Crisis in Catalonia

A crisis simulation is a key component of my public management course, intended as an enjoyable and thought-provoking way of teaching crisis management. Each year I invent a crisis: there are enough situations out there that could escalate into a crisis that it’s easy to imagine a plausible scenario. This year’s concerns the separatist movement in Catalonia.

The assignment has Canada’s ambassador to Spain sending the Deputy Minister of Foreign Affairs an urgent email with four ominous developments. First, a crowd has surrounded the Canadian consulate in Barcelona, and is demanding Canada recognize an independent Catalonia. Second, there have just been two explosions in downtown Madrid. Third, the ambassador has learned that, to compensate for the economic hit the Spanish economy has been taking due to political instability, the Spanish government has decided to levy taxes on Spanish investments overseas. This includes Cintra Infraestructuras, the concessionaire for Ontario’s Highway 407 electronic toll road, so Toronto drivers can expect to see higher tolls. Finally, the ambassador has also learned that one of the major Canadian banks, believing that the crisis has been overstated, has made a three billion dollar bet on Spanish bonds. The escalation of the crisis, particularly the explosions in Madrid, has driven down the price of the bonds, and the bank faces a billion-dollar loss on this bet.

Wow, that’s quite a package of problems! I asked my students to play the role of crisis managers at Global Affairs Canada and come up with responses.

In the discussion – which was led by two students I selected and not by me – I expected the students to come up with questions to ask and with priorities to set.

The questions to ask should include the following. Has the crowd outside the Barcelona consulate shut off access? Are they armed? Who is inside the consulate? Have similar crowds surrounded the embassies of countries such as the US, UK, and Australia? Have the local police been consulted? Are they at the scene? Are they planning to use force to remove the crowd? Who is claiming responsibility for the explosions in Madrid: ISIS, Catalonian militants, or another group?

An important logistical move would be to establish a secure telephone or preferably video-image link among Global Affairs staff in Ottawa, the ambassador in Madrid, and the consul in Barcelona.

The students quickly recognized that the key priority was the safety of people in the consulate in Barcelona. The students also realized that Canada’s long-standing rejection of Quebec separatism would require a rejection of the crowd’s demand that Canada recognize an independent Catalonia. All that would be possible would be a minimal concession that would allow the crowd to leave peacefully.

The two problems that concern only money are not of comparable priority. Highway 407 is a provincial responsibility, but the contract with Cintra Infraestructuras’s Canadian subsidiary may limit what the Government of Ontario can do to prevent a sharp toll increase. The Spanish bonds may recover if the situation improves. Even if the bonds went to zero, the hit to the bank’s balance sheet would be sustainable. Government is not obligated to bail out bankers for their bad decisions (unless the viability of the bank itself is concerned).

The case includes two other teaching points. It illustrates the importance of the Foreign Service in gathering information. The two economic problems hadn’t become public knowledge: embassy staff in Madrid had used their sources to find out about. In addition, it illustrates political and economic interconnectedness.  What appears initially to be a Spanish problem has consequences for Canadian citizens in the consulate in Barcelona or on the streets in Madrid and for Canadian firms and consumers.

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