Taxes and EU Representation

In addition to the information about Euskal Herria (the Basque Country) and the Basques available at different web pages, I will be posting news articles so you can get a better idea about what is going on in that corner of the world that the Basques call home.

To start, we have this article that tackles the issue of the ongoing political conflict between the Basques and Spain, specifically when it comes to the relationship between the Basque Country and the rest of Europe.

Here you have it:

Basques Tax Madrid on EU Representation

By Leslie Crawford
Financial Times
February 14, 2002

Less than E 1bn ($870 m) ties the Basque country to Spain, and that link is getting weaker by the day. That is the amount the Basque regional government, which collects its own taxes, must share with Madrid to pay for services provided by central government, such as justice and defence.

But the tax-sharing agreement is under pressure over one of the thorniest issues in Spanish politics: whether regions that are largely self-governing, such as the Basque country, have the right to represent themselves in the European Union.

This became the Basques' central demand when negotiations began last year over a new tax-sharing regime. The Basque Nationalist party (PNV), which controls Spain's three Basque provinces, wants an independent voice in Brussels. The nationalists do not hide the fact that their ultimate goal is to become an independent country in Europe.

Their demands, however, have been rejected by José María Aznar, prime minister, who has refused to make any concessions to Basque nationalists for fear that it will undermine the unity of Spain. "The European Union is a treaty between states, not regions," Mr Aznar said at the first press conference of Spain's EU presidency. Romano Prodi, president of the European Commission, concurred. "It is up to each member state to decide how it organises itself internally," he said. Mr Prodi indicated that regional representation was not on the EU's agenda, already overcrowded by negotiations for the admission of new member states.

But the Basques are not giving up yet. Juan José Ibarretxe, leader of the regional government, visited Mr Prodi in Brussels last month and offered to co-operate with the Commission in its drive to harmonise taxes - provided Brussels recognised the exclusive competence of Spain's three Basque provinces in fiscal affairs.

"If we have the right to decide our tax policies, we also want to be consulted when the EU discusses fiscal matters that affect us directly," says Javier Urizarbarrena, a top tax official in the province of Vizcaya. "We want to participate in the decision making, as part of the Spanish delegation. We are not seeking to undermine the position of the Spanish finance minister."

The Basque demands are catching on. Catalonia is one of the most vocal defenders of a bigger decision-making role for regional governments within the EU. Even Galicia, a fiefdom of Mr Aznar's Popular party, would like to be included in delegations to the EU when fishing or agricultural matters are discussed.

Basque authorities say there are precedents within the EU to accommodate regional representation. Scottish ministers, they say, attend about 12 per cent of all ministerial meetings in Brussels, while German states, or Länder, are present at one third of all EU gatherings.

Not all Basque citizens approve of the way their political leaders have used the issue of EU representation to further the cause of independence. Businessmen have warned Mr Ibarretxe that secession would bring painful economic consequences for the wealthiest region in Spain. "Basque nationalists pretend that nothing would change after independence; that the EU would happily accept the secession from a member state, and that our relations with the rest of Spain would not be affected," says José María Vizcaíno, leader of the Círculo de Empresarios Vascos, a lobby group formed by the top 60 companies in the Basque country. "This is a sentimental fantasy that has dangerous political consequences."

Mr Vizcaíno's lobby group has asked Mr Ibarretxe to commission a study on the economic consequences of secession "in order to inject a dose of realism in the independence debate".

Mr Vizcaíno laments the collapse of the tax-sharing agreement, which he says deepens the mistrust between the governments in Vitoria, capital of the Basque region, and Madrid. "They should be seeking points in common, not further confrontations that drive them apart," he says.

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