Sunday, 16 February 2014

Osborne's mistake will backfire

So we now know where the three would-be chancellors post 2015 stand on a formal currency union. Or do we?

Well delivering his speech in the West End of Edinburgh, George Osborne said to the people of Scotland "If you walk away from the UK you walk away from its currency". It was a threat with a clear political agenda. Blackmail, in other words. The BBC's Douglas Fraser commented "Pro-union parties said they would not negotiate ahead of the referendum - they're now doing so, but only to rule out negotiations." About the best thing any BBC reporter said all day. Had this been a unilateral referendum with no Edinburgh Agreement signed then I might have respected David Cameron's wish not to debate. I would have especially respected his wish if he said that his government would make the transition to independence as smooth as possible for the sake of the Scottish people if they decide democratically that they wish to become a sovereign nation. But his government has not shown any respect to the Scottish people by sending George Gideon Osborne (that is actually his middle name!) to say what his government would threaten to do if they vote for independence. By not even saying that a formal currency union would be one option for an independent Scotland his contempt was complete. If it just so happens that a majority of people have already decided to choose independence then George Osborne, Ed Balls and Danny Alexander have decided that the people of Scotland are making a big mistake. But more to the point this is proving that David Cameron is no longer treating this simply as a debate between people living in Scotland, the UK Government has actually come up here and interfered. That means David Cameron has an absolute moral obligation to come up here and debate with Alex Salmond so he can explain his Government's posturing. He is now accountable to the people of Scotland.

Osborne's intervention is beginning to backfire

Of course they probably are bluffing. The purpose of this threat is to stop people voting Yes to Independence. But if they do vote Yes then Osborne and Alexander are going to have to think again. Not least since the latter is a Scottish MP representing a Scottish constituency. Still would they want to lose face? That would be an embarrassment in front of the media so most likely they will try to honour their threat. I would therefore encourage Alex Salmond to make it clear that the Scottish Government would continue to use the pound anyway. Personally I think this is the approach that should be taken. There has to be a currency on day one of Independence prior to any alternative being given approval by the Scottish people. So it should be the status quo, the formal currency union of present, or as close as possible to it which would be an informal currency union. That is unless a currency referendum is held before independence day and a different verdict is given. As I mentioned in my post last week the Scots could use a 'new' currency which would be called the Pound (£) pegged to Sterling. Or they could choose to adopt a new and distinct currency which therefore couldn't be used interchangeably with the pound sterling. Or they could choose the Euro. If they say they want to keep a sterlingised Pound then the informal currency union is what it should be until an agreement is actually reached with Westminster. If Westminster don't like the unilateral use of their Pound by their neighbours then it is up to them to approach Holyrood with an offer of a formal currency union.

What must get up our noses more than anything else is when the Unionist politicians accuse the SNP of planning to default on debt it is not obliged to even pick up! How they think it is consistent to argue Scotland has to take on a share of the national debt while regarding Scotland as secessionist country instead of a co-successor of the UK baffles me. Alistair Darling can't have his argument both ways and if Scotland is to inherit part of the debt then Scotland has to be treated fairly. George Osborne says the pound 'isn't an asset to be divided up between two countries after a break-up like a CD collection'. But whether you call it an asset or not Mr Osborne would surely agree that it is what we would regard as a right in the UK's name. If the Unionists are asserting that independence means walking away from everything in the UK's name that goes for the negative (the liabilities) as well as the positive (the rights). And the national debt is just that - a negative thing in the UK's name amassed by Tony Blair, Gordon Brown and one Alistair Darling. Alex Salmond is actually offering to take on a share of such a liability in return for being allowed to keep its fair share of the UK's rights. So much then for Alex Salmond being accused of picking and choosing the parts of the union he likes and leaving what he doesn't like. It is clear the people wanting to do the picking and choosing are those who believe Scotland should take on a share of the UK's debt without being allowed a formal currency union or automatic entry to the EU. Alex Salmond is the person who has proved he is prepared to concede to gain. We would rather not have any national debt but we're prepared to shoulder some if we're allowed a mutual share in the currency.

But if we aren't granted that share then all Salmond has to do is say is 'well, we'll use our own currency and peg it to what we see fit but if you want us to take on a share of the debt it must come with a formal currency union.' An independent Scotland being able to use another country's currency without any of the restrictions of a formal currency union is actually a very liberating thought. I say why not? The moment we adopt our own version of the pound we can peg it or float it as we see fit and then if it is the desire for the people of Scotland to advance towards a full currency union we have the upper hand in negotiations.

Alex Salmond's interview on Newsnight, 13.02.14

A willingness to accept Scotland as a secessionist country means a fresh start with no national debt. It would therefore have a positive credit rating while the UK continues to lose its AAA rating. Scotland will show a willingness to be a part of the EU and, despite Jose Manuel Barrosso's shameful intervention today, is highly likely to be welcomed with open arms due to its vast natural wealth. Brussels will see its relationship with Scotland as blessed change to Cameron's cherry-picking attitude. Scotland may ask that they have an opt-out from Schengen but there would be little else that Scotland needs special treatment in. Signing up to the Euro doesn't mean Scotland has to join within any set amount of time only when it feels ready and the people of Scotland approve. If Scotland has to be outside the EU while its application is being processed the rights of Scottish citizens as European Citizens could still be upheld. Scotland will have to reapply to NATO - I don't care for that alliance anyway, Scotland doesn't need it.

The idea of a formal currency union looks less and less appealing to me with Scotland having to 'cede sovereignty' but using the pound unilaterally gives us more freedom. This latter option should be given the thumbs up by Alex Salmond. At the end of the day a banknote is simply an IOU issued by a bank. What matters is the actual wealth within a nation both in goods and in people. Is Scotland a wealthy nation - you bet it is!

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