A smooth transition? And to what?

Iain Macwhirter

HE must be having a laugh. Scottish Electoral Commissioner John McCormick caused a parliamentary row by suggesting Unionists and Nationalists should get together and make a “joint statement” on what a Yes vote would mean in practice. You might as well ask Professor Richard Dawkins and Cardinal Keith O’Brien to agree on what happens in the afterlife.

Nicola Sturgeon called on David Cameron to convene pre- referendum talks on the handover, which the PM rejected at Prime Minister’s Questions, saying he wasn’t prepared to “pre-negotiate Scotland’s exit”. Lip-readers in the twittersphere thought he also said a rude word, as suggested in Steve Bell’s Guardian cartoon, but if he had, he’d have been expelled from the chamber.

Scotland has only very recently begun to contemplate the possibility of leaving the UK. There hasn’t been a century of nationalist agitation here as in Ireland before its departure in the 1920s. And since that involved civil war, it’s not a history anyone would want to repeat. There is of course no reason why the disintegration of a union should necessarily involve conflict. Exactly 20 years ago, the Czech Republic and Slovakia decided to go their separate ways peacefully in the Velvet Divorce. A raft of new states were formed after the disintegration of the Soviet Union without much fuss.

If Scotland decided to leave the UK, the Scottish Government insist the divorce would be similarly smooth. The Queen would remain as head of state and Scotland would retain the pound. Of course, the Queen might refuse, though I don’t believe she would. England could refuse to let Scotland use the pound, but that also seems unlikely since it would cause needless trouble for banks and businesses that straddle the Border. But one or other government could, despite their commitment in the Edinburgh Agreement, get nasty – though there would be little to gain from falling out.

This does not mean, however, that independence would be easy. There would have to be lengthy negotiations about matters such as the division of the national debt – Scotland’s share would be around £140 billion, or one-tenth of UK debt. Scotland would have to renegotiate its relations with the European Union, as would England or the Residual UK, at least as far as contribution to the EU budget is concerned.

There would be negotiations, too, over Trident, which would almost certainly remain in Scottish waters before being decommissioned.

The SNP used to say that they would continue to base welfare provision on the UK model – in the so-called “social union” – but with benefits being withdrawn in England, that might need recalibration. Pensions are often cited as a problem because simply transferring to Scotland a share of National Insurance wouldn’t necessary be enough to finance Scotland’s pensions.

And, of course, there would be oil revenues, which under international law, would mostly go to Scotland. But there would be intense negotiation over precisely how much. There might be further arguments about the ownership of public assets such as army bases, but only if people actually wanted a fight.

So – saying disengagement need not be a nightmare is not the same as saying independence is a good idea. One of the main problems with the Unionist campaign is that it is very one- dimensional – concentrating almost exclusively on threats and warnings: Scotland being thrown out of the EU, being denied the use of the pound, and border posts being erected by England to keep out immigrants.

All this assumes that England would behave belligerently and punitively, like an old-fashioned colonial overlord. But I can’t see why it would. The British state gave up most of its empire by agreement and there’s no reason to suppose it would behave differently if Scotland decided to go it alone.

So, setting aside the problems of disengagement, what would independence look like? The problem here is that we don’t know who would be in charge of it. Some Labour politicians seem to think Alex Salmond would deny Scots a vote on Europe, seize control of the universities, close nuclear power stations, and cover the country with wind farms. But he could only do so if he was still in charge of the Scottish Government, which isn’t guaranteed. The Scottish Parliament would be in charge of the transition and it is likely, given PR, that it would be a coalition in 2016 that actually handles the process of separation from the UK. Labour could even win the first election to an independent Scotland – which would be fascinating.

NO- ONE can be sure what an independent Scotland would look like precisely because it would be up to the people of Scotland to decide what kind of country they want to live in. My view is that Scotland should become one of those small, social democratic countries like Denmark, Norway or Finland. But it wouldn’t be up to me. Scots might vote for parties who want to leave Europe, and hold a referendum. They might want Scotland to become a more closed, banking-led economy, like Switzerland.

One of the most difficult problems would be how to prevent Scotland ending up like Ireland or Iceland, with a delinquent banking sector that effectively takes over the country. Scotland has two of the world’s biggest banks: RBS and HBOS/ Lloyds, which are both partially nationalised. A Scottish government would not have had to bail out these banks on its own had Scotland been independent in 2008, for the simple reason that these are also England’s biggest banks, with most of their operations south of the Border. The Bank of England would have had to co-ordinate a similar rescue operation to prevent the collapse of the entire financial system.

But the greater problem is how a small country could prevent huge banks, with assets many times Scottish GDP, from exerting too much influence on the politics of a small country. The SNP