Catalonias Split With Spain Is About Identity, Not Just Money

As recently as July, secessionists in Catalonia seemed to be in retreat. Spain was the fastest-growing of continental Europe’s big four economies, creating jobs at a rapid clip. A poll that month by the Catalan government showed that support for independence had fallen to 35 percent, its lowest level since 2012. It appeared that Enric Millo, the Spanish government’s representative in Catalonia, might have been right when he predicted in 2012 that once removed from the flame of financial crisis, “separatism would sink like a soufflé.”

What’s sinking instead is the reputation of Prime Minister Mariano Rajoy. Acting on his orders, Spanish police used batons and rubber bullets against those who took part in an Oct. 1 referendum on independence that Spain’s constitutional court had declared illegal. Hundreds were injured in the melees.

The Catalan government claimed that despite Madrid’s attempts at suppression, 2.3 million people voted—about 42 percent of the total electorate—and about 90 percent of them chose to separate from Spain. The Spanish government cast doubt on the result, pointing out that the referendum, in addition to being illegal, lacked certified voter lists and wasn’t overseen by an official election board. And many of those who opposed secession heeded Madrid’s reminder that the vote was illegal. Spain’s King Felipe VI said in a televised address that separatist leaders showed “unacceptable” disloyalty.

Featured in , Oct. 9, 2017. Subscribe now.
Photographer: Juan Teixeira/Redux

The groundswell of separatist sentiment in Catalonia has shown Spain and the world that money isn’t everything. A strengthening economy may have quelled Catalan nationalism a bit, but the desire many have for independence had deeper sources and never went away. Then Rajoy, playing to his conservative base, badly miscalculated. He thought a show of force would keep voters at home. But his attempt to stop the vote just pushed more Catalans into the separatist camp. “In the longer term, the divisions in Spain become more entrenched,” says Antonio Barroso, a political risk analyst at Teneo Intelligence in London.

Economics probably did matter in Catalonia, just not in the way that Spanish optimists were thinking. The reality is that the region hasn’t fully recovered from the global financial crisis, which pushed the economy into a double-dip recession and sent unemployment in the so-called autonomous community as high as 24 percent. (It’s still more than 13 percent.) “The financial crisis brought to the fore the fact that so much of our money is transferred” to the central government, says Jordi Galí of Barcelona’s Center for Research in International Economics, known by its initials in the Catalan language, CREI. “In a context of high growth and prosperity, this may be more easily forgotten. But during the crisis the Catalan government had to undertake huge cuts in services: health, education.”

The transfers issue might not have been enough to stir secessionism all by itself. After all, there’s little call in Connecticut to break away from the U.S. even though the state gives more than it gets. The difference is that the northeastern corner of Spain has its own language, traditions, and aspirations to national greatness. Its history is a seesaw of autonomy and what some see as subjugation. Catalans still commemorate the fall of Barcelona to King Philip V of Spain on Sept. 11, 1714. In 1939 the city fell to the Nationalist forces of Francisco Franco, who suppressed Catalan culture during his 36-year rule.

In recent years, independence-minded Catalans have focused their anger on a 2010 ruling by Spain’s constitutional court that erased parts of a legislative deal that accorded the region broad autonomy. In 2012 the Catalan economist Xavier Sala-I-Martin likened Spain to a possessive husband who reacts wildly when his wife asks for a divorce. “We Catalans have tried to explain during 30 years that we were uncomfortable and the replies have been no’s, scorn, indifference, and contempt. And now they’re surprised!” the Columbia University professor wrote on his blog.

The marriage is far worse now. “People are extremely disappointed, and I would say shocked, by the activities of the Spanish police,” says Giacomo Ponzetto, an Italian who teaches at CREI in Barcelona. “It was absurd, unacceptable behavior, and I would add extremely stupid.” Stupid as in self-defeating, he says. “The Catalan government was looking for this. It’s very obvious. They wanted to provoke a response.”

Like it or not, Catalonia has been very much part of Spain—not least because it’s a fifth of the national economy. It exports more to the neighboring region of Aragon than to France, and more to Madrid than to Germany or Italy, says Pankaj Ghemawat, who teaches at the New York City branch of IESE Business School, which also has campuses in Madrid and Barcelona.

Many economists think Catalonia would be worse off economically on its own. The outcome hinges on whether it would assume a share of Spain’s national debt, whether it would be permitted to join the European Union and adopt the euro, and how much it would cost to replicate services—such as defense—it gets from Madrid. Further complicating matters, Spain could throw up legal obstacles to secession. One reason many Catalans have shied from independence in the past is that they weren’t ready to take a leap into the unknown.

But the violence that marred the Oct. 1 vote has focused Catalans’ minds on issues other than euros. “At some point the economic considerations start to be irrelevant and identity becomes paramount,” says Ghemawat. On Oct. 1, he says, “we took a giant step in that direction.”

    BOTTOM LINE – A long and painful downturn fanned separatist sentiment in Catalonia, which, contrary to predictions, didn’t die down with the recovery.

    Read more: http://www.bloomberg.com/news/articles/2017-10-05/anatomy-of-a-bad-marriage

    These Suburbanites May Have No Fracking Choice

    When Bill Young peers out the window of his $700,000 home in Broomfield, Colo., he drinks in a panoramic view of the Rocky Mountains. Starting next year, he may also glimpse one of the 99 drilling rigs that Extraction Oil & Gas Inc. wants to use to get at the oil beneath his home.

    There’s little that Young and his neighbors can do about the horizontal drilling. Residents of the Wildgrass neighborhood own their patches of paradise, but they don’t control what’s under them. An obscure Colorado law allows whole neighborhoods to be forced into leasing the minerals beneath their properties as long as one person in the area consents. The practice, called forced pooling, has been instrumental in developing oil and gas resources in Denver’s rapidly growing suburbs. It’s law in other states, too, but Colorado’s is the most favorable to drilling.

    Now fracking is coming to an upscale suburb, and the prospect of the Wildgrass homeowners being made by state law to do something they don’t want to do has turned many of them into lawyered-up resisters. “It floors me that a private entity could take my property,” says Young, an information security director.

    Many states require 51 percent of owners in a drilling area to consent before the others have to join. Pennsylvania doesn’t allow forced pooling at all in the Marcellus, one of the most prolific shale gas regions in the country. Texas, the center of the nation’s oil production, has strict limits on the practice. Despite its founding cowboy ethos of rugged individualism, Colorado has one of the lowest thresholds. “There’s a tension in oil and gas law between allowing private property owners to develop their mineral estates on their own and the state’s desire to ensure that ultimate recovery of oil and gas is maximized,” says Bret Wells, a law professor at the University of Houston.

    The rise of horizontal drilling and hydraulic fracturing over the past decade has ushered in a modest oil boom on Colorado’s Front Range by enabling companies to wring crude more cheaply from the stubborn shale that runs beneath Denver’s northern suburbs. From 2010 to 2015, Colorado’s crude output almost quadrupled. This year the state is pumping more than 300,000 barrels a day, most of it from the Wattenberg oil field beneath Wildgrass and beyond.

    Colorado’s population is booming, too. As Denver’s suburbs bloom northward into oil and gas territory—Wildgrass is about 20 miles north of Denver, not far from Boulder—housing developments are erupting where once there were only drilling rigs and farmland. And because horizontal drilling can reach as far as 2 miles in all directions from a well, companies need underground access to more land to maximize production from each site. The Colorado Oil & Gas Conservation Commission issues hundreds of pooling orders every year. “It’s an entirely new issue,” says David Neslin, former director of the commission, now an attorney at Davis Graham & Stubbs in Denver. “That’s creating some understandable friction with local governments and local communities.”

    Denver-based Extraction Oil & Gas is at the epicenter of that friction. Although it has rural holdings, a substantial amount of its reserves are located in populated areas. So the company, like others in the region, has put a lot of energy—and cash—into making its operations more palatable to suburbanites who fear the prospect of a drilling rig sprouting up within sight of their kiddie pools. Extraction almost exclusively uses electric drills, which are quieter than diesel-powered, and a new generation of hydraulic fracturing equipment that cuts noise. “It’s incumbent upon us to learn to live with these communities,” says Extraction spokesman Brian Cain. “Where we can go the extra mile to minimize impacts, we wish to do so.”

    The company’s latest project involves drilling 99 horizontal wells in Broomfield. That means leasing mineral rights from Wildgrass residents. Letters went out to some of them last year offering a 15 percent royalty and a $500 signing bonus. Some signed, others demurred, and still others organized a campaign aimed at blocking the project. Extraction hasn’t applied for a forced pooling order, but Young and his neighbors have come to believe it’s inevitable.

    The suburb’s agitation prompted the city to create a special task force to evaluate Extraction’s proposal. The company responded by taking members of the task force on a tour of oil and gas country. It wanted to show how its operations are less disruptive than traditional drill sites.

    Ultimately, the company agreed to more stringent environmental standards than the state requires. It will move some wells 1,300 feet from neighborhoods, almost three times farther than the law mandates. It will reduce the number of wells per site, monitor air emissions as well as water and soil quality, and build pipelines to transport oil immediately off-site instead of storing it in the city. “I can see Broomfield turning out to be a new model for how large-scale development gets done,” says Matt Lepore, director of the state commission, which will rule on Extraction’s applications for siting the wells this month.

    Such concessions have smoothed the path for development in many communities. But for some Wildgrass residents, any leasing is unacceptable. They say they fear accidents, such as the April pipeline explosion that killed two people and destroyed a home in Firestone, 20 miles away. Some simply find the terms of the initial lease offer laughable.

    “The money is so negligible,” says Elizabeth Lario, a health coach who’s lived in Wildgrass since 2005. And then there are property values: Homes in Wildgrass range from $500,000 to more than $1 million. “The royalties won’t offset the drop in property value,” says Stephen Uhlhorn, an engineer who’s lived in Wildgrass for four years. Oil development “is now hitting affluent neighborhoods where people have assets and livelihoods that exceed the value of any royalty they’re offered.”

    The bedrock of Colorado’s oil and gas policy is a 1951 law that says responsible fossil fuel development is in the public interest. The state, the law says, must protect the public from “waste”—industry parlance for oil that’s left in the ground. While Colorado has some of the strictest environmental regulations of any oil-producing state, it gives companies latitude in choosing where to drill. The Colorado Supreme Court has repeatedly held that the state’s interest in developing mineral resources preempts any local law that would curb drilling.

    Efforts to change the statute have fizzled. State Representative Mike Foote, a Democrat whose district is adjacent to Broomfield’s, introduced a bill earlier this year to raise the pooling threshold to 51 percent. It passed the House by a slim margin but died in a Senate committee in a party-line vote, with Republicans opposed. “The oil and gas industry pretty much controls the capital, particularly in the Senate,” Foote says. “Operators can do whatever they want.” Lepore, the head of the state oil commission, concedes the pooling threshold is low compared with other states. “I have no philosophical objection to a 51 percent requirement,” he says. “There are intelligent changes that could be made to the forced pooling law.”

    Young, the Wildgrass resident, received a lease offer last year. Since then he’s been working with a lawyer to consider his options, and so far he doesn’t like them. “You couldn’t put a Walmart where they’re putting these wells—no one would approve that zoning,” he says. “But for some reason, the industry is completely exempt from everything.”

      BOTTOM LINE – In Colorado, whole neighborhoods may have to lease the minerals under their land if just one homeowner agrees.

      Read more: http://www.bloomberg.com/news/articles/2017-10-03/these-suburbanites-may-have-no-fracking-choice