The late weeks of the Scottish independence campaign have featured threats and warnings against Scotland that its economy will be in dire trouble if it secedes from the UK. One of the assumptions behind these threats and warnings is that Scotland will be entirely at the mercy of the British parliament and major corporations. It won’t be. In fact, Scotland has valuable things that the UK wants, which Scotland can trade for the things that it wants but can’t achieve through independence alone.
Major things Scotland wants:
– Access to the pound sterling, preferably through a cooperative agreement with the Bank of England so that Scottish banks are backed by a lender of last resort.
– Admittance to NATO and the EU as a full member state of both organizations.
– A proportionate share of UK national assets.
– An open border with the UK, to facilitate trade.
Major things the UK wants:
– For Scotland to assume its share of the UK national debt.
– For Scotland to continue to host the Royal Navy’s nuclear submarines, which are armed with Trident nuclear missiles.
The logical thing to do here is to trade these things for each other, and I hope that is the course both parties will take in the event of a “yes” vote. A few points:
1) NATO/EU membership and the national debt are inextricably linked. If Scotland is a successor state to the UK, then it should automatically qualify for membership while also automatically owing a share of the debt. But if Scotland is not considered a successor state, but instead a breakaway state, then its membership in international organizations cannot be assumed, nor can its responsibility for the UK’s national debt. Logically, the two are connected, and having one without the other does not make sense.
2) The question of Scotland’s share of UK national assets is a tricky one, and again it comes down to whether or not Scotland is a successor state or a breakaway state. If a successor, then national assets need to be divided proportionally, but if breakaway then Scotland might get nothing. If national debts are shared, then so should national assets. Again, this is really an extension of point 1.
3) Keeping the pound sterling might keep banking offices open on Edinburgh, but it won’t be good for the country as a whole to not control its own currency. Best option here is to stay on the UK pound for an interim period, then convert on a 1:1 basis to Scottish pounds, the value of which could then be set by a new Scottish central bank. It is also reasonable, should Scotland and the UK agree that Scotland is a successor state picking up its share of the debt, that Scotland should enjoy access to the currency the debt is denoted in, for at least an interim period.
4) The Trident submarines are a trump card for Scotland. The SNP doesn’t want them and the draft constitution calls for their removal, but an interim agreement on allowing them to be based in Scotland for a ten- or twenty-year period, while the UK makes other basing arrangements, could be traded for considerations on the border and any number of other issues.
So, enough with the threats and warnings. Scotland has plenty to trade, and both sides should be able to reach an agreement in the event that Scotland chooses independence.
(For my fuller views on Scottish independence, see here.)