Does anyone with two fingers believe that Catalonia, Valencia, Andalusia or Murcia will one day be able to pay their debts to the State? Where will the money come from? To multiply the fiscal pressure on its citizens? To jivarize their own administrations to the point of exhaustion? What draws the most attention to the riot organized by the PP against the investiture pact and the amnesty is that it ends up charging against a cancellation of the regional debt of which this same party was the first promoter.
Recognizing and accepting that it is impossible, in addition to possibly incorrect, to return this debt is nothing new, discovered now in a perverse negotiation resulting from the political needs of Pedro Sánchez for his investiture. It was known from the very moment that the government of Mariano Rajoy, then also president of the PP, created the mechanism for the State to keep the debts that the autonomous communities could neither pay nor renew, the FLA and others of similar
The executor of this rescue program, at the head of the Ministry of Finance, Cristóbal Montoro, had to think and propose, with relative success, plans to deal with the fact that the debt was unpayable. Now, putting debt relief with the State on the table means a pure acceptance of reality. Of course, with a delay of a decade and showing that the debt itself is no longer the problem, since it is automatically renewed year after year and without any prior formalities, so it has not stopped growing. It is the interest, which does weigh on the accounts. And this is due to the absence of a new regional financing system that fixes the basic problems.
When the FLA was put in place, in 2012, the debt that happened to be in the hands of the State was as unpayable as it is now, since it was the consequence of the financial bankruptcy of the most populous and most affected autonomous communities for the financial crisis of 2008. Less Madrid, of course, in those days just like today, protected by the capital to live under the protection of the crises.
The Great Recession collapsed the collection of territorial administrations – linked above all to the real estate bubble through the taxes generated by the excessive buying and selling of flats – while they had to continue to provide basic services such as education and above all, healthcare. Also the dependency law, which the government of José Luis Rodríguez Zapatero had approved without transferring new resources to the autonomous regions to apply it. And the more skills, the more disaster.
At that critical juncture, the State, i.e. Rajoy and Montoro, chose to secure the money to meet the payment of their own commitments to their creditors, plus pensions and the runaway unemployment benefit and it went not understanding the needs of the autonomies. These were left without income and unable to finance themselves in the markets, which in the midst of the euro crisis did not lend them a cent more.
Only when it began to become clear that the Central Administration would not withstand the global financial consequences of the tsunami that would be caused by the shock wave of a suspension of the payment of the debt of an autonomous community such as Catalonia or Valencia, was created the new FLA mechanism. Either the debts are assumed or the bankruptcy would advance like a domino from the autonomies to the heart of the public treasury.
But beyond that, nothing else changed in the financial conditions of survival of the autonomous administrations. Its deficit continued to gallop, despite the cuts, in the case of Catalonia, from the first era of Artur Mas, or of María Jesús Montero, then Minister of Health of Susana Díaz's Junta d'Andalusia. The basis of the continuing problem was insufficient funding in view of the growing expenditure needs.
And what now looks like a surrender of Sánchez to Carles Puigdemont or Oriol Junqueras, the removal of 20% of the debt, remains small to the size of an atom, compared to the measures that the willful Montoro put on the table in those financially turbulent years.
The minister traced several possibilities. The first, a classic payment, at the rate of 10% of the total debt each year. In other words, in a decade the debt would have been extinguished for the communities against which they had resorted to the FLA. Not for the State, that is to say for all the taxpayers who, as now, continued to bear the debt on their shoulders.
It was also considered to convert the debt into a perpetual one with symbolic interest, a gentler way of applying the liquidation. The debt is not returned although it remains recorded in the accounts of all participants. A modality that could arouse less criticism in Brussels, which feared that the autonomous communities would take it as a free bar to increase their expenses, as explained by the Minister of Economy at the time, Luis de Guindos.
Partly because of this last reason, none of this could be approved and the Treasury opted for a halfway method, that of extending deadlines, reducing interest and the partial contribution of new resources to the suffocated communities. A classic flight forward, which in practice involves postponing the delicate matter of finding a definitive solution to a later time. Now, the political situation has generated this moment of truth.
But spreading a morbid punitive attitude that considers that the punishment must never cease to be applied if it serves to satisfy the one who imposes it, some argue that the debts must weigh eternally on the citizens regardless of the causes of them generated and of the justice of its origin. The funny part is that some of those who now vociferate most against the removal, the territorial barons of the PP, who also need it, seem to prefer to be blind in exchange for being blind.
