Scotland, on the brink of breakaway

After 307 years together, will the Kingdom remain United after Scotland’s referendum on independence this Thursday? With polls showing extremely close and varied results, this vote has been nearly impossible to predict. Nearly all Scots are expected to have their say in what will likely be the most fascinating political decision made this week (according to the New York Times 97 per cent of those eligible to vote have registered, more than 4 million people). Two OpenCanada contributors, both of Scottish descent, make last-ditch efforts in support of opposing sides: why Scotland should stay with the U.K., and why it should get out.

YES: Leave inequitable U.K. and take your place, Scotland

Tom Cooper, Director of the Hamilton Roundtable for Poverty Reduction 

This week, Scotland will decide its destiny.

Will that future be as part of a continued union with England, Wales and Northern Ireland or will Scots roll back 300 years of history? On Sept. 18, a referendum will be held asking Scottish voters if they would like to re-form their old country, which has been part of the United Kingdom since 1707.

The answer should be clear – Independence is a natural evolution for Scotland. Over the last 15 years, the devolution of some powers from Westminster to Holyrood (the Scottish Parliament) has demonstrated that Scotland can and should take its place as a modern and vibrant economy on the world stage. Perhaps more importantly, many Scots are yearning to build a fairer society and close the gap between the haves and have-nots. That vision is becoming incompatible with staying part of a U.K. that is growing increasingly inequitable.

Following decades of real political alienation, the Scotland Act came into effect in 1999 to create a Scottish Parliament for the first time in 300 years. New powers such as education, many community services, transportation and local government were handed over to the new Government of Scotland from the Parliament at Westminster.

The choices Scotland has been making with those new responsibilities have been both wise and bold: Free university tuition for Scottish students, the adoption of living wage and affordable housing initiatives – including promoting a right to housing – top the social policy agenda.

The pro-independence Scottish Nationalist Government, led by First Minister Alex Salmond has been framing the debate as a choice between creating a more just Scotland or continuing as a junior partner in a deeply inequitable Great Britain.

The Yes Scotland campaign isn’t focused on nationalist jingoism: Gone is Sean Connery in a kilt screaming “Scotland, Forever”… Today’s independence movement revolves around inclusiveness. While inequality and poverty are still very real in Scotland, the Scottish Government sees independence as an opportunity to choose a better path.

Those in favour of keeping the Union intact – including Britain’s three main political parties: the Conservatives, the Labour Party and the Liberal Democrats, have argued that independence is too great a risk.

The No campaign, known as ‘Better Together’ has been pushing the economic uncertainties of Scottish independence – such as which currency Scots would use and potential membership in the European Union – as key arguments to persuade voters to stay in a potentially reformed Great Britain.

With a population of 5 million, is Scotland too small to thrive and survive? There’s a strong argument to be made, that some of the most successful European economies – the Nordic countries of Norway, Finland and Denmark – flourish exactly because they are small, diverse economies.

In a recent televised debate, Salmond said Scotland’s array of natural resources – notably the oil and gas revenue from the North Sea (now estimated at £1.5 trillion in offshore reserves) – added to the human potential from its world-class universities – would allow it to compete and prosper in international markets. Salmond believes the No side’s economic calamity arguments are unfounded and has dubbed the No campaign ‘Project Fear’.

But what does the debate mean for people on the ground? When I visited Scotland in June, there the excitement and hope was palpable. I spoke with Jennifer McCarey, who works for the Scotland’s largest public sector union, Unison, in Glasgow.

A life-long Labour Party supporter, she’s voting for independence in the upcoming referendum.

Why? McCarey believes those seeking social justice in Scotland are looking for a new direction – one that an independent Scottish government can provide. She’s not alone. Those who want to reform and expand the state’s role in childcare and welfare and protect health care services say the best way to do that is through independence. They believe that within the United Kingdom, the needs of Scottish communities, and the most vulnerable within them, have simply been neglected for too long.

McCarey told me she has been amazed at the way the Yes Campaign has appealed to younger, socially conscious voters who have traditionally stayed away from political discourse – and the ballot box. In Scotland, the voting age has been lowered to 16 and youth are engaged in the independence debate like never before – particularly through social media.

It is now clear that the result on Sept. 18 will be closer than anyone expected. Bolstered by positive polls, a strong mobilization of voters and a vision of a fairer society, Scotland’s destiny awaits. Will Scots grab hold?

NO: Gambling on an Uncertain Future

Andrew Reddie, PhD candidate at the University of California, Berkeley

Over the past three years, the “No” campaign has repeatedly won in polls of the question, “Should Scotland be an independent country?” But as the referendum on Sept. 18 gets closer, the margin between the two sides has grown consistently smaller and now the result is within the margin of error — with recent polls suggesting the count is even.

Unfortunately for Scots and those living in Scotland, the debate has continued to leave more questions than answers with regard to what independence means for its political and economic future — despite the Scottish Parliament’s publication of a 670-page white paper and years of planning.

Indeed, the uncertainty of what Scottish independence entails adds considerable strength to the argument that independence represents an unwise endeavor. Perhaps frustratingly, evidence of a strong, stable independent Scotland is not beyond reasonable doubt as questions over its currency, oil, and regional standing abound.

According to the House of Commons Library, Scotland’s public spending per head is £10,152. For the United Kingdom as a whole, that figure is only £8,788 — a difference of £1,300 that current subsidies from London cover, but that Holyrood will have to include in its new budget. Scotland’s spending per head on its National Health Service is also higher than the United Kingdom average while a larger proportion of its population is reliant upon welfare to make ends meet. Without these subsidies, Holyrood needed to provide compelling evidence that it can manage the shortfall while maintaining Scotland’s existing standard of living. In spite of its rhetoric, it has failed to do so.

Moreover, the economy writ large faces a unprecedented volatility in the face of a “Yes” vote as fund managers and capital decides whether to flee to London or not. The Royal Bank of Scotland has made clear that it plans to relocate to London in the event of a “Yes” vote from the Scottish electorate. Ironically, Scotland has already missed out on investment amidst extended negotiations over currency union and Scotland’s exposure to the United Kingdom’s debt.

The uncertainty over the future of the Scottish currency is representative of the wider economic issues with independence.

If Westminster hopes to force Holyrood into paying Scotland’s share of the United Kingdom’s debt, it will likely have to accede to Alex Salmond’s wish to remain part of the Sterling. However, if Westminster does decide to force Scotland out of the Sterling, Salmond has, belatedly, laid out three “Plan Bs.”

While none of them remedy the inevitable increase in transaction costs in the balance of trade between Scotland and the rest of the United Kingdom, they are worthy of further consideration. The first alternative is to have a new Scottish currency pegged to another currency (most likely the pound but perhaps the Euro) with a central bank making sure that the peg stays consistent.

The second is to not create a new currency at all and to either continue using the pound or another currency with no input on monetary policy — taking this path makes Salmond’s recent opposition to joining the Euro nonsensical.

The final option would create a floating Scottish currency without a peg. The latter option is probably the best in general terms as Scotland would have the ability set its own interest rates and manage the volatility of relying upon oil as its primary export, but, as David McCausland of the University of Aberdeen points out, it would have the unintended consequence of substantially increasing the transaction costs in trading with the United Kingdom (Scotland currently exports 60 percent and imports 70 percent of its goods to England, Wales, and Northern Ireland).

Scotland’s future and the value of its oil are also of obvious importance to the impending election. During the campaign, the “Yes” campaign has continually overestimated the value of North Sea oil and its impact on Scotland’s economy and tax base. Industry insiders have claimed that the value of Scotland’s oil may have been overstated by as much as 60 percent. As the BBC noted, the figures from the Scottish government and the Office for Budget Responsibility in London are wildly different. At the very least, the failure to adequately take stock of Scotland’s resource is an abdication of both campaigns’ responsibility to the electorate.

Mirroring arguments on currency and oil, the “Yes” campaign has shrugged off the difficulties faced by Holyrood in convincing Brussels and EU member states to not only admit Scotland, but to do so without making it adhere to the established accession process mandating that all new members must become part of the eurozone. It remains unclear how Scotland will accrue the associated benefits of membership in the European Union and overcome opposition from Eurozone countries that face their own independence movements. Spain, in particular, has intimated that Scotland must “join the queue.”

In other international fora, too, Scotland faces diminishing influence. Instead of being part of a mission with permanent membership of the UN Security Council, it would be on the outside looking in. At the IMF and World Bank, too, Scotland would have a diminished role and would ironically have to cede sovereignty to Brussels during free trade negotiations (in the event that it does join the EU).

On questions of the budget, currency, oil, and representation in Europe the “Yes” campaign has been found wanting. The most compelling argument from Salmond during the referendum cycle has been that Scotland ought to be represented by the party that it votes into power (Scotland provided just one Conservative MP to Westminster in the most recent British election). But devolution already takes Westminster out of many key decisions facing the Scottish electorate and Holyrood currently has powers that it has not yet used, hardly strengthening the argument for needing full independence.

As such, I remain in favour of accepting increased powers from Westminster rather than gambling on a future for which we don’t appear to have a clear strategy.