Catalonia versus Spain: playing the game without communication

By Dr Jack Fosten

The dust has far from settled after a week in Catalonia which has sent shockwaves around the world. Events began on Sunday 1^st October (termed “1-O” by the Catalans) with a banned referendum brought about by the separatist-leaning Catalan president Carles Puigdemont in defiance of orders from the Spanish government. Rather than permitting the vote to proceed peacefully in the same way as a similar referendum held in November 2014, the strategy of Prime Minister Mariano Rajoy’s government was to use police force to shut down the referendum and prevent Catalans from voting. What followed were ugly scenes, beamed across the globe, with heavy-handed police beatings dealt out to civilians in order to block off polling stations and remove ballot boxes.

The stakes are high on both sides. On the one hand, the Spanish government is keen to keep Spain united and not to lose Catalonia, a wealthy region which contributes a more-than-proportional share of Spanish GDP. On the other side, the Catalan government is desperate for its people, who possess a very strong feeling of Catalan identity, to at least be able to have a vote on their own future and either choose independence, as favoured by Puigdemont and his party, or remain as part of Spain.  Of key importance is the question how did things escalate to this point? Why did the Spanish government not simply allow the referendum to go ahead, when it knew that most Catalans were in favour of staying as part of Spain (according to polling figures collected by the Catalan government themselves in July this year, at that time only 41% of Catalans were actually in favour of separating from Spain).

To get an insight about how this outcome may have come about, let’s set this up as a simple game in which Rajoy has two options, allow or block the referendum; and similarly the Catalan people have two options, to vote “no” or “yes” on the ballot.   Suppose the payoffs to both parties under different actions are as given in the table below where the first number is the payoff to the Catalans and the second is the to Spanish government (of course in reality the situation is much more complicated and would need to be modelled as a sequential game).

A simplified Game of Catalans vs. the Spanish Government

                                   Note: the left payoff of each pair is the payoff to the Catalans

Based on the polling figures, if a legal referendum was held we model the payoffs to Catalans as 3 in the case of a “no” vote and 1 in the case of a “yes” vote. However, if Rajoy blocks the referendum, we assume that Catalans instead prefer to vote “yes” but their payoff is only 2. For the payoffs to the Spanish government who prefer a united Spain, we model the payoff to be 2 if Catalonia votes to remain part of Spain, and 1 if they leave, following a legal referendum. If they decide to block the referendum, they additionally derive some net benefit Δ = (b – c). This is comprised of some benefit (b) of displaying a ‘show of force’, minus some cost (c) from harming the Catalan people, for example damage to Spain’s outward facing global reputation, future internal political problems and so on.  In terms of determining the possible outcomes of this game, a lot depends on whether the net benefit Δ is positive or negative.

Given this over-simplified game, let’s first assume the likely scenario that the cost of blocking the referendum (c) outweighs the benefit (b) to the Spanish. In this case net benefit, Δ, is negative and allowing the referendum is a “dominant strategy” by the Spanish government as this action gives them a higher payoff regardless of the Catalan vote. Given this strategy, and provided the opinion poll is to be believed, then the Catalans would overall be better off voting “no” and remaining part of Spain (not Mr Puigdemont himself, of course!). This peaceful Nash equilibrium outcome, however, is far from the scenes we witnessed on 1-O.

So what led Rajoy to instead play the strategy of police intervention and brutality? The somewhat  unpalatable explanation suggested by this simple game is that Rajoy in fact derived more benefit from a show of force than the perceived costs from harming the Catalan people (b is larger than c so Δ is positive). In that case, given the game above, blocking the referendum is instead a dominant strategy for the Spanish. Given that the Spanish government choose to block the referendum, the indignant Catalans choose to vote “yes” and leave Spain, exactly as the unofficial poll from 1-O seemed to suggest. Of course, there are other possible explanations we could consider if we used more complicated games, or assumed different payoffs. This could lead to multiple different equilibria, suggesting that the “wrong” one was played in reality.

Leaving this toy game aside, the practical implications of Rajoy playing the militant strategy was the transmission of unsightly images and videos across the globe within hours through social media. Not only may this have damaged Spain’s reputation but he has also further alienated and enraged Catalans, as evidenced by a wide-scale public strike held on Tuesday 3^rd October. In fact, it is likely that the anger and resentment over the behaviour of the police on 1-O may even push Catalans who were ‘on the fence’ on the issue of separation into a position where they would actively vote against the Spanish under all circumstances in the future. Rajoy seems to have pushed the opportunity for the peaceful and desirable equilibrium further and further from his own grasp.

It seems that the events of 1-O come as a direct result of poor communication on both sides between the Spanish and Catalan governments. It now feels inevitable that a mediator is needed to sit down with both sides and work on a future path of actions which delivers a stable and desirable outcome to both parties. In the days after the referendum such mediation was not immediately been forthcoming, neither from the King of Spain nor from external sources such as the European Union. In Barcelona, people have marched in the streets with banners asking “Shall we talk?”

Will anyone step in to bring about dialogue between these two sides?