Nationalist Economics

Conventional wisdom dictates that nationalism and separatism are characterized by close-knit bonds formed from an intense allegiance to a common history, lineage, land, and language. This is largely correct, especially in regards to more primitive nationalist movements in lesser developed countries.

Yet in more prosperous and federal—where much power is devolved from the central government to regional entities—countries, financial concerns often reign supreme. Self interested economics—anxiety over sharing wealth with less affluent regions within the country—must be added to the dynamic, as witnessed by recent nationalist unrest.

Belgium, famous for its waffles and chocolate, but also for its communitarian and federalist structures, is falling victim to this phenomenon. Its reputation for diversity and collegiality may be on the wane, as the multi-ethnic state is danger of disintegration.

The small country hosts the most supranational entity in the world, the European Union, along with a diverse domestic population: split between the French-speaking Walloons in the south and the Dutch-speaking Flems in the north, with some German-speakers on the side.

Indeed, linguistic cleavages have threatened the unity of the country since its creation in 1830 by King Leopold. The capital, Brussels, is caught in the middle—the site of a verbal war, with each side seeking to impose its linguistic dominance. This an exaggeration perhaps, but gaining validity with time.

Currently exacerbating things is the lack of a standing government, despite over one hundred days passing since the election. An effort to carve together a center-right coalition is hamstrung by—surprise, surprise—bickering between Flemish and Walloon officials.

Fears of the state’s collapse were fanned last year when the television station RTBF—a cruel joke indeed—reported that Flanders had declared independence. Also, one Flemish journalist put Belgium for sale on Ebay.

With no federal government, Flemish separatists may see this as the perfect time to break away. Remi Vermeiren, a Flemish nationalist, declared, "For a while, 'separatist' was a dirty word. Now there are almost daily discussions about it.” Walloons seem scared to death of this possibility, with one regional newspaper noting, “The Walloons are like a wife who's scared that her husband may leave her.”

It was not always this way. Wallonia was a region of immense industrial economic power, with profitable mining and steel sectors. Nationalism followed. Flanders was an economic laggard. But recently, the roles have reversed.

Having achieved high levels of economic growth—clearly delineating itself from Wallonia—largely on the back of a burgeoning services sector, Flanders is reluctant to share the wealth. Subsidies to its poorer regional neighbor suck the state coffers dry, leaving many Flemish citizens feeling bitter.

This is certainly what Vermeiren was trying to convey with the statement: “We are an expensive, inefficient country.” Unsurprisingly, Flemish nationalists want to retain their economic windfalls, while Walloons wish to retain the allocation of funds.

This is not how a successful federal state is governed. Unity in diversity is largely dependent on economic solidarity. Unfortunately in a federal state, despite what Gordon Gekko might say, greed does not work. Reallocating funds from richer to poorer regions helps develop the entire country’s economy, which in the long run is good for the more affluent areas.

The modern European Union is based on this premise. EU Structural and Regional Funds is a financial program, which injects capital from rich member states into lesser developed, usually new, members. Spain joined in 1986, with a relatively dismal economy. Regional funds turned the country’s economic fortunes around to the point that now Spain is a net contributor to the EU budget.

Ironically, Spain is also a country embroiled in separatist, economic conflict. Regional variety, even more so than Belgium, is rampant in Spain, which is made up of 17 semi-autonomous regions. Also home to the two of the most enduring and well known nationalist movements, in Catalonia and the Basque Country, the country is no stranger to separatist unease.

The Catalan and Basque regions are two of the most affluent areas in Spain. To be sure, there is much more than economics at play in these movements, but in today’s federal system, finance again plays a primary role. In this vein, Catalonia recently obtained an agreement with the central government in which it controls over 50% of its tax receipts.

Needier regions such as Andalusia have complained that this jeopardizes national economic cohesion, as the area, much like Wallonia, receives benefits from wealthier regions. The center-right Popular Party responded to the new Catalan statute by warning of “the Balkanization of Spain.”

Neither Spain nor Belgium is in imminent danger of dissolution. But a common thread running through the separatist threats is economic nationalism. If Scots truly thought they could hold their own economically—and there are many who already do—without the help of London and the rest of Great Britain, the nationalist movement would gain even greater support and British unity would likely be in danger.

Prosperity empowers an already divergent people who wish to garner greater control of their economic destiny—much to the dismay of other provinces—adding a financial layer to nationalist separatism. Economic nationalism may be the wave of the future in a globalized world.