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Tuesday, 21 May 2013

Will Scotland Be Independent In a Currency Union?

Chamber's Dictionary definition of independence is, "not subordinate, completely self-governing". Sovereignty is defined as, "pre-eminence, supreme and independent power". Political philosophers have debated sovereignty for centuries, from Bodin to Rousseau but the UK Constitution has determined that sovereignty rests with parliament, while Scots consider it rests with the people, although we seem to have great difficulty deciding whether or not it is divisible, never mind actually exercising it. The SNP and many of its supporters would appear to believe that sovereignty can be "shared" but at the same time retained, "given away", and retained, without explaining how that can be achieved. That argument will be examined to some extent below, as I take the opposite view.

I was given the link to the blog written by Gordon McIntyre-Kemp of Business For Scotland, entitled, "Economic Policy in an Independent Scotland", which is sub-titled, "Exploding the Scotland will not be fully independent myth". My opponents in this debate about currency, claim it is "brilliant" and effectively demolishes arguments to the contrary. We shall see.

Mr McIntyre-Kemp makes his first mistake when he includes Denmark in the euro-zone. It is not, but has "pegged" its currency to the euro, which gives the Danish government a great deal more freedom than if they had actually joined the euro, but gives it absolutely no input to monetary policy in the euro-zone. Mr McIntyre-Kemp's article does no more than list the twenty-six revenue streams currently controlled by Westminster, then the five others, which will be transferred to the control of the Scottish Parliament by 2015, under the Scotland Act of 2012. He calls them all economic levers, a total of thirty one, twenty six plus five, when in actual fact, there are just two - those associated with tax (fiscal levers) and those associated with money supply (monetary levers). Finally he gives a list of seven items of expenditure which are controlled by Westminster, including trade, which is actually controlled by the EU.

Those three lists allow Mr McIntyre-Kemp to conclude that an independent Scotland would have control over its economic and fiscal policy. He goes on to say, "Scotland by voting "Yes" and staying within the EU would be gaining at least twenty eight new financial and economic levers and have control over some of our major expenditures, while trading the ability to set an interest rate in order to maintain a free common market and currency zone with the rest of the UK." Of course Scotland would be gaining nothing of the sort, as it is the intention of the Scottish Government to have a formal currency union with the rUK, which means it will have no control over monetary policy and limited control over fiscal policy. Therefore, instead of the twenty eight mysterious economic levers Mr McIntyre-Kemp claims, Scotland will have part control of ONE - fiscal policy.

Before reaching his rather self-satisfied conclusion, Mr McIntyre-Kemp indulges in some extraordinary flights of fancy. He states, "The Bank of England operates independently of the Government and does not control economic or fiscal policy in the UK but it has a key role of maintaining inflation at a low level, using interest rates. It does this independently from the Westminster Government but the inflation target is set by the Chancellor" I will have more to say below, about the relationship between the Government and the Bank of England, but here again, we have the assertion the Bank is "independent" although its sole function of controlling inflation is determined by Government, to whom it is answerable. On sovereignty, he has this to say, "All independent countries in common markets or currency zones, have to agree to integrate some of the policies and market conditions that they operate under, in order to make the market/zone work as an optimum solution. It does not mean they give up sovereignty as they can always change their mind - unlike Scotland today where we have given up 100% sovereignty to Westminster on these issues."

Let us look at the sovereignty argument as it applies to the EU. If Scotland was independent and decided to join the EU, it would agree to give up all control of agriculture or fishing, as well as a host of other functions of government (for a fuller list see my Blog "Independence Don't Make Me Laugh"). Mr McIntyre-Kemp and his supporters all argue that sovereignty is retained because "we could change our mind". The CAP is not a one-off agreement about a single agricultural arrangement, it is an agreement that the EU will act for Scotland and determine ALL agricultural policies from then on in. As Qualified Majority Voting (QMV) applies, whether or not a policy is in the interests of Scottish farmers, they have no option but to agree (ear marking of sheep is a recent example). This applies on EVERY agricultural issue and CAP has not been to the overall advantage of Scottish farmers. On agriculture therefore, Scots have no sovereignty. If they leave the CAP, they leave the EU therefore the only two occasions on which sovereignty can be exercised is once, when they give it away when they join the EU and second, when they leave the EU and take it back. They cannot exercise sovereignty at any other time, and retain membership of the EU. Any arrangement will be as a consequence of a deal between the member states, not some ad hoc agreement and Scotland can be regularly outvoted, just as it is in Westminster. Fishing has been a disaster for Scotland's fishing communities and over 100,000 jobs have been lost in the industry. Scottish sovereignty obviously played little part in protecting our fisher communities. Of course Westminster carries the blame for this but would the situation have been any different if Scotland had been in a position to make its own deals, as the prize was our fishing grounds?

Any basic economic text book will have a chapter headed along the lines of "The interaction between Fiscal (tax) and Monetary (money supply) Policy". The SNP leadership and its supporters are determined to defy the laws of economics and deny that such an interaction takes place, arguing that as long as we control fiscal policy, it doesn't matter who controls monetary policy. Alex Salmond is on record as saying, "I believe the essence of economic independence is control of taxation and spending because it allows you to revive your economy." This totally ignores the fact that fiscal policy will have a direct impact on monetary policy (witness the problems in the euro zone) and vice versa. Using the examples in Mr McIntyre-Kemp's lists, if a Scottish government decided to "go for growth" and implemented a benign fiscal policy by lowering corporation tax and VAT, the first would encourage investment by business (Ireland has been under pressure from the EU to increase their corporation tax and the SNP has said it intends to radically reduce the tax) while the second would encourage consumers to spend more. The overall impact could be inflationary pressure caused by an excess of demand. Government could increase income tax, which would run counter to its benign fiscal policy, but would more likely raise interest rates (monetary policy). If, as has happened recently, the inflationary pressure was as a consequence of increased costs of raw materials, increasing interest rates would be a waste of time because inflation was of the cost/push variety, therefore increased personal taxation would be more in order. But what effect would that have on economic growth?

That is a very simple example of how fiscal and monetary policy can interact and why, as Mr McIntyre-Kemp pointed out, "all independent countries in common markets or currency zones have to agree to integrate some of the policies..." although he did not seem to appreciate why such integration took place. He finished his blog with, "It could even be described as xenophobic to suggest countries that enter into integrated common markets and or shared currency agreements, are not truly independent".  Others can judge how "brilliant" it was.

On a more serious note, the following is taken from the recent paper I prepared for the Options For Scotland think tank, and which caused such a flurry of support for a Scottish currency in the media. The preferred option for the SNP is a formal currency union with the rUK and, particularly in the past fortnight, they have made an increasingly strong argument in favour of this union. The No Campaign and the Treasury have made an equally strong argument opposing such a union and the strident tone of their opposition is such, that one has to wonder why Scots would find anything attractive in a continuing union with the rUK The Chancellor in particular, has taken every opportunity to threaten Scots with the most dire consequences if they vote Yes next year. The SNP argues that it would be in the interests of both an independent Scotland and the rUK, to have a formal currency union, pointing out that the balance of payments of the rUK would benefit by over £40 billion per annum, that cross-border trade between both sides would continue uninterrupted and costs would be minimised. The most important aspect of this option for the SNP, is that they claim that Scotland would have control of fiscal policy, thereby allowing a Scottish government the freedom to initiate the kind of economic policies which would create economic growth and employment. A currency union based on sterling, is made to sound so attractive for both sides by the SNP, that it is worth asking why either side would choose to change the relationship at some time in the future. Their commitment to a sterling zone does not suggest they would want to move towards ever having complete control of the Scottish economy. The problem for the SNP is that not even the Working Party of the Fiscal Commission totally agrees with them. The Working Party Report suggests that a sterling zone would be in the interest of an independent Scotland "in the immediate aftermath of independence" but that a Scottish currency would be the best option to give maximum control of the Scottish economy. In order to create a successful sterling zone, the Fiscal Commission sets out the following conditions:-


  • the Scottish Government has a formal input to the Monetary Policy Committee (MPC) of the Bank of England. In other words a member on the MPC
  • Interest rates are set to promote price stability across the sterling zone
  • Financial stability is ensured across the sterling zone on a consistent basis
  • A joint fiscal sustainability agreement is established to govern the level of borrowing and debt within the sterling zone
John Swinney, on behalf of the SNP, welcomed those conditions but claims that a Scottish government would still be free to follow economic policies, including taxation, to create growth and prosperity , in the Scottish economy thereby "creating the fairer society we all seek". It is difficult to see how an agreement between two parties, as laid out by the Fiscal Commission, can allow one of those parties the freedom to follow its own economic policies, at one and the same time.

John Kay, an economist who at one time served on Alex Salmond's committee of advisers, has been moved to ask, "It makes one wonder what independence means." Tod Murray, in their recent paper on the currency said, "If an independent Scotland keeps the pound, there needs to be an appreciation that at best, Scotland will have limited control over monetary policy. The Bank of England could impose checks and balances on Scottish fiscal policy, debt, deficit, taxation and public spending which would amount to a loss of fiscal autonomy." Jim Cuthbert, a well-respected economist whose work has often been quoted by the SNP, in his  latest paper "The Mismanagement of Britain", calls on the Scottish Government to reverse its policy on sterling in light of the current dangers faced by the pound and avoid Scotland being exposed to the "high likelihood of a potentially catastrophic crisis in the not-too-distant future." He goes on to say, "meaningful independence is not attainable within the UK monetary union" and "Independence could potentially insulate Scotland from the worst effects of the impending economic crisis."

If a sterling union was to be set up, great faith is being placed on two things; the first, a Scottish member of the MPC and the belief that a Scottish Government would adopt and follow sensible fiscal policies in any case. It is claimed that one Scottish member on the MPC will be able to influence policy decisions to the extent that the most potentially adverse effects for Scotland, will be avoided. In other words, it is hoped to reverse the attitude towards Scotland of the past thirty years. What appears to be forgotten is the relationship the MPC has with the UK Government and the Chancellor of the Exchequer, who must write to the Governor of the Bank of England at least once every 12 months, laying down the government's inflation target for the coming year and reminding the MPC of its remit under the Act. The letter is couched in the following terms:-

"The MPC is accountable to the government for the remit set out in this letter. Any changes to the remit will be set out in the Budget."

That does not leave much room for interpretation and one Scottish representative is hardly going to make any impact on a committee which is a creature of the Government of the UK and whose remit is to achieve the Government's target on inflation. What also requires some explanation is the faith being placed in an organisation whose record of setting interest rates over the past thirty years, leaves much to be desired in terms of the effects it has had on the economic growth in Scotland. Between 1995 and 2002, Scottish economic growth was 1.9% per annum as opposed to the 2.7% achieved by the rest of the UK over the same period. Any objective analysis would be hard pushed to find any period during the past thirty years, where the economic policies and interest rates set out by successive UK Governments, favoured Scotland. In every year over the past thirty years, economic growth in Scotland has been 0.5% lower than the growth rate in the rest of the UK.

In light of all of the above, the most sensible currency option for an independent Scotland would be a Scottish currency. In the past, any mention of a Scottish currency has been derided, with the usual sneering references being made by the usual suspects. It has been asserted Scotland is too small, it would be too difficult, it would cost too much and it would be either a petro currency floating on a sea of oil or, the oil price would make the value so unpredictable it would be unmanageable. More sensible and realistic assessments now recognize that small countries can mange their currencies just as well as the larger countries. The opening lines in the report from the Fiscal Commission states, "By international standards, Scotland is a wealthy and productive country. Even excluding North Sea oil output, GVA per head of the population in Scotland is estimated to be 99% of the UK average and the highest in the UK outside London and the South East. However, over the past 30 years, Scotland's economic growth rate has lagged behind that of many of its peers."

A nation's currency is much more than a store of value, it is a measure of the status of a nation state and can even be viewed as an object of pride. The German, Swiss and Dutch currencies have all been used as reserve currencies in the past and many German and Dutch now bitterly regret having lost their own currencies for the sake of the euro. The success of Norway and Switzerland in managing their currencies is a measure of just how small countries can manage their own financial affairs for the benefit of their own societies. As those countries which were once part of the Soviet Union or were part of the Eastern Bloc such as Poland, became more successful, they become less and less inclined to give away their new found independence by joining the euro. Why does New Zealand, with a population of 3.5 million insist on having its own currency, when there are economic arguments for having a monetary union with Australia? Canada, with a population of 33.5 million, exports over 82% of its goods and services to the USA and over 54% of its imports come from the USA, ratios which are far in excess of those that Scotland has with the rUK and the EU, but she guards her independence jealously, including her currency. The population of the USA is ten times that of Canada and all the arguments about being in bed with an elephant apply just as much as they do for the relationship between Scotland and the rUK. There are 221 currencies in the world with just over 60 in some form of currency union, either formal or informal but only 11 countries have the much vaunted AAA status. These include the following, Austria, Australia, Canada, Denmark, Finland, Germany, Netherlands, Norway, Singapore, Sweden and Switzerland. How many large countries are on that list?

An independent Scottish currency is the only option which will allow a Scottish government the degree of economic control necessary to diverge from the history of mismanagement of the Scottish economy since the end of World War II. If sovereignty means anything at all to the Scottish people, control of their own currency is a prerequisite.

Those in favour of a currency union now have a responsibility to EXPLAIN why such a union is to Scotland's benefit, why it is so much better than our own currency and, how it can possibly mean independence, by any reasonable and acceptable definition of the term.

Monday, 20 May 2013

Scottish Nationalism And Catholicism

The level of debate on Scottish independence has gone through various phases over the years and while the Unionists point to SNP assertions and false claims, successive Labour and Tory governments have consistently lied about a whole variety of issues that have affected Scotland. For many years after World War I, it was impossible to get accurate figures for Scottish was losses, which when they were published, showed exactly why. Scottish regiments suffered higher war losses than those of any other part of the UK - bar none. As a member of the economic committee of the SNP which did much work on the oil situation in the 1970s, under the guidance of Donald Bain, I always followed with interest, the government of the day's figures on oil production and the revenues generated. Gavin McCrone, the government economist published his report during the period of the Wilson government, when Denis Healey was Chancellor. McCrone's report was so damaging to the UK government's case against independence, they kept it a secret for over thirty years. Denis Healey has just admitted they "massaged" the figures; in other words they lied. Healey is now a Lord and as one of the "untouchables" he can now admit he was a liar while in office.

Unfortunately, the arguments haven't changed one bit. The oil is running out so fast, we will be lucky if it lasts another two years, the NHS in Scotland is on its last legs, we will never be able to afford to pay pensions in an independent state and one lie follows another with monotonous regularity. Why would any Scot believe a single word about anything, any one of our UK or Holyrood Ministers tells us? Unfortunately, instead of kicking every one of them into touch, out of office and as far away as possible from having anything to do with Scotland's governance, our gullible fellow Scots either don't care enough or consider their behaviour perfectly acceptable. It was inevitable that the "anti-Catholic" charge would raise its ugly head at some point during the campaign, as it always does. It is one of the ugliest aspects of Unionist politics but one which paid good dividends to the Unionist cause, particularly in West Central Scotland, where the vast majority of Scotland's Catholics live. It is not as much of an issue as it once was because the power of religion is not what it once was, but it is also true it can still play on old prejudices to the point of having an impact on certain sectors of the population. It is one of the most despicable cards in the Unionist armoury.

George Galloway, has decided to play this particular card once again, and despite his oft-declared detestation of the establishment in this country, he is willing to play the useful idiot on this occasion, which is a measure of his hatred for the SNP. Brought up a Catholic in a mixed marriage household, where religious tolerance was taught at the earliest age, I can honestly say that the SNP is the one organisation in Scotland where I came across no sectarianism of any sort. I can still remember, as a seven year old, being put off the service bus in 1947, in a snowstorm during the worst winter in living memory at that time, because I attended the local Catholic school. I didn't know why I was a wee Fenian bastard, or why some passengers applauded nor did I understand why my mother burst into tears when I asked her. I am still the only Catholic who was ever recruited into Perth City Police, to spend two years being subjected to the worst kind of religious intolerance. When I stood as the first ever SNP candidate in local government elections in Perth in 1967, my mother and sister were accosted at Mass on the Sunday following the publication of my nomination, by Labour Party supporters of my Labour opponent. They were asked why I was standing against another Catholic.

Like most Highland families, I have relatives in Glasgow, some of whom stayed in Royston Hill, a Catholic ghetto at the time and a product of the corrupt housing policy of the Glasgow corporation. The Labour Party regularly distributed election leaflets outside Mass on a Sunday morning, spreading the word that the SNP would close all Catholic schools, just as Galloway is doing to this day. In fact, the Labour Party in Scotland is the one political party where sectarianism was openly practiced. That kind of jaundiced environment was not a product of anything the SNP did, it was a product of the kind of government tolerated and even encouraged by certain elements at Westminster,  supported by Galloway and his ilk. It is not an SNP government or a constitution drawn up by a SNP government, which demands that the monarch of the UK should neither be a Catholic nor marry a Catholic and Alex Salmond is the only political leader of the major parties who has openly condemned the discrimination against Catholics.

I spent over thirty five years in the SNP and never once throughout that time, was religion ever a problem. I did not know the religion of colleagues I had known for years because the topic was never raised, until during the period after the 1974 elections when the party had eleven Westminster MPs, the Orange Order became concerned about the number of Catholics who were prominent in the party and published a list of their names. I had ceased to be a practicing Catholic many years earlier but my name was up there in lights along with the rest of them. Early in the campaign, I expressed the hope we could have a decent and civilized debate about independence but as the weeks have passed, that hope has long since disappeared. Galloway has just lowered the tone another few notches and no doubt before the referendum arrives, it will be lowered even further. It is all vey sad.

Was Independence Case Done Any Favours?

I was interested to see what kind of impact Nigel Farage and UKIP would have in Scotland but, instead of a report of UKIP's policies, how the party intended to fight the independence referendum in Scotland, unfortunately a handful of clowns wrote the kind of headlines for UKIP, they must have hoped for and, could not have bettered had they written them themselves. I watched the TV coverage and heard the abuse hurled in the direction of Nigel Farage, abuse which included cries of "Fascist", "Go back to England, you're not welcome here"; "You can stick your Union Jack up your arse" Apologists for the demonstrators have said it was Farage's views they objected to, not him as a person. A spokesman for the SNP said, "People in Scotland know how extreme and intolerant UKIP are" which must win top prize for irony. The Yes Campaign also refused to condemn the demonstration and said it would not rule out working with Radical Independence, one of the demonstration's organising groups, in the future.

Farage's reaction was just as intemperate, by claiming the demonstrators had exposed "a pretty ugly face of Scottish nationalism that was akin to Fascism." If either Nigel Farage or the demonstrators who hurled shouts of "Fascist" at him, had a clue what Fascism meant, what a real Fascist stands for, they would not be so quick to bandy the word with such abandon. Is it stupidity, lack of general knowledge, ignorance of what Fascism has done in those countries where it was dominant, or is it a combination of all of them, that causes the word to be thrown at opponents? I would have thought the activities of Hitler, Mussolini and their cronies, during the 1930s and 1940s, would have been so well known, even to the ignoramuses that pollute the internet, that to call Farage a Fascist would be such an obvious nonsense. Farage, by equating Scottish Nationalism with Fascism, merely underlined his ignorance of the Nationalist movement in Scotland. That comes as no surprise, as his and UKIP's knowledge of Scotland, its history and its politics, both past and present, is risible. The best thing that could happen in order to destroy any hope of UKIP making any kind of impact in Scotland, would be to give Nigel Farage and whoever else comes up from England, unlimited time and coverage in the Scottish media.

Throwing stupid accusations of "Fascist" at political opponents, or equating the National Movement in Scotland with Fascism, is just laziness and the kind of childish name-calling now so prevalent. It is akin to the shouts of "perv" or "paedo" that are regularly thrown as insults, when crowds of teenagers meet in the streets.  We never did experience Fascism in the UK but there are still far too many of us still alive, who lived during the years when it was dominant in Europe and South America, for the consequences of living under Fascism to be unknown. If there is one thing that sets my teeth on edge, it is to hear some snot-nosed adolescent, of any age, hurl accusations of "Fascist" at an opponent, because either they are too stupid to know any better or, are too lazy to educate themselves about how stupid they are. Do these people really think that Farage and UKIP are the same kind of people who built Auschwitz-Berkinau? Does Farage really think the kind of loud mouths he met in Edinburgh, are the equivalent of the death squads that wiped out whole villages in Eastern Europe? If they do, it is time they took some serious medical advice. If they don't, it is time for them to temper their language, unless they want to see politics in Scotland really descend into the gutter.

I have been involved in politics in Scotland, in one way or another, for over fifty years, campaigned in the streets in some of the roughest places in Scotland. On some occasions, the verbal abuse has been pretty near the bone and, in the early days when the SNP was just beginning to make its presence felt in Scotland, there was the odd physical altercation. Generally speaking, with the exception of the time of the miners' strike, physical violence of the type witnessed in other European countries has been largely absent. In fact, until the internet took over, the kind of bile and nastiness so prevalent on Twitter and Facebook, was unknown outside the realms of anonymous letters. It is the height of nonsense to suggest there are no racists in Scotland and it is not so long ago, self-styled asylum seekers in Scotland found the place anything but welcoming. But it is blatantly outrageous to suggest the National Movement in Scotland, in any of its organised and official guises, is founded on ethnic or racist grounds. To suggest the SNP or any other political grouping on the independence side of the debate, makes anti-English arguments, is to willfully misrepresent the politics of Nationalism in Scotland.

Unfortunately, it is impossible to legislate for stupidity and the reception given to Nigel Farage, allegedly to demonstrate against "the intolerance" of UKIP was as stupid as it gets. The UKIP are "intolerant" therefore we will stop them speaking, UKIP hate foreigners, therefore we will tell Farage to get back to England; UKIP knows nothing about Scotland, therefore we will tell Farage to stick the Union Jack up his arse. Aye, and to show the demonstrators were not anti-English, the leader of one of the demonstrating groups was, yup, you've got it - English. Both Alex Salmond and the Yes Campaign will have their own reasons for not condemning the tone of the demonstration and the kind of language used but I hope they have not damaged the independence case or set the tone for future debate between now and next year.


Tuesday, 14 May 2013

And That Is Independence?

The independence campaign, as opposed to simply the Yes Campaign, has taken a bit of a hiding in recent weeks. The opinion polls have consistently trended in a downward direction and the number of Scots who say they are in favour of independence, is at its lowest level for some months. It is all the more galling, considering there has not been a single positive message from the No Campaign, whose sole strategy has been to spread uncertainty. This has taken little or no effort and has consisted of nothing other than a series of questions of the "Ah, but what about...?" category. That something as ludicrously simple and negative has had such an impact on the support for independence, says much about two things; the wafer-thin confidence of the Scottish people and, the lack of political bite of the independence campaign.

To someone who believes in Scottish independence for its own sake, the fact we have to "persuade" Scots of the benefits of independence, being in control of our own country, the dignity and self-respect associated with independence, is quite dispiriting. That there have been polls, which show that as little as an extra £500 per year, would be sufficient to "buy" the votes of many Scots, suggests that dignity and self-respect are in gey short supply. There will be many who will say I have no right to take that attitude but when it was raised on Question Time, which was being broadcast from Scotland, Janet Street-Porter and Frank Field could hardly hide their disdain. Frank Field summed it up when he said, "I expected to get a hard time up here tonight, but if the only reason you want independence is money..." All of that aside, the independence campaign is going to have to change gear quickly, if it hopes to get a "Yes" vote next September.

I have long been of the opinion that the SNP no longer seeks independence and regularly criticise the party as a consequence. I am just as regularly ridiculed as a "purist" or caricatured by SNP supporters, as some kind of neanderthal "full of bitterness and hate for the SNP" although none of them has been able to explain how what they propose equates with any acceptable definition of independence. One of the reasons the No Campaign has found it easier to ridicule many of the claims made by the Yes side, is the way in which the meaning of the word "independence" has been stretched to the point where there is no circumstance which the SNP does not include in its definition. If after independence is established, Scotland controls its own monetary policy, that is independence BUT, if the Bank of England controls monetary policy, that is still independence. Unfortunately, the SNP presumes to speak for the independence movement and its pronouncements are made with that intention. We are all expected to accept that whatever policy position is adopted by the SNP, is the policy which will prevail AFTER independence. Patrick Harvie of the Greens, has already been moved to remind everyone, "We can't just be there to wave the flag for someone else's campaign." Of course, we are also given an assurance by SNP supporters, that we can always change everything after independence, as if the real world of politics was that easy.

Why should any of the above impinge on the Yes Campaign, which has gone to considerable effort to impress on us that the referendum is not about policy, it is about deciding if Scotland should be independent? If that was how the vast majority of the Scots electorate saw it, those who think about politics - perhaps - at an election, that would be fine, but unfortunately, despite the best efforts of the Yes Campaign, it is still seen as the creature of the SNP. It now has to either accept that is the case and try harder to change the image or,   just admit that it has itself to blame for allowing that to happen and go with the flow. Whichever path it chooses, it must also do something about its inability to effectively counter the No Campaign, by presenting a harder response to its more ludicrous claims.

The problem the Yes Campaign will have if it contradicts the SNP, as happened with the currency for example, is the likely reaction of the SNP supporters, who resent any opposition to the party. Dennis Canavan was only one of several members of the Central Committee who said he preferred a Scots currency, but he rather spoiled the effect by going on to say he would also consider the euro in time. He opted for a Scots currency by saying, "If Scotland were to have its own currency then it would have far more freedom to do its own thing and it would have a full range of economic levers to determine its own economic policy." All of that is perfectly accurate but if we later adopted the euro, we would have none of those powers or freedoms.

The Yes Campaign placed itself in a similar position when it said, "The people who care most about Scotland, are the people who live in Scotland, who will be taking the decisions about our future." then, "As a member of the European Union we will have access to the world's largest free market...and independence is the best way to guarantee it". That is not only SNP policy, it contradicts the whole notion of independence, as well as the claim the Yes Campaign is not about policy. Blair Jenkins also endorsed the SNP's volte-face on NATO, stating "It will be to the benefit of the Yes Campaign".

It is little wonder the Scots electorate is confused about what independence would mean. SNP policy has been full of contradictions. It endorsed the ERM until it collapsed eighteen months later, but it then endorsed the euro, with Alex Salmond claiming the "pound is a millstone around our neck", but then the euro went into meltdown, so it decided that perhaps the millstone wasn't really so big after all and plumped for a currency union based on sterling, arguing with every policy change, "we will still be independent". We are all expected to accept all of this because a committee of "experts" has endorsed it. There is no doubting the economic expertise of the Fiscal Commission but their policy paper did not conclude by stating, "...And that is independence". No, what they endorsed was the SNP's economic policy, not independence. The next time Scots are asked to accept the findings of another panel of experts, it will do no harm to ask, "How many of them are Scottish Nationalists, how many of them favour independence, how many of them are prepared to say, "And that is independence"?


Sunday, 5 May 2013

Scottish Alternatives To The EU

Blair Jenkins used a rather clever ploy, when addressing students on the need for the Yes Campaign in the run-up to the referendum on Scotland's constitutional future in 2014. He asked his audience to imagine that Scotland was an independent country and, they were being persuaded to join a political union, which would become the United Kingdom. So that they would have some idea of what the new Union would mean, he listed the changes that would take place. Scotland's ancient parliament would be abolished and her MPs would have to sit in the new Parliament in London, they would be in a permanent minority and could be regularly outvoted, and so on. The question was, would they want to join a union under those conditions?  I recently wrote about the three issues which were causing the SNP the most embarrassment in the campaign for independence viz. whether or not Scotland would be an automatic member of the EU, the retention of sterling as Scotland's currency in the event of a "Yes" vote and, membership of NATO but without having nuclear weapons in Scotland, thereby necessitating the removal of Trident from the Clyde.

The SNP decided to support Scotland's full participation in the EEC, including the single currency, in 1990 and that has been the party's policy ever since. "Independence in Europe" became the party's mantra in 1988 and it gave its complete support to the various Treaties which followed the Single European Act, which it also supported when it was signed in 1986. The Party's National Executive told a rather unhappy membership that the Act would have little or no effect on the sovereignty of an independent Scotland. Support for the euro replaced the party's earlier commitment to a Scottish currency and remained until the banking crisis of 2008, caused the euro to begin to unravel. Although the SNP decided to retain sterling after Scotland votes "Yes", support for membership of the EU remains as strong as ever. Despite the embarrassment that this has caused, when it was discovered the First Minister and the SNP had taken no "specific" advice on the question of Scottish membership, the party has continued to insist that an independent Scotland will retain its membership, together with the opt-out of the euro and the Scottish share of the budget rebate won by Margaret Thatcher. Several "experts" on the legal and political aspects of the EU have expressed opposing views, therefore there is no definitive answer to the question of whether or not Scotland will be granted automatic membership.

If we were to use the Blair Jenkins ploy and apply it to EU membership, assume that Scotland is independent and was being offered membership of the EU in its current form, the Scottish electorate would be asked to consider membership of a Union where the imbalance of Scottish representation to total representation of member states, would be far greater than the current imbalance in Westminster. If those countries which have applied for membership are accepted, the imbalance will become even greater, with Scotland having a single Commissioner (perhaps) out of a total of 27 (currently), 2 - 3 in the Council of Ministers from a total of 345 where Qualified Majority Voting  (QMV) is applied and 255 votes are needed to win. The European Parliament has 735 members and Scotland would have a possible 16, whereas we currently have 52 out of a total 650 in Westminster. Scots MPs have never voted in Westminster on the basis of their nationality as Scots, but on the basis of their party affiliations, which has frequently meant that issues which impacted on the whole of Scotland such as the destruction of our industrial base, have been argued, won or lost on a party political basis, rather than a national basis, much to the detriment of the long term interests of Scotland. The same voting pattern would be followed in the EU.

Complete control of agriculture, fishing and foreign trade would be handed over to the EU which would also determine competition laws for the internal market. If membership of the euro was agreed, monetary policy, the setting of interest rates and indirect control of fiscal policy would pass to the European Central Bank. The recent history of the failure of the euro, has increased the demands for even greater integration and control of  member states' budgets. The conditions which are being imposed on Cyprus, assuming it accepts another bailout from the ECB, are the harshest imposed on any member state and speak volumes about the attitude of the bureaucracy at the head of the EU, to the smaller member states. Wide areas of social policy, transport, consumer protection and energy also come within the remit of the EU. There really is no need to take this ploy too far, given that the recent history of the EU, particularly those countries which are also members of the euro zone, will be fresh in peoples' minds and they have seen the TV pictures of the riots in Greece, Spain and elsewhere. It does no harm however, to actually list the powers which the EU has and, to remind people of the imbalance of voting power in the hands of the larger countries. We have been fed on the myth of how well small countries have done in the EU, when the reality is that it has been run by the Franco/German axis. The recent experiences of Greece and Italy and how easily their elected heads of government were removed, should be a wake-up call for those who are concerned about democracy and the rights of member states.

What should strike any supporter of Scottish independence, is the inconsistency of the SNP in their attitudes to the Union with the rest of the United Kingdom and the European Union. In her speech to the British Irish Chamber of Commerce in February, Nicola Sturgeon warned Scots that David Cameron's promise of a referendum on EU membership, created "damaging uncertainty", putting Scottish jobs at risk. She also claimed the EU had "created and safeguarded some 64,000 Scottish jobs in the past ten years". She asserted, without offering a shred of evidence, it was "overwhelmingly in the interests of an independent Scotland to be in the EU". Her entire address could have just as easily been applied to the UK and made by any Unionist politician arguing for Scotland to remain a part of the UK. She not only ignored the fact that Scotland is a net contributor to the EU and runs a Balance of Payments deficit with the EU, it has also cost Scotland 100,000 jobs in the fishing industry alone. In a piece for The Scotsman on January 26th, Alyn Smith, the SNP MEP, took the familiar party line of disparaging those who oppose membership of the EU as "dingbats". Such a sophisticated line of argument is sure to win converts to Scottish independence, from Scotland's ever increasing group of EU sceptics.

The SNP continues to insist that, despite being asked to relinquish control of our lives to the extent outlined above, we would still be independent. It is a claim of which more and more Scots are openly disdainful, to the point where the latest survey showed 34% of Scots are opposed to EU membership and 67% want a referendum on membership. The manner in which centralised control has been imposed by the EU, has gone largely unnoticed because of the relentless conspiracy of silence pursued by the main political parties. Those who have attempted to oppose EU centralisation, have more often than not, been parodied as cranks or even racists by the EU supporters such as Alyn Smith, David Cameron and Ken Clarke whose description of the membership of UKIP did nothing to enhance his own appreciation of the depth of opposition to the EU now prevalent throughout the UK. Cameron's decision to offer a referendum on EU membership - if the Tories win the next Westminster election - is not being followed by the SNP, a decision they will come to regret, particularly as the refusal has been couched in exactly the same kind of supercillious language used by Unionists when they earlier refused a referendum on Scottish independence and were rightly condemned by the SNP.

The SNP has invested so much political capital on the "Independence in Europe" line since 1990, it is understandable that they find it difficult to complete the volt face. The policy slogan was always an oxymoron but the increased centralised control of the EU and the unraveling of the euro, now make the claims associated with "Independence in Europe" quite risible. Both the SNP and more importantly, the Yes Campaign, would do well to look at the alternatives that would be available to an independent Scotland, such as the EEA and EFTA. The entire campaign from the Unionist side has been based on nothing more than the creation of uncertainty in the minds of the Scottish electorate. There has been no appeal to principle, little or nothing of a positive message of why we should adhere to the Union. Unfortunately, the SNP and the Yes Campaign, have reduced independence to the point where it has become almost meaningless and the only perceptible change will be in the transfer of fiscal powers from Westminster to Edinburgh, but, even those will be curtailed by the conditions the SNP has proposed for the monetary union it seeks with the rUK. Given the recent events in the UK and the EU, from the war in Iraq, the scandal of the MP's expenses, the banking crisis, the unraveling of the euro and the consequent increase in centralisation in the EU, the Scottish people may be far more ready to embrace radical change than the SNP and the Yes Campaign are ready to admit. It is almost certain they are prepared to accept greater change than they are currently being offered.

Membership of the Common Market was sold to the British people on the basis of it offering a much larger market for British goods and services; in other words it was supposed to bring substantial economic benefits, with little or no downside to the deal. The supporters of membership played down the question of the loss of sovereignty, denying such a possibility even existed. Even today, the more fanatical of the EU supporters still attempt to claim there is little or no loss of sovereignty, witness the most recent statements of the SNP leaders, despite the obvious evidence to the contrary. Economic nationalism is the basis of the current SNP leadership's desire for independence, hence Nicola Sturgeon's claim about jobs and the importance of the EU to Scotland's trade situation. Sovereignty would appear to mean little or nothing to the leadership of both the SNP and the Yes Campaign, despite the assertion by Alex Salmond at the party conference in Inverness that, "....the sovereignty of the Scottish people is in our DNA." The loss of sovereignty involved in membership of the EU and a formal currency union with rUK, cannot be finessed or spun to the point where the Scottish electorate will be persuaded it does not exist. The loss may not matter to those who now argue that "independence does not mean what it used to mean", a piece of nonsense peddled to justify the fact that EU members have already surrendered their independence; but it certainly matters to those countries in the euro zone, such as Greece and Cyprus, who are currently having to live with the consequences.

If sovereignty of the people genuinely matters - as the SNP and the Yes Campaign claim it does -  Scotland's political leaders must look at the alternative political and trading structures which offer membership to an independent Scotland and compare the conditions under which Scottish membership would be offered. Scots have never been given the opportunity to decide whether or not they are prepared to surrender sovereignty to the extent that is required for membership of the EU and no political elite has the right to deny them the right to make that decision. There are those who argue sovereignty can be "pooled" or "shared" but a nation can no more be a wee bit sovereign than a woman can be a wee bit pregnant. We are either sovereign or we are not and those who favour membership of the EU but oppose membership of the UK, find it difficult to explain the difference.

Sovereignty is not simply an abstract concept, it has practical applications. A claim to sovereignty is a claim by some representative authority in the name of "the people" to exercise a monopoly of law-making and law-enforcement within a designated territory. In an increasingly interdependent world, sovereign states have accepted specific treaty limitations on their law-making rights. But the EU goes further by requiring member states to cede a general right of law-making on a permanent basis, to EU institutions. Sovereignty is a legal as well as a philosophical way of describing the right of a people to govern itself, to determine its own priorities within the constraints imposed by its external environment. Increased interdependence may change the balance of advantage and disadvantage in any "self-determined" act, but it cannot make the principle of self-determination or self-government superfluous. At any level of integration or interdependence, a community of people must ask itself how important it is to retain the right to make its own choices between the options with which they are faced. As the debate on the currency an independent Scotland should use, has finally attracted the attention of the media, it is obvious that one of the most important objections to a sterling currency union, is the degree of control of the Scottish economy which would be left in the hands of the Bank of England and the government of the rUK - in other words sovereignty.

If EU membership entails losing control, both political and economic, to the EU commission and other areas of EU bureaucracy, what are the alternatives? Obviously trade is important but is it so important that control of the country has to be sacrificed in order to satisfy the demands of those who live by it? A Union which has  existed for over 300 years, has shown what it means to surrender control of our affairs to a much larger neighbour, whose relationship with us has not always been benign. Having endured that experience, through bad times and occasionally good times, we know better than most that to repeat it with another group of larger and more powerful neighbours, intent on creating a federal union, would be an enormous mistake. We can avoid making that mistake but first of all, we must lose the notion that we have no alternatives, that we are incapable of creating the kind of society we seek, without surrendering control of the means by which to create it.

What are the alternatives? The first is the European Economic Area (EEA), sometimes called "The Norwegian option", which includes the member states of the EU plus, Iceland, Liechtenstein and Norway. This would free Scotland from the regulations which govern the Common Agricultural Policy (CAP), the Common Fisheries Policy (CFP) and Regional Policy, while reducing the budgetary contribution. It would grant access to the Single Market in goods and services but access would be subject to rules decided by the EU, with no input by Scotland. It is the preference of Norway but there is growing discontent with what some Norwegian politicians call "fax democracy", where Norwegian Ministers receive the next rules governing their relationship with the EU, by fax. That view is contradicted by others who point to the 1989 Conference of Plenipotentiaries in Basel, Switzerland, as an example of how Norway participates fully in drafting EU legislation which may affect it. Rules of Origin apply and there is little doubt that influence on EU regulations would be less than that afforded to those countries which have full membership, but fishing is too important an industry for Norwegians to surrender control to the EU and the CFP.

The second option is the European Free Trade Association (EFTA), originally set up to act as an alternative to the original EEC but as some of the original members joined the EEC, the membership has been reduced to Lichtenstein, Iceland, Norway and Switzerland. The agreement gives access to the EU markets under the EFTA umbrella but Switzerland has made a number of bilateral agreements with the EU and other countries throughout the world. EFTA has established trade agreements with twenty six countries throughout the world, as well as the twenty seven countries within the EU and only Switzerland is not also a member of the EEA. This gives Switzerland more control over its own affairs but none of the EFTA countries are bound by either the CAP or the CFP, nor are they bound by the Social and Employment legislation.

There is also the "Turkish Option" which, as the title implies, applies to Turkey only. Turkey first made application as an Associate member of the European Economic Community in July 1959 and the Association Membership came into effect in December 1964. Both the internal politics of Turkey and the external relations created by the problems associated with Greece and Cyprus, caused the application for membership to be shelved but on the 6th March 1995 a Customs Union was formed between the EU and Turkey. To complete membership of the EU, Turkey must complete 33 of the 35 chapters of the acquis commaunitaire, which is the complete body of EU Law. At the moment Turkey has full access for goods but agricultural products are not covered by the customs union and Turkey is not governed by either the CAP or the CFP, makes no Budget contribution and is not covered by either Social or Employment legislation.

Finally, Scotland could have no formal relationship with the EU other than that which would be conducted through the World Trade Organisation (WTO). This would mean the EU would have no power over Scotland in terms of the CAP, CFP, Social and Employment legislation or Regional Policy, neither would there be any authority over product regulation except for exports to the EU. By the same token, Scotland would have no influence on the EU in how trade with other countries is conducted. The determination to liberalise trade throughout the world has been on-going since the end of WWII, a recognition of the fact that free trade can benefit everyone but it should never be assumed that free trade is always to everyone's advantage. It was certainly NOT to the advantage of the estimated 100,000 Portuguese textile workers who lost their jobs on the imposition of the internal market in the EU. It is now widely recognised that the fringe countries of the Mediterranean such as Greece, had economies that could not possibly compete with Germany and Greeks have had to suffer the consequences.

Free trade has more often than not, simply been an extension of the foreign policy of the major nations such as the USA or even the UK and, it has finally been recognised by the people of the UK, that the EU is as much a political union as it is a trading union. We are told that if we leave the EU, thousands of jobs will be sacrificed as they refuse to trade with us. It seems to be forgotten that trade is a two-way process, that Scotland has a balance of payments deficit with the EU; in other words, we buy more goods and services from the EU than it buys from us. Common sense would dictate that if they refuse to buy our goods and services, we will find other markets and whether or not we are members of the EU, they will still want to sell us their products - or suffer the unemployment that the loss of trade will create. Sheer self-interest will ensure trade continues, to say nothing of the vindictiveness towards Scotland that would need to exist in the EU, for it to cut off Scotland, alone of all the countries in the world, from a trade that would benefit their own citizens. In all my travels throughout both the EU and Eastern Europe, I have yet to see any evidence of the kind of vindictiveness with which Unionists claim we would be confronted.

The Scottish people are not just entitled, in theory, to decide whether or not they want to be members of the EU. They must be given the opportunity - for the first time - to vote in a referendum, on the kind of relationship they would prefer to have, after being given - again for the first time - the kind of information that would allow them to make that decision. The EU is not just a trading organisation, not by any stretch of the imagination; it is a political union, the evidence for which is more and more evident since the euro crisis. Scots are being told they MUST walk away from one incorporating union, in order to embrace another, without as much as a by your leave. That is both dishonest and undemocratic and must not be allowed to happen.