General Strikes and Secession Threats Could Derail Austerity

A blog about business and economics.
Sept. 26 2012 8:08 AM

Europe's Austerity Politics Rocked by Greek General Strike, Catalan Secession Threat, Spanish Protests

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MADRID, SPAIN - SEPTEMBER 25: Riot police run behind protesters near Cibeles during demonstrations surrounding the Spanish Parliament on September 25, 2012 in Madrid, Spain.

Photo by Pablo Blazquez Dominguez/Getty Images

Widespread protests erupted across Greece on Wednesday as trade unions called a nationwide strike to contest billions of euros worth of new salary and pension cuts being discussed by the government and its international creditors.

Spanish politics:

The developments unfolded as police officers and protesters clashed before the Parliament building and as Mr. Rajoy comes under intense pressure from investors and his European counterparts to clean up Spain’s banks and public finances, particularly at the regional level.

And in Catalonia:

Now, Catalonian matters are significantly more complex. Artur Mas, the region’s powerful leader, announced Tuesday that he will call a snap regional election Nov. 25.
For many observers, this is a move by Mr. Mas to strengthen his bid for more autonomy, with the explicit threat of a pro-independence referendum looming in the background. Local media is reporting Wednesday that Mr. Mas is meeting with other Catalan parties to prepare such a vote.

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As you may recall, it's not that long ago that the world was optimistic that Mario Draghi and the European Central Bank had finally gotten the situation under control. But the politics of the thing essentially prevent a "once and for all" resolution from taking place. That's because the ECB's game is to centralize as much authority in Frankfurt as possible which means that peripheral governments must be continually put to squeeze between the demands of the central bank and the demands of the voters. The fear is that if the ECB goes "too easy" on the Spanish government, that Rajoy will give in to the political unpopularity of the ECB agenda and back off. Spain needs to be perched perennially on the brink of a crisis since its citizens can't be trusted to Ireland/Baltic-style simply go along with austerity budgeting.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.