 1: but this is very unlikely to happen anytime soon. Here's

288
00:15:22,800 --> 00:15:26,000
Speaker 1: the bottom line for what Dan raised in our intro.

289
00:15:26,600 --> 00:15:29,840
Speaker 1: Will the trash continue to be collected in Catalonia? Isn't

290
00:15:29,840 --> 00:15:32,360
Speaker 1: at all that really matters in the end? Well, at

291
00:15:32,360 --> 00:15:36,120
Speaker 1: the end of disruption in Catalan's daily life. If they

292
00:15:36,160 --> 00:15:39,680
Speaker 1: really go to independence, if they lose all these trade

293
00:15:39,680 --> 00:15:43,560
Speaker 1: agreements and all this uh multilateral agreements they're enjoying, the

294
00:15:43,600 --> 00:15:46,560
Speaker 1: effect could be quite significant on the daily life of

295
00:15:46,920 --> 00:15:50,360
Speaker 1: the cataman citizens, in terms of jobs, in terms of inflation,

296
00:15:50,520 --> 00:15:53,200
Speaker 1: in terms of being able to collect money to go

297
00:15:53,240 --> 00:15:55,840
Speaker 1: to the A T M and have Europe. So I mean,

298
00:15:55,840 --> 00:15:57,960
Speaker 1: at the end of the day, Yeah, the question is

299
00:15:57,960 --> 00:16:00,080
Speaker 1: is pretty much about the quality of life, and but

300
00:16:00,480 --> 00:16:04,440
Speaker 1: what's the future they want in the region. Has anybody

301
00:16:04,680 --> 00:16:08,760
Speaker 1: asked the leaders of the independence movement what their plans

302
00:16:08,760 --> 00:16:14,600
Speaker 1: are for monetary arrangements, budgetary arrangements, revenue raising, bordering customs.

303
00:16:14,960 --> 00:16:21,640
Speaker 1: Has anybody actually asked them that demanded that they explain. Well,

304
00:16:21,680 --> 00:16:24,440
Speaker 1: there has not been a real campaign ahead of the votes,

305
00:16:24,880 --> 00:16:27,240
Speaker 1: and I haven't seen anything where they really explained what

306
00:16:27,320 --> 00:16:30,800
Speaker 1: they want. I've seen some declarations of some supporters of

307
00:16:31,400 --> 00:16:35,200
Speaker 1: the catal and President Pride demon saying that they could

308
00:16:35,520 --> 00:16:39,520
Speaker 1: resort to capital controls or to some form of economic

309
00:16:39,600 --> 00:16:43,680
Speaker 1: quercation to make sure that the capital flows don't don't

310
00:16:43,760 --> 00:16:47,520
Speaker 1: leave Catalunia. Um the question, obviously, I mean to me

311
00:16:47,680 --> 00:16:51,040
Speaker 1: the business. Some banks, for example, have already left, right

312
00:16:51,080 --> 00:16:54,440
Speaker 1: they moved their headquarters away from Barcelona and they put

313
00:16:54,480 --> 00:16:56,200
Speaker 1: them in the valley Arres or in Madrid. So they

314
00:16:56,240 --> 00:16:59,640
Speaker 1: already preventively made a move to make sure that they

315
00:16:59,640 --> 00:17:02,440
Speaker 1: don't get disrupted in the business. But I think, yeah,

316
00:17:02,440 --> 00:17:05,399
Speaker 1: the question for the Catalan government is are you ready

317
00:17:05,600 --> 00:17:07,679
Speaker 1: to go all the way down this path and are

318
00:17:07,720 --> 00:17:11,159
Speaker 1: you ready to assume the responsibility towards your citizens. I

319
00:17:11,160 --> 00:17:14,840
Speaker 1: think this is the very central question here, Maxim before

320
00:17:14,840 --> 00:17:20,200
Speaker 1: you go a thirty question, what makes Catalonia so special?

321
00:17:20,840 --> 00:17:24,320
Speaker 1: I mean, why doesn't Bavaria want to break away? Why

322
00:17:24,359 --> 00:17:29,359
Speaker 1: not Brooklyn secession? What's so great about the Catalonians? So Actually,

323
00:17:29,359 --> 00:17:32,600
Speaker 1: the funny stories that Bavaria is actually a party that

324
00:17:33,200 --> 00:17:35,760
Speaker 1: also advocates independence, but they only have a few votes

325
00:17:35,840 --> 00:17:37,840
Speaker 1: right there. They're not big at all at the national

326
00:17:37,840 --> 00:17:41,240
Speaker 1: stage or even at the regional state. Catalunia is from

327
00:17:41,280 --> 00:17:45,359
Speaker 1: the history of Spain, from the Franco Hera, from the

328
00:17:45,440 --> 00:17:49,040
Speaker 1: Civil War. It has in an identity, a cultural identity

329
00:17:49,080 --> 00:17:52,919
Speaker 1: that is probably stronger than other regions in Europe. It

330
00:17:53,040 --> 00:17:56,560
Speaker 1: is also of the Spanish GDP, and as I said,

331
00:17:56,600 --> 00:17:59,760
Speaker 1: it's a net contributor to the national budgets. So there's

332
00:17:59,760 --> 00:18:02,200
Speaker 1: a lot of for the for the independence is there's

333
00:18:02,240 --> 00:18:04,280
Speaker 1: a lot of arguments if you line them up like

334
00:18:04,320 --> 00:18:07,200
Speaker 1: this of saying we could actually do well just by

335
00:18:07,200 --> 00:18:12,280
Speaker 1: ourself without the Spanish states and the Spanish authority. Again,

336
00:18:12,440 --> 00:18:15,840
Speaker 1: this idea might be at first sight an interesting one,

337
00:18:16,200 --> 00:18:18,200
Speaker 1: but if you go reading on the technicalities of this,

338
00:18:18,359 --> 00:18:20,200
Speaker 1: if you would go all the way down that pass,

339
00:18:20,560 --> 00:18:23,080
Speaker 1: you would lose, I think more than you would win

340
00:18:23,480 --> 00:18:28,240
Speaker 1: by declaring independence. We'll have you back when Brooklyn declares independence.

341
00:18:28,520 --> 00:18:31,040
Speaker 1: That's a yeah, Maxim. It was a pleasure having you on.

342
00:18:31,160 --> 00:18:33,719
Speaker 1: Thank you so much for taking the time my pleasure.

343
00:18:33,760 --> 00:18:41,000
Speaker 1: Thank you very much. Dan. What do you think of

344
00:18:41,040 --> 00:18:44,000
Speaker 1: all this? To this answer your questions about whether anybody's

345
00:18:44,160 --> 00:18:47,800
Speaker 1: thought of the real issues that have to be taken

346
00:18:47,840 --> 00:18:51,440
Speaker 1: care of if a country actually becomes independent, I'm left

347
00:18:51,440 --> 00:18:56,040
Speaker 1: with the impression that few people have contemplated, or at

348
00:18:56,119 --> 00:19:01,960
Speaker 1: least articulated, what the machinery of night in an independent

349
00:19:02,359 --> 00:19:07,119
Speaker 1: Catalonia would look like. It's all very well to wave

350
00:19:07,200 --> 00:19:10,680
Speaker 1: a flag in a square and hauld a candle at midnight,

351
00:19:11,320 --> 00:19:14,960
Speaker 1: But how does the business of government get done? It's

352
00:19:14,960 --> 00:19:18,960
Speaker 1: not glamorous, but it strukes me that it's pretty essential.

353
00:19:19,600 --> 00:19:21,760
Speaker 1: What you're saying seems like it could be applied to

354
00:19:21,840 --> 00:19:24,199
Speaker 1: a lot of countries in the world today. On the

355
00:19:24,240 --> 00:19:27,040
Speaker 1: other hand, this is how things happen in the world,

356
00:19:27,040 --> 00:19:30,480
Speaker 1: how revolutions, how all these kinds of issues that we cover,

357
00:19:30,840 --> 00:19:33,600
Speaker 1: you know, actually get done. It comes down to how

358
00:19:33,720 --> 00:19:38,520
Speaker 1: people feel and then the actual machinery of government follows later.

359
00:19:42,600 --> 00:19:45,119
Speaker 1: Benchmark will be back next week and until then, you

360
00:19:45,160 --> 00:19:47,920
Speaker 1: can find us on the Bloomberg terminal, Bloomberg dot Com,

361
00:19:47,960 --> 00:19:51,680
Speaker 1: our Bloomberg app, as well as on Apple Podcasts, pocketcasts,

362
00:19:51,760 --> 00:19:54,320
Speaker 1: and Stitcher. While you're there, take a minute to rate

363
00:19:54,359 --> 00:19:56,640
Speaker 1: and review the show. Some more listeners can find us

364
00:19:57,000 --> 00:19:59,040
Speaker 1: and let us know what you thought of the show.

365
00:19:59,400 --> 00:20:03,320
Speaker 1: You can follow me on Twitter at Scott Lanman Dan

366
00:20:03,560 --> 00:20:08,000
Speaker 1: you are at moss under School, Eco, Maria is at

367
00:20:08,080 --> 00:20:11,480
Speaker 1: at m A R I A T A D, and

368
00:20:11,680 --> 00:20:16,080
Speaker 1: Maxim is at at m x s b A. Benchmark

369
00:20:16,200 --> 00:20:19,520
Speaker 1: is produced by Sarah Patterson. The head of Bloomberg Podcast

370
00:20:19,680 --> 00:20:22,880
Speaker 1: is Francesca Levy, thanks for listening, see your next time.