Image courtesy of Edinburgh International Film Festival
Last week marked the 35th anniversary of 11 SNP MPs voting with Margaret Thatcher to bring down James Callaghan's Labour government. The no-confidence motion was lost by a single vote, and only 2 of those SNP MPs survived in the general election that followed, ushering in 18 years of Conservative government. This act of electoral self-immolation by the SNP in 1979 is a reminder of that party's unhappy track record when it comes to disastrous political miscalculations and short-term thinking that too often conflates what is good for the SNP with what is good for Scotland.
Fast-forward to 2014. There is a contradiction and an absurdity at the heart of the SNP's economic claims regarding a currency union and, ultimately, the party's case for independence.
The contradiction lies in the pretence that a yes vote in the referendum will deliver independence with full sovereignty residing in Edinburgh, even as the SNP's unilateral plan to join a currency union with an unwilling foreign state would, on its own logic, ensure that economic and political sovereignty is surrendered straight back to Westminster. The absurdity lies in thinking that the political parties in the rest of the UK (rUK) would, against civil service advice, economic logic and the apparent wishes of the electorate, endorse a currency union with a foreign state -- Scotland -- when UK governments for the last 15 years have wholeheartedly rejected a currency union with a more economically credible but no more stable group of foreign states -- the eurozone.
It was Alex Salmond's own conversion on the road back from Brussels which bolsters the democratic and economic case against a currency union between rUK and an independent Scotland. His 180 degree pivot between 1999 when he declared in Brussels that the pound was "a millstone round Scotland's neck" and his current plan for an independent Scotland to embrace the pound and reject joining the euro, was indicative of a First Minister grudgingly forced to recognise the political reality that Scots, just like the overwhelming majority of people in the whole of the UK (85 percent in 2011), showed little desire to join an economically unstable monetary pact with other states.
If the rose-tinted vision of genuine independence which Alex Salmond is representing in public reflects what he actually thinks, he should know full well that joining a currency union with rUK will not deliver independence. But if Mr Salmond is dissembling and sees a yes vote as a negotiating tactic to get more powers along the lines of devo max on steroids, the contradictions between independence and the SNP plans for sharing the pound would, in his mind, disappear.
That is a dangerous game, though, not just for Mr Salmond, but for any Scots tempted to vote 'yes' in the expectation of a fudge which will give them a rosy patriotic glow on September 18, but avoid the downsides of a Scotland politically and economically adrift of the UK in a Europe which seems a little cooler since the continent's energy supplier, Vladimir Putin, annexed Crimea. While there might be economic integration in such a fudge, the surrender of sovereignty on Scotland's part to allow it to be part of a currency union with a foreign state would lack one essential ingredient -- democratic consent.
Supporters of independence have every right to expect that a yes vote will, in fact, mean real independence. One must assume (or hope) they do not want a phony independence where the Scottish people lose all the benefits of UK citizenship, but are nevertheless subject to the economic policies of a UK government they can no longer vote for. This is where the logic (used in its loosest sense) of the SNP plan to share the pound leads.
One need only look at the eurozone to see why.
The political and economic integration needed to make European monetary union work has led to tentative plans for a "Euro Union", an economic government with the power "to override the budgets of member states" that break fiscal rules. This is the type of prescription that is thought necessary to make a currency union function, but there are no guarantees that it will work economically. Even if it does, the medicine may be too strong politically for the citizens and politicians of a number of EU countries, not least Germany which feels that more transfers of sovereignty will emasculate its economic independence and probably violate its constitution.
It is precisely these types of eurozone style transfers of political and economic sovereignty from Edinburgh to London which would be necessary to make a currency union viable, and Alex Salmond knows it. The problem for Mr Salmond is that saying as much to Scotland's voters would mean acknowledging either (a) that such concessions on sovereignty would make independence a fiction, or (b) that the SNP made a strategic blunder by trying to share the pound with a foreign state instead of the option which would have been a basis for real independence -- a Scottish currency.
Addressing this last point, Larry Fink, chairman and chief executive of the world's largest asset management company, BlackRock, said recently: "I assume there would be a different currency. One should assume that as a certainty -- that would be my observation. How would you have an independent country and share a currency? That generally doesn't work -- that's called the euro."
This is the real world of hard economic and political choices that a Yes campaign built on emotional sound bites and sentiment prefers to ignore. Alex Salmond has treated the referendum process with a degree of levity better suited to a fringe candidate at a by-election, rather than with the seriousness which his plan to break up the world's oldest and most successful political union demands. The SNP is marketing Scottish independence as a cute puppy you can give your kids. Except Scotland is not a dog, and independence is not just for Christmas. It's forever.
Whatever political capital Mr Salmond tries to extract from the comments of an unnamed UK minister over the possibility of a currency union, he will stop short of acknowledging the full implications of those comments. If such a currency deal were in the offing, it would entail the surrender by the Scottish parliament to the UK government of such economic and political sovereignty as was deemed necessary to mitigate the considerable risks of the UK acting as guarantor for Scotland's financial system, and in effect, its economy. Such a deal would turn independence into a farce, make Scotland a vassal state of a country ten times its economic size, and would be a basis not for a stable currency union, but conflict, resentment and recrimination.
Unfortunately, conflict, resentment and recrimination seem to be staple parts of the SNP's 5 a day. Real independence based on a Scotland with its own currency would have forced Mr Salmond and his party to get real and stop blaming Scotland's ills on "the London parties" as they like to refer to the other Scottish and UK parties. But Scotland existing in a grossly uneven relationship with the UK in a fraught and tense currency union would be manna from heaven, allowing SNP politicians to carry on attributing the nation's problems to arrogance, insults and general Westminster perfidy.
Actually -- that will probably carry on whatever Scotland decides in September.
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