Catalan companies fear independence drive

A push for independence in the rich Spanish region of Catalonia has companies there worried that a break from the rest of Spain could also fracture their businesses. Regional president Artur Mas called early elections there for November 25 after the central government rejected his call for Catalonia to raise and spend its own taxes, saying it has a right to "self-determination". Businesses big and small in Catalonia fear they might lose access to the Spanish market and investment and their ties to the rest of Europe would be threatened if the region broke away. "Independence would be a tragedy for Catalonia and Spain," Josep Pique, a former foreign minister of Spain and now chairman of Vueling, a major airline based in Barcelona, said in a television interview. Javier Baratech, boss of a small publisher, Ediciones Rondas, told AFP: "It could ruin the Catalan economy for the small and medium businesses." Fiercely proud of their distinct language and culture, Catalans feel they are getting a raw deal from Madrid -- a long-standing complaint inflamed by the recession. The northeastern region, whose economy is bigger than Portugal's, accounts for a fifth of Spanish output but is being squeezed by austerity cuts and an economic crisis that has put one in four workers out of a job across Spain. Another publishing group, Planeta -- Catalonia's ninth-biggest company by turnover -- embodies the economic contradictions of the region, independence-minded yet with important ties to the rest of Spain. "If Catalonia were independent, Grupo Planeta would have to leave," its chairman Jose Manuel Lara said on the radio. "No publishing company is based in a foreign country that speaks a different language." An estimated 600,000 to 1.5 million people flooded the streets of the regional capital Barcelona on September 11 calling for independence for Catalonia, whose population is around seven million. But worried businesses are keeping quieter on the whole. Catalan companies "are showing a great deal of worry, a great deal of concern and a great deal of silence" on the sensitive issue, said Joan Rosell, president of the CEOE, the Spanish business federation. Xavier Mendoza, an economist at Barcelona's ESADE business school, said the biggest problem of independence for Catalan businesses would be losing its grip on the Spanish market. "Suddenly your market would be no longer 45 million inhabitants but seven million," he said. "The size of your market helps you achieve economies of scale, plus specialisation. It makes you more competitive and helps you export." Catalonia's economy -- whose international aspect Mas proudly highlights -- accounts for more than a quarter of Spain's goods exports, though the region only has 16 percent of the country's population, Mendoza said. But he warned that breaking away from Spain would likely cause a simultaneous rift with the European Union. "There would be a period, it could be a few years or quite a few years depending on political factors, during which it would have to negotiate treaties, make deals with the European Union and have the blessing of all the member states." During this period, "I think the most significant effect, at least in the short term, would be that foreign investment would decline substantially." For a company like publisher Ediciones Rondas, "which has 20 percent of our customers in Catalonia and 80 percent in the rest of Spain, the tariffs that would be levied for being outside the European Union would make us not competitive," Baratech said. "I know one customer who is already saying that, all other things being equal, he would prefer to buy from a company in Spain than one outside it."