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Showing posts with label referendum negotiations. Show all posts
Showing posts with label referendum negotiations. Show all posts

Monday, 29 July 2013

Kings and queens – 2016 and all that: the Monarchy, YES and the SNP

Dennis Canavan makes a remark about the monarchy and the media are on to it like flies on to shit - “splits in YES campaign” etc.

Let me try to help our feeble media, assuming that they are not just shills for Better Togethera big assumption admittedly – and are simply badly informed and not actively hostile to independence.

1. YES Scotland is a loose coalition of all parties committed to an independent Scotland – SNP, Greens, SSP etc. – and individuals and groups committed to independence, including those who are committed despite the policy of their main party or organisation, e.g. Labour for Independence, trades unionists for independence, union branches who have come out for indy, e.g. CWU and those of no party affiliation whatsoever. It includes artists, Women for Independence and many other ad hoc groups formed to support YES.

2. By definition, such a disparate grouping can have no manifesto for government in an independent Scotland. 

Its members and groups have different visions for indy Scotland in every aspect of government policy, economic, social, cultural etc. This reflects the same range of opinions on almost every topic as those held by the wider electorate.

Their only unifying beliefs are that Scotland is capable of running its own affairs, has the natural resources, talents and economic competence to run its own affairs, and should run its own affairs. They therefore believe that Scots should vote YES in 2014 to independence. 

3. Across the United Kingdom, opinion on the monarchy is divided in every sector of society and within sectors, and that includes significant numbers of voters within the three major Unionist parties and the trade union movement. It should be no surprise to anyone that such differing views exist within the YES campaign.

Nonetheless, the media give every appearance of being astonished by such a revelation – or maintain the pretence that they are.

WHAT’S THE PROBLEM?

In one sense, there is no problem. For example, I am an SNP supporter (not a party member), committed to independence, and I am a republican. I believe the monarchy is the heart of the British Establishment, that both are inherently undemocratic and that they are inimical to the welfare of the people in a democracy.

But the SNP is committed to a constitutional monarchy, to retaining the Queen as constitutional monarch – and her lawful successors – in an independent Scotland.  How do I know this? Because Alex Salmond has said so repeatedly, and also states that this has been SNP policy since 1934. (There seems to be some division of opinion on just when and how this came to be SNP policy right now, and some voices have challenged it.)

So what, say some strident republicans – the SNP may not form the government of an independent Scotland – there’s an election in May 2016, and if another party, or coalition of parties is in government, then things may change.

But there’s an inconvenient additional fact to be considered – the SNP are the current government of Scotland, the SNP delivered a legal referendum, and the SNP Government has a full range of policies for independent Scotland.

And crucially, the SNP Government will negotiate with the UK Government the terms of the independent Scotland that will be born in 2016 if there is a YES vote in 2014. They will doubtless consult fully – including with YES Scotland - and respect the rights and privileges of the Holyrood Parliament but they – and no one else - will ultimately decide the content of the negotiating agenda, the composition of the Scottish negotiating team, and the entry and exits point on every substantive issue - and the deal breakers.

(The autumn White Paper due in a few weeks will set down fundamental policies and principles that will underpin that negotiation.)

These political realities are all too easily forgotten in the heady atmosphere of the YES campaign, but there is no easy way round them. The strength of the campaign lies in the fact that it is a very broad church and can embrace just about any political belief and none, providing its members subscribe to the two core beliefs – Scotland can be fully independent and will be fully independent. But let me leave the monarchy for a moment and look at another reality – the nuclear issue

Most commentators accept as a fact that an independent Scotland will reject nuclear weapons and ensure that they are decommissioned speedily and removed from Scotland as soon after independence as possible. But this is not a YES policy, it is an SNP party policy. There is nothing that debars a pro-nuclear individual or group  from affiliating to YES (as far as I know) since YES has no such policy or indeed any policy. They would probably feel more than a little uncomfortable in the near consensus of anti-nuclear views in YES, and might well be regarded as flat-earthers by their colleagues, but if they are prepared to knock on doors, canvass, stuff leaflets and generally contribute to a YES vote, who is going to say nay to them?

And they would have to accept the reality of the SNP Government incorporating its anti-nuclear policy as a prime, deal breaking objective in the negotiations. And so it is with the monarchy, although for me - and I would hope for most - the monarchy is by no means as fundamental a position as the No to Nuclear policy.

However, if social media and traditional media are any guide to YES opinions, there is more than a little ‘magical’ thinking going on – a kind of “with one bound we’ll be free and can do anything” mindset over what happens after indy.

I am of the left in politics, a lifelong Labour supporter and voter up to the 2007 Holyrood election, and for much of my life I would have - perhaps a little reluctantly latterly - have acknowledged that I was a socialist. But these days I would describe myself as a social democrat loosely on the Scandinavian model, and I don’t expect the old ideal of a socialist state ever to be realised, nor do I expect renationalisation of the commanding heights of the economy or a total abandonment of the concept of the market, although I would like to see a radical change in the way we structure our economy, our banks, our health service, our public services, our society and the values we live by. 

But we have more than enough to do to first win the referendum, then negotiate our exit from UK, hold an election and begin the complex process of wriggling out of an old, stale chrysalis of the Union and tentatively flexing our new wings.

So, on the monarchy and on a vast range of issues, I accept that the SNP Government will determine the shape of the new Scotland by negotiation, by reaching agreement on the mind-boggling range of things that come with un-entangling Scotland from a three centuries- long union. That will involve making legally-binding commitments with long-term ramifications, not just for Scotland and rUK, but for our relationships with Europe, America and indeed the entire world community.

If we are to have any credibility as a new state, we cannot be seen to enter this new era in a mood of “well, we can renege on any deal we make or agreement we reach after independence” – one, because such a position would be contemptible, and two, because it just ain’t practicable …

Of course, no government can bind its successors politically, but there are practical realities that mean that, on the very big issues, there is little likelihood of short to medium term change. We can’t go holding referendums every other quarter to determine the will of the Scottish electorate.

However, we are already committed to one post-independence referendum, on adoption of the euro - if that ever becomes an option again - so perhaps it is feasible to commit to one on retention of the monarchy. If we are going to go down that route, we had better announce it pretty damn quick, since the Scottish electorate has a right to know before the vote on September 18th 2014.

Saor Alba, but maybe not Vivat Regina?

Saturday, 2 June 2012

Scotland’s currency – the unionists' last resort: the pound, the euro and a’ that …

From the over-excited young audience member in last Sunday’s debate who called Nicola Sturgeon a liar, through Johann Lamont at PMQs, and former Chancellor Nigel Lawson, the unionists think they have got the SNP on the ropes over an independent Scotland’s currency, the Bank of England as lender of last resort, and the seat on the monetary policy committee (MPC). Alf Young in the Scotsman on Saturday also jumped aboard the bandwagon, and since we all know where Alf stands on independence, I won’t bother quoting from a thoroughly superficial attack on the SNP. You can read it here.

Unionists have been given aid and comfort in this attack by the more insular  section of SNP supporters who believe that to be truly independent, Scotland must have its own currency. The real true believers in this group also are against membership of the EU and probably against having any truck with anybody or anything after independence that does not meet their definition of being authentically Scottish. Their vision of independence owes more to mist-shrouded visions of Caledonia than the uncomfortable economic realities of the modern world, and just what the transition to independence some four to five years down the line will require of the Scottish Government and of Scotland.

I am not sure how all this is playing with the electorate and whether it will affect their choice in the autumn of 2014. Economic and monetary theories are probably not not well understood by the average voter, and given the lamentable record of economists in contributing to a stable world economy, their ferrets-in-a-sack fights over economic remedies, and the disastrous politicisation of economic debate, the voter can be forgiven for asking what the hell economists really know about the price of mince.

As for me, my economic understanding is roughly equivalent to that of Alan Johnson, MP who, when he became Shadow Chancellor for a time from 2010, had to find a primer on economics to give him some idea of what was going on. (I did cover economics as part of the Institute of Personnel and Development exam syllabus in 1968, which as one laconic Lancastrian friend observed, would not have qualified me to run a ‘toffee shop in Wigan’, i.e a sweetie shop in Glesca.)

The core points in the unionist argument are as follows -

1. Scotland is not going to be become independent if we (the Tory,Labour/LibDem Coalition against Scotland’s independence) can help it, but if it does, it won’t really be independent if it still has sterling as its currency.

2. Alex Salmond really wanted to join the euro: he was wrong on that, therefore he is wrong on this.

3. An independent Scotland would not have any influence in a currency union with the UK, much less a seat on the MPC, and would be wholly at the mercy of the Bank of England on monetary policy, and since the B of E is invisibly controlled by the UK (sic) Government and the Treasury, Scotland’s financial independence would be an illusion – the control of fiscal levers and policy would make no difference.

Now it seems to me, with my Ladybird Book of Basic Economics in my hand, that these simplistic arguments should be relatively easy to rebut, but although the SNP Government may have rebutted them piecemeal in various forums, they have been making a bit of a pig’s breakfast of rebutting them in single, coherent, accessible statements, and are certainly losing the PR war at the moment.

MY REBUTTAL

This is an attempt to talk the language that the average voter might begin to understand, so a warning shot to the ravening hordes of PPE graduates and professional economists – don’t try to bury me alive in complex conflicting arguments and academic references which have more to do with the political axe you are grinding than economic facts – haul your wagon to one of the many learned journals who publish this kind of thing, and have fun quarrelling with your peers over arcane theories.

1. Scotland is not going to be become independent, but if it does, it won’t really be independent if it still has sterling as its currency.

The idea that there is some pure, unalloyed version of independence in the complex interdependent world we live in is fantasy, as it is in individual life. Independence includes the right to decide with whom we cooperate, with whom we form alliances, when we cooperate and when we walk away, and whether that cooperation and those alliances are on trade, on economic controls, on defence, or in cultural, social, humanitarian and sporting policies and joint ventures.

And to forestall yet another ludicrous unionist old chestnut, our present membership of the UK does not already give us such sovereignty – it involves the surrender of the right to decide, the surrender of the sovereignty of the Scottish people on all but the few devolved matters the sovereign UK deigns to permit us to exercise some control over.

It might be nice at some point in the future to have an independent Scottish currency, Equally it might be appropriate to remain in sterling, or to join the euro, or join some other currency union as yet unknown. What will be even nicer is that the sovereign Scottish people will make that decision – nobody else.

2. Alex Salmond really wanted to join the euro: he was wrong on that, therefore he is wrong on this.

Resisting the urge to laugh at the utter naivety of this argument, I will simply say that what anybody said about the euro, about economics, about international banking and finance over four years ago is now almost completely irrelevant in the light of the economic and financial chaos that has engulfed the world. With the exception of a few prophetic voices crying in the wilderness, nobody foresaw it in any meaningful sense, least of all the economic and political theorists. Great fun can be had by selectively picking quotes of yesteryear, but it contributes nothing to an adult debate.

3. An independent Scotland would not have any influence in a currency union with the UK, much less a seat on the MPC, and would be wholly at the mercy of the Bank of England on monetary policy, and since the B of E is invisibly controlled by the UK (sic) Government and the Treasury, Scotland’s financial independence would be an illusion – the control of fiscal levers and policy would make no difference.

First, a few facts -

Currency unions exists all over the world, and can be one of three kinds – informal, formal, or formal with additional rules. They are entered into to maximise economic efficiency in a geographical region.

Scotland doesn’t need permission to use sterling – it is an internationally tradable currency, like the dollar, and if an independent Scotland continues to use it, it de facto has entered into an informal currency union with rUK.

To take the arrangement beyond the informal would require negotiated agreement with rUK. Such an agreement could only be reached during the wide-ranging negotiations that will take place after the YES vote in autumn 2014. The present UK Government is not going to enter into such negotiations, formally or informally, in the lead-up to the referendum when it is fighting for a NO vote. To do so would be to admit, de facto, that Scotland was likely to become independent. (Johann Lamont more or less did just that at FMQs.)

(If sensible politics and diplomacy were a feature of the present UK Coalition Government and Opposition, there would probably be confidential discussions taking place right now. Regrettably, there is little evidence of anyone in the Coalition Cabinet, or in the Scottish Office, or the Holyrood Opposition capable of the sophisticated approach that this would demand. There are undoubtedly such people in the diplomatic services. But to use diplomats would involve acknowledging that Scotland is likely to become an independent country.)

The Bank of England is the Central Bank of the United Kingdom. Gordon Brown gave the Bank of England operational independence in monetary policy in 1997, and it became responsible for setting interest rates through the Bank's Monetary Policy Committee, independent of Government.

The members of the MPC are the Governor of the Bank of England, two deputy governors, the Bank's Chief Economist, the Executive Director for Markets and four external members with financial expertise directly appointed by the Chancellor. A representative from the Treasury also sits with the Committee at its meetings. The Treasury representative can discuss policy issues but is not allowed to vote.

Its role is to set interest rates, to issue banknotes (Scotland still issues its own) and to contribute to “protecting and enhancing” the financial system. It has the right to use a process called quantitative easing to ‘print money’ (which is not printing more banknotes!) usually in crisis situations such as the recent banking collapse. The MPC does this by electronically creating new money to purchase assets, thus increasing the national debt. (Between March 2009 and January 2010, the MPC authorised the purchase of £200 billion worth of assets, mostly gilts – UK Government debt) This injects more money into the economy.

An independent Scotland will have full control of every aspect of the financial measure – fiscal levers – necessary to run the Scottish economy, raise taxes, etc.

If it uses a currency other than its own - e.g. the euro, sterling, the dollar – its interest rates would be set by the central bank of that currency. Scotland would therefore be subject to the monetary controls and monetary policy of that central bank.

The strength of a currency depends on the economic performance of the country issuing it, and the perception of that country, its currency and its economic performance by other countries. This determines the exchange rate, normally defined against the dollar.

For a newly independent Scotland to launch its own currency in a favourable world economy would have been a bit of a gamble: for it to launch its own currency in the current chaotic economic climate, or to join the euro would be lunacy. Sticking with sterling is the prudent, sensible option, either informally or within a currency union with rUK. This is not the time for macho posturing, indeed there is never such a time …

For the Bank of England and rUK not to accept the reality of an independent Scotland, with full fiscal control, using sterling, without having an observer equivalent to the present UK Treasury advisers would be illogical. Lyndon Johnson’s memorable phrase of “better inside the tent pissing out than outside pissing in” comes to mind. Since the criteria the chancellor uses for selecting the four independent special advisers is unknown to me, I can offer no advice other than to say that a special adviser with an insight into, and special knowledge of Scotland’s finances would make sense.

A currency union beyond the informal also makes sense to any objective adviser.

As for Johann Lamont’s nonsense about consulting the Bank of England or the UK Treasury in advance, I refer to my comments above. Expect no objectivity from them until we have a decisive YES vote and negotiations have commenced.

Bank of England Monetary Policy Committee