The Dirty Independence Question

[Buff124]

About this currency union thing. Just for the sake of argument, I had this convo with myself

Who owns the pound ? The Bank of England

Who owns the Bank of England ? The UK nation-state. The Bank was nationalised in 1946

Is Scotland part of the UK nation state ?Yes

Therefore is Scotland a part owner of the Bank of England ? Yes

Therefore is Scotland a part owner of the pound ? Yes

Can an independent Scotland be denied the use of the pound as its currency ? Not sure.

The Bank always owns the UK national debt too, of course. So would an independent Scotland also be denied the opportunity to take responsibility for its share of the national debt ? Not sure. Assets and liabilities are two side of the same coin.

[lost]

About this currency union thing. Just for the sake of argument, I had this convo with myself

Who owns the pound ? The Bank of England

Who owns the Bank of England ? The UK nation-state. The Bank was nationalised in 1946

Is Scotland part of the UK nation state ?Yes

Therefore is Scotland a part owner of the Bank of England ? Yes

Therefore is Scotland a part owner of the pound ? Yes

I believe this is the argument Salmond is making, because Scotland is 8.5% of the UK it should get a 8.5% stake in the bank of England. I think the problem with this argument is when you apply it to all the UK assets i.e does the remainder of the uk therefore get over 90% of the assets north of the border including 91.5% of the north sea oil?

I actually agree with Neil on this one. If Scotland is to keep the pound then it would have to file a balanced budget each year, I can't see any chance of it being allowed to issue new debt dominated in sterling.. In reality I'd see a bank of Scotland which would have to issue bonds denominated in a new Scottish pound to the value of around 8.5% of the national debt (£115 billion) which would then be repaid to the remainder of the uk. What the interest rate the market would demand on this debt with Scotland having no credit history is anyone's guess.

I actually think though after seeing Barroso's comments last week stating that it would be almost impossible for Scotland to join the EU means Cameron won't be the Scots biggest problem. I think Barroso is quite happy (rightly or wrongly) to use Scotland as an example to the Basque regions of Spain and France along with the northern league of Italy of what will happen to a region breaking away from an EU country.

[Buff124]

I can't help thinking that the location of the oilfields are a geographical feature, and if rUK took 91% of Scotland's geography then the border would be somewhere up around Inverness.

Talking about where oilfields are, in the 1970s all oil exploration licenes for the west coast of Scotland were refused because such activity would interfere with the operation of the nuclear submarine base at Faslane.

There are substantial oilfields off Scotland's west coast, but they can't be developed until the sub base is shut down.

[eFestivals]

About this currency union thing. Just for the sake of argument, I had this convo with myself

Who owns the pound ? The Bank of England

Who owns the Bank of England ? The UK nation-state. The Bank was nationalised in 1946

Is Scotland part of the UK nation state ?Yes

Therefore is Scotland a part owner of the Bank of England ? Yes

Therefore is Scotland a part owner of the pound ? Yes

Can an independent Scotland be denied the use of the pound as its currency ? Not sure.

The Bank always owns the UK national debt too, of course. So would an independent Scotland also be denied the opportunity to take responsibility for its share of the national debt ? Not sure. Assets and liabilities are two side of the same coin.

there are assets and liabilities - the money, which can be shared - and then there are the institutions of a sovereign state which cannot be shared (unless agreed to be shared).

The BoE and the currency itself (not the value of any money within that currency) are state institutions.

Think of this way... there's the Foreign Office, and then there's it's personnel and buildings. Scotland might well get some of the personnel and buildings, but Scotland will be getting no say whatsoever over the Foreign Office (except thru the normal diplomatic channels that different sovereign states use to communicate).

Scotland is choosing whether to leave the UK's state institutions and instead have its own. That means you don't get a say over those UK state institutions if you leave.

Viberubber suggested in a rather stupid way that anyone who disagrees with what Salmond is proposing must be a tory by default because they're agreeing with tories. And yet it's the view of rUK (both it's people and it's politicians, of all political colours) which Scotland has to accept as perfectly reasonable if Scotland wishes the same respect to be given to it's referendum vote. Either people are allowed to chose their sovereign actions, or they're not.

The simple fact is that at the moment of independence there is a very rational case for a currency union - but the people of rUK have to want one and agree to one (both of which look unlikely).

But given the fiscal policies that Scotland has suggested it wants to pursue, the rational case for currency union decreases over time, and will become increasingly fraught and unsuitable for the people of both countries.

Why should rUK underwrite the debts of a foriegn state? If rUK were to agree to do that i suspect the terms they'd want would be too humiliating for Scotland to accept - which is likely to be control of Scotland's fiscal and tax policies, so that it's difficult for Scotland to run up bad debts that rUK would have to bail out.

Not only that, Scotland could leave that currency union at any convenient moment for itself but not rUK and so leave the rUK in the shite. Why would rUK set itself up for that possibility? It would be far better to have the fiscal separation in a well-managed way from the rUK's perspective.

Scotland needs to wake up to the fact that rUK is allowed its own sovereign view and that doesn't have to match what Scotland wants. That's not bullying, that the very sovereignty Scotland says it wants for itself.

If you want independence, you're welcome to it ... but don't go falling for Salmond's lie that you can leave behind all the bad bits and keep all the good bits, including the bits you are choosing to leave by choosing to be independent.

Edited February 22, 2014 by eFestivals

[eFestivals]

And unfortunately for what Salmond tells you, without a currency union Scotland's economy is very quickly in deep shit.

Scotland's financial sector is a bigger part of its economy (8%) than the oil and gas. But on top of that, the liabilities that sector carries is waaaaaay beyond what a Scottish central bank could realistically underwrite as lender of last resort.

And so Scotland needs that currency union (with someone big and stable, if not the rUK), or else its financial sector will head south, and Scotland's economy will plummet.

That is the inescapable reality that Salmond is failing to mention to you.

[eFestivals]

And before I get the sort of standard response from pro-independence people that can be seen in any other place where a bit of rUK thinking and facts is said to those people....

I don't hate Scotland. I don't much care either way what Scotland chooses to do. Scotland is perfectly free to choose it's future, just as the rUK would be able to after that proposed split.

From the practicalities I'm "pro unionism" but for much more than just the UK. I'd be trying to push the UK into more of a union with the rest of the EU countries i I were in charge - so my own "unionism" is not about the domination that Scotland tends to see it as.

But from other practicalities, I see Scotland being independent sometime in the future even if they don't vote for it this year. So from that point of view I think it might as well happen sooner rather than later, as it's going to happen anyway. The longer any split takes, the more bitter I can see some reactions and the worse neighbours we'd be as a result.

Not everyone who laughs at Salmond does so because they hate the Scots or don't want the Scots to have independence. Too many pro-indy's like to pretend that hate of Scotland is the only thing that drives any negative views of the independence campaign.

[Buff124]

does that mean Scotland will have to adopt the bitcoin as its currency ?

[Buff124]

More musing, just to give the arguments an airing. Thanks for taking the time to respond to my mini rambles. Oh, and I don't hate anyone either. I do find far right political attitudes very hard to tolerate though, but that's about it. Its all about practising compassion, innit ?

so.....

In the event of no currency union, it looks like Scotland's options are: a fixed or floating exchange rate mechanism, shadowing either the US dollar (as an oil producer, this makes sense as oil is priced in dollars) or the Euro (as is is the case with Switzerland, who have a fairly loose arrangement) ; or a more formal tie-in to the Euro via ERM II (as is, and has been, the case with EU candidate countries) ; or even the pound (which is what Ireland did for a few decades)

However it is difficult to see a scenario of no currency union , as it lets Scotland off the hook in terms of UK public debt. Scotland would have no debt, and could not be accused of debt default, because it never issued any in the first place. The UK issued the debt, and if rUK claims successor state status, then it takes on all debt issued by the UK.

The Scottish government has stated that it would in good faith take on its share of historical UK debt , as part of a transitional period (about 9 years, which is how long it takes to pay off UK bonds on average) during which time Scotland would continue to use the pound as its currency. Doesn't sound like a deal too far.

It could all just end up in the courts of course. Charges of multiple breaches of the Treaty by Westminster would be levelled, and the Treaty itself could simply be anulled on that basis.

This clause of the Treaty is a bit iffy , isn't it ?

"That, from and after the Union, the coin shall be of the same standard and value throughout the United Kingdom as now in England, and a Mint shall be continued in Scotland under the same rules as the Mint in England; and the present officers of the Mint continued, subject to such regulations and alterations as Her Majesty, her heirs or successors, or the Parliament of Great Britain, shall think fit."

There's also the clause barring Catholics from ascending the Throne. Human Rights Act anyone ?

EDIT: Fair enough, the Succession to the Crown Act 2013 changed that. Now its just the first six people in line to the throne who need 'approval'

The legal route could be a very messy one, with lots of dirty laundry on display, and would doubtless take years to reach a conclusion. Perhaps best (in the event of a yes vote) if EWNI and Scotland signed a new Treaty as equal partners, independent, yet recognising the mutual benefits of inter-dependence ?

Edited February 22, 2014 by Buff124

[eFestivals]

In the event of no currency union, it looks like Scotland's options are: a fixed or floating exchange rate mechanism, shadowing either the US dollar (as an oil producer, this makes sense as oil is priced in dollars) or the Euro (as is is the case with Switzerland, who have a fairly loose arrangement) ; or a more formal tie-in to the Euro via ERM II (as is, and has been, the case with EU candidate countries) ; or even the pound (which is what Ireland did for a few decades)

the euro isn't an option without first having your own currency and central bank.

However it is difficult to see a scenario of no currency union , as it lets Scotland off the hook in terms of UK public debt.

no it doesn't.

You don't get the UK's Foreign Office. Will you also say about that "unless we do, Scotland won't pay it's debts"?

[Buff124]

Fair enough if you want to have a laugh about this little convo

We're both quoting opinions to each other based on what we've read in the media , which reminds me of the Mark Twain quote

If you don't read the papers you're uninformed, and if you do read the papers you're misinformed

[Buff124]

besides, in a not unlikely scenario the no vote wins, but a yes vote in excess of 35% puts pressure on Westminster to hand over more fiscal autonomy to Holyrood - the 'devo max' option - and by 2016 Scotland becomes independent in all but name, and keeps the pound as its currency anyway. Still got to sort out the nuclear sub base though

Edited February 23, 2014 by Buff124

[Buff124]

Things are getting ramped up in advance of Head Boy's visit to Europe's oil capital for a Cabinet meeting this week (the exact venue being a closely guarded secret for security reasons). Bit confused in this Guardian article - now who's trying to have their cake and eat it ?

"Cameron, ...said that he would set out "how the UK government can maximise the benefit of North Sea oil and gas to the UK economy for decades into the future, giving a vital boost to local communities and families across Scotland".

The Treasury in London has countered the SNP leader's claim that reserves left in the North Sea are worth £1.3 trillion, saying this is the most optimistic assessment of the total wholesale value, not the tax revenue that would accrue to the country."

I think the word is confirmed, not countered

http://www.theguardian.com/politics/2014/feb/23/cameron-union-north-sea-oil

[Buff124]

TIME OUT: to sincerely congratulate Barry on the birth of his daughter. may she enjoy a happy, healthy, peaceful and prosperous life and i'm sure she'll be a lasting source of pride and joy to you sir.

OK, back to kicking lumps out of each other's assertions

[Buff124]

Leaving aside currency union, economic debates and so forth, the real driving force behind the independence movement is much more fundamental

Edited February 23, 2014 by Buff124

[metallimuse]

That is pure class!

[eFestivals]

Fair enough if you want to have a laugh about this little convo

In all seriousness, it's difficult not to laugh at many of the assertions made by those supporting independence in the comment pages of newspapers. Regular examples include...

- "project fear". Apparently, anyone who doesn't agree with every morsel of what Salmond says is talking bullshit designed to scare the people of Scotland (which of course includes quite a few Scots people who are very active in supporting the independence campaign).

- "we have rights as EU citizens". No you don't; for a start there is no such thing as an "EU citizen". You have rights within the EU as UK citizens, and if you leave the UK you leave the EU.

- "the EU hasn't said what its position is with Scotland". Well, apart from when Barosso told you.

- "what Barosso said doesn't matter, he'll be out of office before the end of the year". And yet Barosso stated the EU position.

- "they'll make exceptions for Scotland". Well, perhaps they might do, we've yet to see. But as things stand the *ONLY* entry proceedure the EU has is that which Barooso stated, and for the EU to allow a different method of entry will require agreement of all 27 countries, EU treaty changes, and - for the UK at least - a referendum on those EU treaty changes.

- "the act of union gives us rights to the UK's currency when we're independent". No it doesn't.

Etc, etc, etc.

I'm happy if Scotland chooses independence for itself, but I'd MUCH prefer it made that choice on the basis of the facts and not self-serving fantasy bollocks. Hopefully that's the view of all sensible Scottish people too.

We're both quoting opinions to each other based on what we've read in the media

Nope. I'm quoting what is the state of things from solid facts. You know, like the EU treaties made between sovereign states, andf the act of union made between soveriegn states which ended scotland's status as a sovereign state ... a status that can only be legally restored via an act of parliament in Westminster, an act of Parliament that will say *ONLY* what can be voted thru in that parliament.

[eFestivals]

the 'devo max' option - and by 2016 Scotland becomes independent in all but name, and keeps the pound as its currency anyway.

You'd get the currency, but what you'd not get is the right to set Corp Tax - the very thing which all of the bright financial future for Scotland that Salmond promises is based on.

One of the often-mentioned things by those who support independence is "Scotland will have it's own sovereign wealth fun just like Norway".

To do that you'd first have to turn around the (approx) £9Bn pa deficit that Scotland is running plus be in surplus for that surplus to be able to be saved.

(we could argue about the exact details of Scotland's finances, but only the numerically dyslexic could suggest that Scotland runs a surplus or could do within at least a decade of independence).

So what are you looking forwards to, that SWF or the massive cut in services that it would require?

Salmond intends to bribe 'English' companies to relocate to Scotland to sort out the reality of Scotland's finances, but the rest of the UK is just not going to roll over and let that happen under either devo-max or independence ... why should the rest of the UK fund Scotland to steal their own businesses to their own detriment?

[eFestivals]

While us posting here might disagree about a lot around independence (note: a different thing to disagreeing about Scotland's right to be independent if it wishes to be), one thing I'm sure we can agree on is...

David Cameron is a dick.

As PM of the UK he should butt-out of everything non-factual or projected about Scottish independence.

So, while the point of what he said yesterday/today is very likely to be true (Scotland *would* have greater costs in extracting its oil; the indy campaign knows it too, which is *exactly* why it wants a currency union), it's still something he shouldn't have said.

However, it was right that the "UK political parties" stated their position regarding currency union, because that is something those parties have an absolute say about (the one in power at the time of an iScotland, anyway). This is a political decision for rUK, and no less able to stated than Salmond stating he wants an independent Scotland.

(Whether that stated position is followed thru on is another thing; both sides will have to shift some of their positions in the negotiation process, tho I find it incredibly hard to see how the population of rUK would allow that currency union given 25 years of any currency-union propaganda).

[Buff124]

Assertions, assertions, assertions..... this isn't an argument about whether its right or wrong for Scotland to seek self-determination, its more about the nuts and bolts of can it be done ? will it be worth it ? will it be allowed ? The real argument will take place inside each individual, or not at all.

Oh well, back to the nit-picking

- "project fear". a phrase coined by staff at the Better Together campign HQ. Allegedly

"there is no such thing as an "EU citizen" I know what you mean, but still...

"Any person who holds the nationality of an EU country is automatically also an EU citizen. EU citizenship is additional to and does not replace national citizenship." Says the EU. http://ec.europa.eu/justice/citizen/

So Scotland votes to dissolve Treaty of Union, ergo leaves EU ? Scotland hasn't voted to leave the EU.

So Scotland votes to dissolve Treaty of Union, ergo gets kicked out of EU ?

On 20 February 2014, former director general of the European Commission Jim Currie told MSPs he did not foresee any EU member state blocking an independent Scotland's membership. http://www.bbc.co.uk/democracylive/scotland-26265755

Currie also stated that Barosso's comments were "extremely unwise" and "inaccurate".

"apart from when Barosso told you." - See above. The 27 members states were asked to give view by the BBC, nearly a year ago. One or two answers, everyone else declines to give an opinion. As the Slovakians put it:" In the end, it is a political decision made by all the member states."

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-21601242

Like I said, it assertions. Unless you have a crystal ball.

Barosso was interviewed on TV, he gave his opinion, nothing more From a Catalan and Basque perspective, one might think Barosso's comments were for their consumption, not Scotland's.

" the act of union made between sovereign states which ended Scotland's status as a sovereign state ".

If so, then it also ended England's status as a sovereign state. So do we both have to apply for EU membership ?

And we can get into trading opinions about what constitutes a sovereign state if you like

"Scottish government granted power to create bonds like a sovereign state"

http://www.itv.com/news/2014-02-19/scottish-government-granted-power-to-create-bonds-like-a-sovereign-state/

Edited February 24, 2014 by Buff124

[Buff124]

You seem pretty knowledgable about financial stuff like Corporation Tax. I don't know anything about it, but I did spend a couple of minutes on Google though (can't say I don't try )

"The Scotland Act 2012 gives the Scottish Parliament the power to set a Scottish rate of income tax to be administered by HM Revenue & Customs (HMRC) for Scottish taxpayers. It is expected to apply from April 2016. The Act also provides powers for new taxes to be created in Scotland and for additional taxes to be devolved."

http://www.hmrc.gov.uk/news/news-calman.htm

Does the Scotland Act 2012 mention Corporation Tax ? Yes, it gives three exemptions to Scottish control of Corporation Tax

Clause 67) corporation tax that is applied to life assurance companies and friendly societies on returns ultimately attributable to savers and investors

Clause 62) no change will be made to the rate of deduction for payments to subcontractors in Scotland

Clause 70) As dividend income and interest payments are excluded from the definition of the Scottish rate of income tax, there are no Scotland Act consequential issues relating to AIFs.

http://www.hmrc.gov.uk/news/technote-scot-taxrate.pdf

As a little knowledge is a dangerous thing, you'd better tell me where I've went wrong (again)

Edited February 24, 2014 by Buff124

[Buff124]

...and it wouldn't be right not to sign off with some gratutitous 'humour' courtesy of Armando Ianucci (good Springburn boy that he is). It was either this clip or the Best of Jamie McDonald, so I went for the pre-watershed option.

[eFestivals]

Assertions, assertions, assertions..... this isn't an argument about whether its right or wrong for Scotland to seek self-determination, its more about the nuts and bolts of can it be done ?

I've (I hope) already made clear that I think Scotland has the right to make its own choice on its own future.

I've also previously said that I have no doubts whatsoever on its ability to be a viable independent state.

However....

will it be worth it ? will it be allowed ? The real argument will take place inside each individual, or not at all.

I agree. And I think the decision should be made on an emotional basis and not a financial one, because....

That emotional basis is merely about the question: do we want to and are we able to manage our own Scottish affairs?

The financial questions are far more complex. But to keep it simple, here's the line of thinking that I reckon everyone should use...

Salmond might be Scottish and he might be a long-running proponent of independence, but first and foremost he's a politician.

When a politician of any political persuasion says "let them all eat cake" you know they're lying. It's the standard trick of all politicians, to promise only jam tomorrow, and that nothing bad will come from their policies. And this is what Salmond is doing.

He shouted "bullies" when rUK laid out it's view towards currency union - a view that rUK is no less entitled to have than (if it happens) the Scottish wish to be independent.

He then said he'd give a detailed response a few days later, where he shouted "bullies and bluster. They're lying" as what he wanted to think of as "detail". The detail in saying the same thing he'd said before which he gets no say over is astounding.

(an aside: I particularly like the idea that rUK needs a currency union because Sterling's balance of payments will be badly effected without Scottish oil.... because with a currency union or not the exact same issue from that still exists for rUK, that its own balance of payments will be worse. So balance of payments means absolutely fuck all from an rUK perspective - it's the same situation with or without a currency union).

The simple fact is that there's lots of unknowns, that no one knows. Not Salmond, not the SNP, not the 'yes campaign', not Cameron, not rUK, not "the experts".

What is known is that both states will be viable, and that both will suffer bad consequences as a result of separation that will cost them income, and that both states could be better off or worse off ultimately. We only get to find out for real if it happens.

[eFestivals]

- "project fear". a phrase coined by staff at the Better Together campign HQ. Allegedly

Alleged by...? The 'yes' campaign for their own benefit.

Yeah, I believe them, just as I believe that any criticism of anything of the independence campaign's claims HAS TO BE done to try and scare the shit out of the people of Scotland.

The 'yes' campaign is of course indisputably right about all their claims - even the ones that the yes campaign disagree on themselves. Like that currency union, for example.

"there is no such thing as an "EU citizen" I know what you mean, but still...

"Any person who holds the nationality of an EU country is automatically also an EU citizen. EU citizenship is additional to and does not replace national citizenship." Says the EU. http://ec.europa.eu/justice/citizen/

so how would Scottish people retain any "EU citizenship" when they'd cease to citizens of a member country?

So Scotland votes to dissolve Treaty of Union, ergo leaves EU ? Scotland hasn't voted to leave the EU.

Scotland is not a member of the EU; the UK is. Leave the UK and you leave the EU.

There's almost nothing about the campaugn as clear as this certainty. The "continuing legal entity" idea is fixed in law in all major states and treaties around the world. The UK remains in, and Scotland is out.

There is not one iota of anything to counter that legal certainty.

So Scotland votes to dissolve Treaty of Union, ergo gets kicked out of EU ?

No, Scotland will have CHOSEN to leave the EU as a consequence of leaving the UK. That's how it works and even Salmond says that's how it works.

What Salmond also says is that Scotland will have exceptions made for it, so that it can immediately rejoin, because it's in the EU's interests for that to happen - and I get the logic of that idea.

But that logic is not written into the EU treaties, and those EU treaties are the EU's 'law'. Those treaties have to be abided to unless new treaties are agreed by all member states.

On 20 February 2014, former director general of the European Commission Jim Currie told MSPs he did not foresee any EU member state blocking an independent Scotland's membership.

there's few people saying membership would be "blocked".

But membership would have to be via the membership rules - and those real rules don't favour Scotland's real situation.

[eFestivals]

Currie also stated that Barosso's comments were "extremely unwise" and "inaccurate".

But more accurate than anyone who does not reference the treaties and the rules they stipulate.

As the Slovakians put it:" In the end, it is a political decision made by all the member states."

yep - by those states and in reference to the existing rules.

Anything else requires a change of those rules, which works against Scotland's wants as getting the rules changed will take longer than the current entry procedure.

Like I said, it assertions. Unless you have a crystal ball.

EU current rules are clear, no crystal ball needed.

EU treaty changes issues are also very clear, and very clearly slow.

Barosso was interviewed on TV, he gave his opinion, nothing more From a Catalan and Basque perspective, one might think Barosso's comments were for their consumption, not Scotland's.

... and what perspecive is on the Nat's view which comes up with that?

Might it be a perspective where Scotland has everyone do its bidding while it tells ot5hers "do what we say else we'll throw our dummy out of the pram" (as it has over the currency & debt issues).

Any country that results to stupid self-harming brinkmanship at the first opportunity is going to find it very hard going within the international community. Just a thought.

If so, then it also ended England's status as a sovereign state. So do we both have to apply for EU membership ?

No, a new state was created called (ultimately) UK. The UK will be the continuing legal entity, the entity which Scotland will be choosing to leave.

And we can get into trading opinions about what constitutes a sovereign state if you like

PMSL ... perhaps being able to assert your sovereignty? Something Scotland hasn't been doing for 300+ years because it's not (now) a sovereign nation on any basis you might mention.

[gary1979666]

" the act of union made between sovereign states which ended Scotland's status as a sovereign state ".

If so, then it also ended England's status as a sovereign state. So do we both have to apply for EU membership ?

I'll leave the rest to Neil, but couldn't let this one go. England isn't in question here; it's still part of the UK, the UK will remain part of the EU. Scotland want independence from the UK, ergo, will no longer be in the EU. I didn't even think that bit was in question, even Salmond agrees they would have reapply, just he thinks its a no-brainer.