Is Scotland a country or not?
by Yes Orkney - 14:26 on 11 August 2014
Currency and Scotland's status as a country.
For the Yes campaign independence represents a chance to build a better, fairer society with a more democratic and accountable government. It's not about currency, but the debate is largely being framed as such and we need to understand why.
Click to enlarge
Which of the five viable currency options identified by the Scottish Government Fiscal Commission Working Group1 will an independent Scotland adopt? How you look at this depends on whether you think Scotland is currently even a country at all.
If the United Kingdom is a union of countries, then when Scotland becomes independent it will be entitled to its share of the joint assets, and also liable for its share of UK debt as a so-called continuator state. This is the position taken by the Scottish Government, which wants to act responsibly and pay its debts. The pound Sterling is viewed as one of the assets to which Scotland is entitled.
If Scotland was "extinguished" as a country by the Act of Union 1707, which is the line taken by Westminster2, then what independence would actually mean is the creation of a 'new' country - a successor state. The Scottish Government maintains that UK debt would therefore remain UK responsibility as new countries are not liable for the debts of others.
In reality legal opinion on Scotland’s status as a continuator or successor state is mixed3. Everything is up for negotiation but the Scottish Government is in a strong starting position.
Despite the Tory/Lib-Dem coalition Government in Westminster saying it would not enter into any negotiations prior to a Yes vote, all pro-union parties are claiming to have taken the Scottish Government's preferred option of currency union off the table. This is a political tactic designed to force the Scottish Government to endorse one of the other options instead, which would weaken their negotiating position in the future. It is also an attempt to scare people into voting No.
It is completely disingenuous of Alistair Darling to continually clamour on about 'Plan B'. He is well aware Scotland cannot be stopped from using the pound, which is an internationally tradeable currency4. What he attempted to do in his televised debate with Alex Salmond was get the First Minister to publicly settle for second best (for both Scotland and the UK). At a business meeting following the debate, Salmond said:
'If we had a zero share of debt then Scotland would be in both balance of payments and budgetary surplus in the first year of independence. We wouldn't be paying up to £5 billion in interest payments.
'That is the logical conclusion of the UK Government claiming all of the assets of the country – they end up with all the liabilities.
'So that would be quite attractive. But obviously it also tells you why it ain't going to happen. There is no way that a UK Chancellor is going to allow himself to be in a position where Scotland gets [off] scot-free in terms of the debt.'
In addition, Ed Miliband recently admitted when pressed in an interview with STV that ruling out a currency union would cost businesses in the remaining UK millions of pounds in transaction fees5. This is not a vote winner with the UK general election coming up in 2015, and lends weight to the theory that the pro-union parties will change their tune following a Yes vote this year.
We can say with certainty that an independent Scotland will be using the pound6. It is very likely that the pro-union parties are bluffing on the issue of formal currency union since it would be in their interests too, but we will be using the pound regardless. We are living in an industrious, resource-rich country which is not overly dependent on any one sector - our economy will do well. When Ivan McKee of Business For Scotland was in Orkney7, he said:
'The UK balance of payments would be in a much worse state if Scotland wasn't in the Sterling zone, so from their point of view it makes sense to have it as well. So, despite all the mouthing off that's going on, the reality is that when push comes to shove Scotland continuing to use Sterling is the most sensible option.
'What it's like long-term - 10, 20 years - we might decide to do something different, and there's plenty of examples around the world of people that have done something different and made it work.'
When Ireland became a Free State in 1926 it used the Irish pound pegged to Sterling with the full co-operation of the British Government and the backing of the Bank of England7. This lasted until Ireland joined the Euro in 1978 (and the Irish economy is now stronger than the UK's). The Ireland Act of 1949 also specified that Ireland would be not regarded as a foreign country under British law.
Why is Scotland being treated differently?
MSL
2 Newsnet Scotland - Act of Union
3 Scottish Constitutional Futures
4 City AM - The Big Independence Lie
5 Newsnet Scotland - Ed Miliband currency threat
6 Ivan McKee in Orkney, on YouTube
Add your comment