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TABLE 7.7. The ACs Before the Reform of Regional Financing in Spain
(2008-2009)
Net Recipient
Net Contributor
Socialist incumbent (PSOE/PSC)
Andalusia, Extremadura,
Asturias, Aragon,
Castilla-La Mancha
Catalonia, Baleares
Conservative incumbent (PP)
Galicia, Castilla-Leon
Madrid, Valenciana
relatively more equal region was able, once more, to introduce marginal cor-
rections to an otherwise hyper-redistributive system. This was only possible
because of: the Catalan socialists' need to compete with nationalist parties
within the region, the reduced clout of the PSOE at the national level, and
the latter's need for parliamentary support to secure a stable executive. The
preferences derived from an uneven economic geography and changes in an
originally centripetal party system jointly account for this change in Spain's
fiscal structure.
The new CoC included provisions for yet another round of revising the
regional financing system, to be completed by the end of 2009.Intheinterim,
Zapatero had been reelected as head of yet another minority government in
2008, and faced a bargain in which territorial interests, as determined by
economic geography, cut once again across party lines. The prospect of the
generalization of the system agreed as part of the new CoC split ACs into four
groups defined by party loyalty and their relative positions in Spain's economic
geography. Table 7.7 identifies the different sub-groups.
The ACs in the top left quadrant are concerned about the reduction in overall
levels of redistribution that would follow the generalization of the Catalan
model. The Catalan government, under the close scrutiny of nationalist parties,
is deeply committed to retain what had been so hard to achieve, and issued a
clear warning that they would not accept less. The conservative net recipients
oppose the generalization of the Catalan model on partisan and distributive
grounds. Finally, Madrid and Valencia have every financial incentive to accept
the reform, given their relative position in the system (see Figures 7.2 and 7.4 )
but their partisan identity suggests otherwise. In the end, their distributional
interests prevailed and these two regions refrained from opposing the reform
openly, thereby weakening the political position of the PP against the reform.
In turn, the fundamental dilemma for the government was how to reconcile the
distributive interests of Catalonia and Baleares on the one hand, and the rest
of the socialist regions on the other. 30
Being a minority government in Madrid, Zapatero was trapped by the inter-
ests of the Catalan socialist incumbent, who was himself under pressure by the
30 A detailed analysis of this dilemma with plenty of evidence on the positions of different ACs is
avaiable at the 2009 Informe sobre la Democracia en Espa na , Fundacion Alternativas, Madrid.
 
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