The price of Scot­tish in­de­pen­dence

Financial Mirror (Cyprus) - - FRONT PAGE -

Though the world’s eyes now are on Scot­land’s ref­er­en­dum on in­de­pen­dence from the United King­dom, Scot­land is not alone in seek­ing to re­draw na­tional bound­aries. There are in­de­pen­dence move­ments in many other parts of the world; in­deed, 39 new states have joined the United Na­tions since 1980. Many more as­pi­rants are wait­ing in the wings, and would likely be en­cour­aged by a Scot­tish “Yes” vote.

The Scot­tish pro-in­de­pen­dence cam­paign is based on four claims. The first is cul­tural: to pro­tect and strengthen the iden­tity of the Scot­tish peo­ple. The sec­ond is ide­o­log­i­cal: to move Scot­land to­ward a Scan­di­na­vian-style so­cial democ­racy. The third is po­lit­i­cal: to bring demo­cratic gov­er­nance closer to the peo­ple. And the fourth is eco­nomic: to lay claim to a larger share of North Sea oil and gas.

UK po­lit­i­cal lead­ers and many Euro­pean gov­ern­ments are strongly urg­ing the Scots to vote against in­de­pen­dence. Scot­tish in­de­pen­dence, the “No” cam­paign ar­gues, would bring few if any of the claimed ben­e­fits; on the con­trary, it would cause many eco­nomic calami­ties, rang­ing from fi­nan­cial pan­ics to the flight of jobs and in­dus­try from Scot­land. More­over, an in­de­pen­dent Scot­land might be ex­cluded from the Euro­pean Union and NATO.

What should the rest of the world think about this de­bate? Should the Scot­tish in­de­pen­dence cam­paign be hailed as a break­through for claims to cul­tural iden­tify and self­gov­er­nance? Or should it be viewed as yet another source of in­sta­bil­ity and weak­ness in Europe – one that would in­crease un­cer­tainty in other coun­tries and parts of the world?

Se­ces­sion move­ments can, no doubt, cause great in­sta­bil­ity. Con­sider the re­gional and even global tur­moil over Kosovo, South Su­dan, Kur­dis­tan, and Crimea. Yet na­tional in­de­pen­dence can also be han­dled peace­fully and smoothly. The 1993 di­vi­sion of Cze­choslo­vakia into the Czech Repub­lic and Slo­vakia – the famed “vel­vet di­vorce” – im­posed no sig­nif­i­cant or last­ing costs on ei­ther suc­ces­sor state. Both ac­cepted the di­vi­sion, and, know­ing that their fu­ture lay within the EU, fo­cused their at­ten­tion on ac­ces­sion.

Here, then, is a plau­si­ble and pos­i­tive sce­nario for an in­de­pen­dent Scot­land. The rest of the UK (called the “RUK” in the cur­rent de­bate), in­clud­ing Eng­land, Wales and North­ern Ire­land, would quickly and ef­fi­ciently ne­go­ti­ate the terms of in­de­pen­dence with Scot­land, agree­ing how to share the UK’s pub­lic debt and pub­lic as­sets, in­clud­ing off­shore oil and gas. Both sides would be prag­matic and mod­er­ate in their de­mands.

At the same time, the EU would agree im­me­di­ately to Scot­land’s con­tin­ued mem­ber­ship, given that Scot­land al­ready abides by all of the re­quired laws and demo­cratic stan­dards. Sim­i­larly, NATO would agree im­me­di­ately to keep Scot­land in the Al­liance (though the Scot­tish Na­tional Party’s pledge to close US and Bri­tish nu­clear-sub­ma­rine bases would be a com­pli­ca­tion to be over­come).

Both Scot­land and the RUK might agree that Scot­land would tem­po­rar­ily keep the Bri­tish pound but would move to a new Scot­tish pound or the euro. If such mon­e­tary ar­range­ments are trans­par­ent and co­op­er­a­tively drawn, they could oc­cur smoothly and with­out fi­nan­cial tur­moil.

But if the RUK, the EU and NATO re­spond vin­dic­tively to a Yes vote – whether to teach Scot­land a les­son or to de­ter oth­ers (such as Cat­alo­nia) – mat­ters could be­come very ugly and very costly. Sup­pose that a newly in­de­pen­dent Scot­land is thrown out of the EU and NATO, and told that it will re­main out­side for years to come. In this sce­nario, a fi­nan­cial panic could in­deed be pro­voked, and both Scot­land and the RUK would suf­fer eco­nom­i­cally.

The key point is that the costs of sep­a­ra­tion are a mat­ter of choice, not of in­evitabil­ity. They would de­pend mainly on how the RUK, the EU, and NATO de­cided to re­spond to a Yes vote, and how mod­er­ate a newly in­de­pen­dent Scot­land would be in its ne­go­ti­at­ing po­si­tions. If cool heads pre­vail, Scot­tish in­de­pen­dence could pro­ceed at a rel­a­tively low cost.

The dan­gers of na­tional se­ces­sion are much greater in places with­out over­ar­ch­ing en­ti­ties like the EU and NATO to con­strain the sit­u­a­tion among the suc­ces­sor states. In such cir­cum­stances, uni­lat­eral claims of in­de­pen­dence op­posed by the na­tional gov­ern­ment or a sub-na­tional unit of­ten lead to a break­down of trade and fi­nance – and of­ten to out­right war, as we saw in the breakup of the Soviet Union, Yu­goslavia, and most re­cently, Su­dan.

In those cases, sep­a­ra­tion was in­deed

fol­lowed by deep eco­nomic and po­lit­i­cal crises, which in some ways per­sist. In­deed, in the case of ex-Yu­goslavia and the for­mer Soviet Union, the EU and NATO ab­sorbed some but not all of the suc­ces­sor states, thereby rais­ing ma­jor geopo­lit­i­cal ten­sions.

In­ter­na­tional pol­i­tics in the twenty-first cen­tury can no longer be about na­tion-states alone. Most key is­sues that are vi­tal for na­tional well­be­ing – trade, fi­nance, the rule of law, se­cu­rity, and the phys­i­cal en­vi­ron­ment – de­pend at least as much on the pres­ence of ef­fec­tive re­gional and global in­sti­tu­tions. Even if Scot­land de­clares in­de­pen­dence, it will – and should con­tinue to be – bound by a dense web of Euro­pean and global rules and re­spon­si­bil­i­ties.

I am per­son­ally sym­pa­thetic to Scot­land’s in­de­pen­dence as a way to bol­ster Scot­tish democ­racy and cul­tural iden­tity. Yet I support in­de­pen­dence only on the as­sump­tion that Scot­land and the RUK would re­main part of a strong and ef­fec­tive EU and NATO.

Cer­tainly, a Yes vote would put an even higher pre­mium on ef­fec­tive EU gov­er­nance. But, if the EU and NATO were to “pun­ish” a newly in­de­pen­dent Scot­land by ex­clud­ing it, real dis­as­ter could en­sue, not only for Scot­land and the UK, but also for Euro­pean democ­racy and se­cu­rity.

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