Spain’s Federal Experience (A work in progress) Violeta Ruiz Almendral Professor of Tax and Finance Law Universidad Carlos III de Madrid, Spain Forum of Federations  

One culture…?

Or many…?

The Spanish tradition of centralized government XV century: unification by marriage of the Kingdom of Castilla with the Kingdom of Aragón (which includes Aragón, Catalonia, Balearic Islands and Valencia) XV and XVI: expansion of Spain (“discovery” (conquest!) of America, etc.) XVIII: King Felipe V, with the so-called “Decretos de Nueva Planta,” abolishes the political and administrative autonomy of Aragón, Catalonia, Mallorca and Valencia, with the purpose of centralizing and unifying political power (specially painful for Catalonia) The three provinces of the Basque Country and of Navarra survived this centralizing attempt by the Spanish kingdom (until Franco)

The Spanish tradition of centralized government Short “federalist” experiences: XIX: First Republic, 1873 Constitution (disaster) XX: Second Republic, 1931 Constitution (1936-1939 Spanish civil war)

The civil war divided Spain 20/11/2018

Leaving many dead (1 million) 20/11/2018

And a (fascist) Dictatorship 20/11/2018

The Spanish Transition: from Dictatorship to Democracy 1939: Franco wins the civil war, dictatorship starts 1975 (november 20th): death of Franco. Transition starts 1977: first general elections 1978 (december 6th): Constitution is approved 1981 (february 23rd): Coup d’État. Fails. Demostrations all over Spain 1982: Socialist party wins with absolute majority.

Transition starts 20/11/2018

But Democracy is still feeble: 1981 (february 23rd): Coup d’État 20/11/2018

1981 (february 23rd): Coup d’État; the role of the King 20/11/2018

The Spanish Transition: from Dictatorship to Democracy Dynamics of the process: no major breakthrough, no major change: a “legal revolution”…two elements: 1) FORMAL ELEMENT: The existing legal framework, the set of laws and orders that had been approved under the Franco regime, were respected and taken as a departure point. 2) MATERIAL ELEMENT: The will to achieve a maximum degree of consensus among Spain’s diverse political and social forces.

The Spanish Transition: from Dictatorship to Democracy The special relevance of the “constitutional consensus”, achieved in two arenas: (1) “Moncloa Accords”, government, political parties, trade unions and business associations pledged to guarantee social harmony and economic stability. (2) Ratification of a Constitution which established a balance among the demands of the diverse groups involved, finding formulas for transaction

Eleccions in Spain 1977 First general elections 1978 Constitution 1981 Coup d’Etat (unsuccesful) 1982 Socialist party absolut majority 1996 People’s Party (2001, People’s party absolute majority) 2004 Socialist party 20/11/2018

The Spanish Constitution Bill of rights Protection of the rights (Constitutional Court) Social rights Division of powers 20/11/2018

The transformation of the Spanish society 20/11/2018

A revolution in many senses 1980: NO WOMEN IN POLITICS 20/11/2018

A revolution in many senses Present government: 50% WOMEN 20/11/2018

The Spanish Transition: the role of the European Union Major institutional catalizer Financing Revolution of the legal system Towards a double federalism? 20/11/2018

Why Decentralize Spain? Decentralization as a means to attaining democracy Some Communities had seen their autonomous aspirations thwarted by the war (Catalonia, Basque Country, Galisia) Others agreed that a certain level of autonomy was necessary, to help them protect their differences (Valensia, Canary Islands, Andalusia…)

Why Decentralize Spain? Fear of a unitary State being easier to turn back to being a Dictatorship; dividing power to ensure democracy and a checks a balance system Want to accomodate different needs, different situations 20/11/2018

Why Decentralize Spain? Differences in tastes for public goods and services arise out of differences in history, culture and language across regions of a country Differences among regions in their capacities for public administration Nationalist sentiments 20/11/2018

What did citizens think? Great division of opinions Explains why Autonomous Communities started off being service providers, without levying taxes 20/11/2018

What were the options? Regional system (Estado integral): large central nucleus and two or three autonomous regions with their own governments, parliaments and legal and jurisdictional powers. Federal system: same powers for all Communities Both options were rejected

What were the options? Regional system (Estado integral): too similar to the Second Republic’s (the right would not accept it) Federal system: would not accomodate different sentiments; maybe not all parts of the territory wanted to become autonomous, maybe not all at the same level Something new had to be invented… 20/11/2018

The formation of the Autonomous Communities Final solution: asymmetric federalism, federalism á la carte, cheese platter federalism… Form of the State not defined in the Constitution of 1978 Guarantee of autonomy: “the Constitution is grounded on the indissoluble unity of the Spanish Nation...and guarantees and acknowledges the right to autonomy of its regions” (section 2)

The formation of the Autonomous Communities Being an Autonomous Community is an option Procedural framework: provinces decide whether they want to became a Community and what authority they want to take on. 20/11/2018

What are the “provinces”? 20/11/2018

The Statutes of Autonomy Basic institutional rules of each Community At the same time: part of the State’s legal system Statutes must contain: The name of the Community Its territorial boundaries The name, organization and seat of its own institutions The powers assumed within the framework laid down by the Constitution and the basic rules for the transfer of the corresponding services 20/11/2018

The functioning of the Autonomous Communities No total separation of authority (dual federalism), but rather shared competencies (cooperative federalism) The Constitution does not assign explicit authority to ACs, they choose over a group of matters listed in the sections 148 and 149 20/11/2018

The different levels of authority: fast and slow lanes

Closing clauses: residual powers (not automatic) Section 149.3 “Matters not expressely assigned to the State by this Constitution may fall under the jurisdiction of the Autonomous Communities by virtue of their Statutes of Autonomy” 20/11/2018

Closing clauses: paramountcy Section 149.3 (cont.) 2) Jurisdiction on matters not claimed by the Statutes of Autonomy shall fall with the State, whose laws shall prevail, in case of conflict, over those of the Autonomous Communities (except for those matters in which exclusive jurisdiction has been conferred upon them) 3) State law shall in any case be supplementary of that of the Autonomous Communities 20/11/2018

The formation of the Autonomous Communities Seven regions would immediately attain the higher degree of autonomy (Catalonia, Galicia, the Basque Country, Andalusia, Valencia, the Canary Islands and Navarre The other ten chose the lesser degree of autonomy 20/11/2018

Common Regime – High Responsibility Andalucía Galicia Castilla-León Extremadura Asturias Navarra Cantabria País Vasco La Rioja Cataluña Aragón Valenciana Castilla- La Mancha Madrid Murcia Canarias Baleares Legend Common Regime – High Responsibility Common Regime – Low Responsibility Foral Regime Regime

The formation of the Autonomous Communities Different quantitative weight of slow and fast laners

Evolution of decentralisation of public expenditures (% of participation of total public expenditures)

An asymmetric system? Intrinsecal asymmetry of the system This asymmetry is both de facto and de jure and explains the role played by political agreements Coordination and cooperation are key 20/11/2018

The functioning of the Autonomous Communities The Constitution bestows special functions to the State, to guarantee coordination, unity within autonomy, solidarity… For example, ‘regulating the basic conditions to ensure the equality of all Spaniards in the exercise of their rights and the fulfilment of their obligations’ or the ‘coordination of the economy’ 20/11/2018

How can a Community obtain (additional) new authority? Constitutional reform Reform of the Statutes of Autonomy (sec. 147) Delegation or transferral of new authority (sec. 150)

Fiscal Federalism in Spain (also a work in progress) 20/11/2018

What the Constitution says… The right to financial autonomy of Autonomous Communities: Section 156.1: “The Autonomous Communities will have financial autonomy for the execution of their authority, following the principles of coordination with the State´s Treasury and solidarity among all Spaniards” 20/11/2018

What the Constitution says… Section 157.1: “The Communities’ resources will be the following...: - Taxes ceded by the State, surtaxes on State´s taxes and other of the kind. - Their own taxes. - Transfers from an Interterritorial Equalization Fund - Yield from their capital resources - Public Debt 20/11/2018

In practice, asymmetry: two financing systems: The “foral” regimes Broad taxation powers Payments to the central State (cupo) The “common” system Limited taxation powers Receive transfers from the central State based on need Different levels of authority, different needs 20/11/2018

The functioning of the Autonomous Communities: the institutional framework 20/11/2018

What the Constitution says The Constitution allows the State to control ACs in some cases (eg Sections 150.3, 153 and 155).

What happens in practice… Instead, the numerous conflicts have been solved – or are in the process of being solved – through politically negotiated agreements, and the Constitutional Court PROBLEM: excessive role of the Constitutional Court in solving conflicts 20/11/2018

The role of political agreements Advantages: They promote cooperation Sometimes the only solution when authority is shared Disadvantages: Bargaining attitudes Different political weight of Communities

The role of political agreements Solutions? Reform of the framework within which agreements are reached (Senate, permanent conferences) Clear definition of playing rules

The role of the Senate It is not a real territorial Chamber: Most senators elected by universal suffrage from provincial voting districts. Only 46 out of 253 are appointed by the Parliaments of the Autonomous Communities Very limited powers making State laws (i.e. no veto rights) Does not allow multilateral action. (But, would everyone want that?: Basque country/Catalonia’s “bilateral model”)

The reform of the system: new Statutes of Autonomy Basque country: a failed attempt Valencia Catalonia Balearic Islands Andalucia Aragón Castilla La Mancha…

A Constitucional reform in Spain? 25th anniversary of the Constitution (2003) Traditional fear of changing a Constitution in Spain The misunderstanding of “constitutional patriotism” (=constitutional inmobility) Fear of opening Pandora’s box

A Constitucional reform in Spain? The dificulties (to name some) The Socialist party (pro-reform) does not have absolute majority Great disagreements in the regional question (still!) No clear idea of where we want to go Some important problems are not being addressed: lack of coordination/cooperation Excesive rigidity of Spanish Constitution

Separatist Terrorism and the State of autonomies: what now? Originally a “political” anti-Franco organization More than 900 dead since the 60s Mafia like methods to obtain financing; agenda unclear The 2006 Truce…. 20/11/2018

…and so much for it 20/11/2018

? 20/11/2018