Category Archives: independence negotiations

Plan B

An explanation of why Plan B must not be revealed by @TheRealMcGowan.
An explanation of why Plan B cannot be stated by @TheRealMcGowan.
I had actually decided not to write anything about the currency Plan B because I've discussed this topic at length in various posts over the past two years, but it's probably a good time to summarise them.

First of all, the reason why there's no Plan B in the White Paper and why Alex Salmond didn't want to reveal a Plan B in the TV debate is because the three principles of getting the best deal, providing maximum clarity and refusing pre-negotiation are in direct conflict:

  1. If we want to get the best deal for Scotland and provide maximum clarity to the voters, we'll have to pre-negotiate important questions such as which currency to use.
  2. If we want to provide maximum clarity and accept the veto on pre-negotiations, we'll have to give away out negotiation strategy and accept the risk that we might not get the best deal for Scotland.
  3. If we want to get the best deal for Scotland and accept London's veto on pre-negotiations, we have to be cagey about our negotiation strategy, thereby sacrificing a certain amount of clarity.

Given this trilemma, it's understandable the Scottish Government has chosen the third option. They can't force London to pre-negotiate anything, even if it would clearly be best for the voters, and of course they can't accept not getting the best deal for Scotland.

Basically, Salmond should have told Darling the following: "Of course I have a Plan B in my drawer. And a Plan C. And a Plan D. I wouldn’t be doing my job if I didn’t. However, if I revealed my alternative plans, I would effectively reveal my negotiation strategy, and that would inevitably lead to a worse deal for Scotland. I want the best deal for Scotland, so I can’t do that. Do you not want Scotland to get the best possible deal, Alastair?"

On top of this, there are extremely good reasons for believing that Plan B will never be needed because Plan A (a formal currency union) is actually in Westminster's own interest:

[The Westminster politicians are] shooting themselves in the foot if they [veto Plan A], because there’s good reason to believe that a formal currency union will benefit the rUK more than Scotland because it’s good for currencies to be anchored in natural resources (such as oil) and exports (such as whisky) rather than being dependent mainly on volatile financial services.

Westminster vetoed a currency union to achieve a No vote, not because it's in the rUK's political and economic interest (which it isn't):

It seems George Osborne was thinking that if he ruled out a currency union, voters would naturally vote No to independence. I’m not sure it has occurred to him that we might vote Yes in spite of his speech (or even because of it). [...] By ignoring [other] options and by failing to explain why rUK politicians would opt for a solution that might harm rUK businesses, he shows that his sole purpose is scaremongering. He didn’t make this speech to provide visibility for rUK businesses (which would have been prudent), but to bully Scottish voters into voting No.

Even if Plan A really was vetoed by the rUK, Scotland would definitely be using the pound anyway:

Using the pound informally would be possible, but it’s an option that is normally used by rather small countries, and I can’t see it being a sensible long-term option for Scotland (although it might be a good idea for a transitional period) [...]

[A] Scottish currency linked to the pound sterling isn’t scary at all. In fact, that’s exactly what’s already happening at the moment when the Bank of Scotland, the Royal Bank of Scotland and Clydesdale Bank issue their own banknotes. They basically have to store one pound from the Bank of England every time they issue one pound, and that’s exactly how a currency board (which is the technical name for a linked currency) would work.

To put it simply, the National Bank of Scotland will put one pound sterling into its vaults (or more likely, into an electronic account) for each Scottish pound it issues. In that way, a Scottish pound is exactly as safe as an rUK pound because the National Bank of Scotland has the means to replace the one with the other if needed.

Furthermore, if a currency union isn't agreed on, Scotland will receive a lot of assets to implement one of the solutions above:

Let’s have a wee look at the BoE’s Annual Report from 2013. On page 99 it states that the total assets are worth £58,022m (58 billion pounds), and the bank has put exactly the same amount into circulation as banknotes. This means that Scotland’s 8.3% population share last year was worth £4816m. [...]

The amounts mentioned above don’t include the UK’s currency reserves (PDF), which belong to the Treasury (although they’re administered by the BoE). In August 2013 the gross currency reserves (including gold and all that) were worth $103,418m, and the net reserves had a value of $44,862m. I’m not an economist, but I presume it’s the latter that are of interest to us here. Scotland would in other words be due currency reserves (including gold) worth $3724m (or roughly £2232m).

Of course, it would hardly be great news for the stability of the Pound Sterling to lose such a great parts of the assets underpinning it from one day to the next, which is why it’s very likely the rUK politicians will start begging Scotland to accept a formal currency union soon after a Yes vote.

Finally, joining the Euro isn't a possibility at the moment (even if we wanted to), and there's a simple way to stay out of it so long as we want:

[The] main issues are likely to be the national debt (unless the rUK decide to keep all of it in order to safeguard their permanent membership of the UN’s Security Council) and the need to have been a member of ERM-II for at least two years. It seems unlikely Scotland would be able to introduce the euro before 2023, even if it became a political priority.

Of course, if Scotland decides not to introduce the euro, staying out of ERM-II is all it takes. This is what Sweden and many of the newer EU members are doing at the moment.

It's therefore understandable why Salmond didn't want to talk about a plan B, and it's also clear that an independent Scotland will be using the Pound for the foreseeable future.

Can we now talk about something which actually matters to most voters?

Putting the rUK’s interests first

Londra - Il Parlamento
Londra - Il Parlamento by gengish skan, on Flickr.
The Lords Constitution Committee was in the news yesterday because they made some proposals concerning the aftermath of a Yes vote.

Most of the headlines were caused by some comments that I didn't find particularly interesting, but Baroness Jay of Paddington, chairman of the committee, also said this:

We urge the UK Government to put the rest of the UK's interests first in the event of independence negotiations.

This is a rather interesting statement. After all, the UK Government will still be the government for all of the UK between a Yes vote and Scottish independence day, and indeed it will still contain Scottish government ministers and be served partly by Scottish civil servants. Nevertheless, the noble Lords will want this UK government to function as the rUK government for the purpose of negotiations.

I really can't see how this would work. They would either have to purge the UK Government of all Scots immediately (but I'm not sure how they could legally do that), or they would live in fear that Scottish moles (mowdiwarps?) would leak parts of the negotiation mandate to the Scottish negotiation team.

Surely the only solution will be to create an rUK negotiation team to match its Scottish counterpart, rather than using the UK government for a purpose for which it isn't suited.

I cannot see how the Westminster government can conduct the negotiations while it's still Scotland's government, too. Only after Scotland's independence day will the rUK government be able to conduct the remaining negotiations on its own.

Baroness Jay added:

The Prime Minister should feel under no obligation to conclude negotiations by March 2016. The Scottish Government's proposed timetable has no legal or constitutional standing.

As I've argued before, I'm not sure it makes any sense for the negotiations to be dragged out. Does anybody really think that the UK can be governed as if nothing had happened between a Yes vote and independence day?

For instance, what happens if the Westminster government wants to do something that Scotland is 100% against (the Bedroom Tax and the privatisation of the Royal Mail are obvious examples from the recent past)? Will they go ahead and tell Scotland to reverse the decision afterwards? That wouldn't be acceptable to Scotland after a Yes vote, so in practice a legislative moratorium will be put in place, meaning that only uncontroversial legislation can be passed, and I cannot imagine Westminster would put up with that for very long.

So although I agree with the noble Lords that the Scottish Government's proposed independence date is only a proposal, my guess is that once the Westminster politicians get their heads round these issues, they'll actually want Scottish independence to happen sooner than March 2016, not later.

When is a UDI not a UDI?

Minnemynt fra Kroningen 1906 - 2 kroner (Revers)
Minnemynt fra Kroningen 1906 - 2 kroner (Revers) by Municipal Archives of Trondheim, on Flickr.
The Edinburgh Agreement states that both governments must respect the result of the referendum:

The two governments are committed to continue to work together constructively in the light of the outcome, whatever it is, in the best interests of the people of Scotland and of the rest of the United Kingdom.

In theory, this should mean that Westminster after a Yes vote will negotiate the terms of independence constructively and as fast a reasonable possible. The Scottish Government has already stated that it believes it should be possible to conclude the talks in time for Scotland to become independent on 24 March 2016, and several independent observers have agreed this is a realistic time scale.

However, what happens if the 2015 General Election becomes a competition about who will be toughest on Scotland, and the resulting government is unwilling to compromise in order to reach a mutually satisfactory agreement? Or what if Westminster gets distracted by other issues (such as UKIP and the Brexit) and kicks the independence negotiations into the long grass?

A unilateral declaration of independence (a UDI) is normally something a prospective country issues when it has been denied a proper democratic path to independence.

So if Scotland votes Yes, and the Scottish Government does its best to negotiate in good faith, but Westminster acts as described above, will an independence declaration be a UDI, or will Scotland be entitled to do so as a result of the Edinburgh Agreement? Basically the independence declaration would say something like this: We have followed the Edinburgh Agreement in letter and spirit, but the Westminster Government is refusing to negotiate in good faith, so reluctantly we have come to the conclusion that we have to declare independence and resume the negotiations as an independent country.

Surely other countries would study the Edinburgh Agreement and conclude that Westminster was the culprit and that the Scottish independence declaration was just, valid and legal.

Hopefully this will be unnecessary, but when I read articles about how the Westminster Government isn't even planning for the negotiations, I can't help thinking they might need to be given a deadline in order to conclude them in a timely fashion.

As I've mentioned before, I do worry that the 2015 General Election will be such a mess if conducted during the independence negotiations that the only reasonable solutions are either to conclude the negotiations before April 2015 or to postpone the election till after Scottish Independence Day. Hopefully Westminster will soon wake up to the real possibility that we'll vote Yes and will start planning for this scenario in earnest.

Between a rock and a hard place

Scotland Office
Scotland Office by Sarflondondunc, on Flickr.
The Scottish MPs from the Unionist parties are finding themselves in an increasingly difficult position as a Yes vote seems more and more likely.

Firstly, it seems their mere presence is preventing the UK government from preparing for a Yes vote, as stated by Alistair Carmichael:

I won’t be able to influence what people in England, Wales and Northern Ireland want out of their constitutional future – that would be entirely improper. It would be improper on the other side of the referendum, just as it would be improper for me to try to change it now. That’s why there will be no contingency planning.

I might be reading too much into his words, but it seems that Westminster is stuck between a rock and a hard place: On the one hand, if they don't plan for Scottish independence, they'll look like ill-prepared amateurs to the entire world, and the financial markets will punish them harshly for it. On the other hand, if they do start planning, they'll either need to include the Scottish MPs and government ministers (who would presumably swap sides after 18/09 and give away London's negotiating position), or they'll need to create an rUK government inside the UK government, which would make the Scottish members feel second-rate and break the basic principles of government.

Secondly, the future prospects are rather bleak for the Scottish MPs after a Yes vote. I have a feeling many of them consider themselves superior to the MSPs in Holyrood, and so they'll probably expect to play a key role in the independence negotiations and in building the new Scotland. For instance, in an otherwise rather insignificant piece in The Telegraph, Iain Martin asked: "How soon do Scottish Westminster politicians go home to stop Salmond taking one man control of designing Scotland's constitution?" It sounds like people in the London bubble tend to forget that the Scottish Parliament exists and is full of capable politicians, and I doubt they'll take kindly to sage advice from newly-unemployed ex-MPs.

In this connexion, it's interesting to note that Scottish Labour's candidate selection process for the 2016 Holyrood election is more or less complete already, so unless they suddenly rip everything up again, many current MPs will have nowhere to go after a Yes vote. They won't be able to become MSPs 2016 -- they'd have to wait till 2020 (and that's a long time if you're used to a Westminster salary and expenses), and of course the House of Lords will not be open to Scottish ex-MPs after independence.

It's no wonder what the Scottish Unionist MPs are the fiercest No campaigners. They have the most to lose, and the narrowing of the gap between Yes and No is already undermining their position at Westminster.

An absolute mess?

Electrical cables, Phnom Penh, Aug 2011
Electrical cables, Phnom Penh, Aug 2011 by judithbluepool, on Flickr.
I had a wee Twitter conversation with a political blogger based in England a few days ago, discussing the consequences of a Yes vote for Westminster, and his conclusion? "It's going to be an absolute mess."

I was reminded of this when I read Martin Kettle's article on the same topic in The Guardian:

If Scotland votes yes, the consequences could be messier and nastier for longer than most of us have allowed ourselves to consider. [...] If a yes victory is declared, how will the British Labour party, meeting for its party conference on the following day in Manchester, react? By promptly agreeing to expedite Scotland's departure? Dream on. A yes vote would explode into the UK party conference season. All the main parties would be destabilised in major ways.

It appears that London-based commentators have only just started thinking about the consequences of a Yes vote, and they're shocked by how much it'll change Westminster. It's probably also in this context that one should see Benedict Brogan's promise that David Cameron will resign after a Yes vote.

I'm not so sure things will be that messy. Of course, it's likely the UK party conferences will be quite chaotic following a Yes vote. The Tories can perhaps focus on whether their dear leader will stay in power, but both Labour and the LibDems will need to look at how to give their Scottish members independence within the party. It's clearly unacceptable if UK Labour is telling Scottish Labour how to negotiate for independence, and they also don't want Scottish votes swaying any decisions on the rUK negotiation mandate.

However, once the conference season is over, I expect Westminster will get down to business. Not doing so would be a dereliction of duty.

Salmond talks as though the negotiations following a yes vote would be straightforward, respectful and informed by mutual trust. Why should that be so? They would more likely be devious, antagonistic and riddled with mutual suspicion, as well as largely meaningless until after the 2015 general election.

I don't understand why the negotiations would be "largely meaningless" for the first six months. Surely if some areas had already been agreed on, a new government wouldn't start renegotiating them.

However, I'm not quite sure whether it would be possible to conduct a sensible general election campaign while the negotiations are ongoing. Wouldn't it be much better to create a national unity government in Westminster to match Scotland's all-party Team Scotland? The general election could then be held after Scotland had become independent, which would allow the campaign to be about "normal" politics -- schools, hospitals, the economy and Europe -- instead of turning into a fight about who can be toughest and roughest in the independence negotiations.

Whether Salmond was negotiating with Cameron or Ed Miliband (and it is worth remembering that if Labour wins in the UK in 2015 and then wins in Scotland in 2016, Labour could in fact be negotiating with itself), the process would be likely to be prolonged. The UK government would have every possible incentive to drive a hard bargain with Scotland, as Hammond made clear in the defence context this week, and it would be backed by public opinion.

As I've written about before, most nations negotiating their independence from a larger country in the past spent significantly less time than 18 months (typically between a few days and six months).

Surely the SNP's proposal is the longest amount of time it is possible to put normal politics on hold, so if London-based commentators are suggesting it'll last much longer than this, it must mean they're expecting the independence negotiations to be an ongoing sideshow rather than the government's main focus.

Could it be that Westminster politicians are planning to tire out Scotland until we agree to keep Trident and all that? If so, Scotland will have to simply declare independence unilaterally (UDI) and negotiate the details afterwards.

The negotiations will only drag on for years if it's deemed necessary to reach agreements on absolutely everything before independence day. Of course, a few things will need to be fleshed out -- citizenship and dividing the military perhaps -- but in most areas it should be possible to state that it will continue to be shared until an agreement has been reached, together with some general rules about conflict resolution, arbitration and such things.

Towards the end of his piece, Martin Kettle suddenly starts having visions of violence:

Meanwhile, what about the public mood? Views will not remain frozen unchangingly once the result is in. Nor will they inevitably remain benign and peaceful. Nationalist opinion could become more militant if the talks become bogged down. Even acts of violence are not inconceivable in certain circumstances or places, as anyone with a smattering of knowledge of the Irish treaty of 1921 will grasp.

There are no signs whatever that Scotland will turn violent after a Yes vote -- the independence movement is uniquely peaceful and optimistic, and this would only get better after a Yes vote -- so this sounds worryingly and dangerously like wishful thinking.

It also doesn't sound likely at all that Westminster will want a scenario like this. Derek Bateman puts it well:

The moment a Yes is declared, the entire British machine moves into diplomatic mode. The first act is to be magnanimous by accepting the result with good grace. The second is to set the tone by appearing reasonable and, even while doing their utmost to get the best deal they can, they will present to the world an image of refined Brits maintaining their dignity. To be brutally frank, the loss of Scotland is the last vestige of a once ‘great’ country slowly sinking below the horizon. They must at all costs pretend the opposite is true, that this is a blip and nothing more.

As part of this image of refined Brits maintaining their dignity, and to concentrate minds and ensure that the negotiations will be finite in duration, I think it would be useful to establish two ground rules straight after a Yes vote: (1) Westminster should agree to a legislative moratorium whereby they agree to legislate as little as possible, and only with the consent of the Scottish Parliament, until Scotland is independent. (2) The two countries should agree that independence will happen no later than 24th March 2016, whether the negotiations have finished or not. Those two rules in conjunction should ensure that the negotiations proceed smoothly and successfully.

The reasons for the proposed legislative moratorium are twofold: Firstly, it would of course be crazy for Westminster to pass laws that Holyrood will simply repeal a few months later, and secondly, without it Westminster might find it tempting to focus on other policies that would be of more interest to the rUK public.

If the main Westminster parties decide to be reasonable and work constructively to finish the independence negotiations quickly and positively as outlined above while putting normal politics on hold, I don't see any reason why the time between a Yes vote and independence day should become an absolute mess at all.

Unexpected anger

HMS Astute Arrives at Faslane for the First Time
HMS Astute Arrives at Faslane for the First Time by UK Ministry of Defence, on Flickr.
I used to think that Coulport/Faslane would be an amazing negotiating chip in the independence negotiations with Westminster.

The Guardian's recent scoop about a currency union not being ruled out after all reveals a similar stance:

"Of course there would be a currency union," the minister told the Guardian in remarks that will serve as a major boost to the Scottish first minister, Alex Salmond, who accused the UK's three main political parties of "bluff, bluster and bullying" after they all rejected a currency union.

The minister, who would play a central role in the negotiations over the breakup of the UK if there were a yes vote, added: "There would be a highly complex set of negotiations after a yes vote, with many moving pieces. The UK wants to keep Trident nuclear weapons at Faslane and the Scottish government wants a currency union – you can see the outlines of a deal."

Various non-Scots that I've talked to over the past few months also clearly expect that the Yes campaign's insistence that Trident must go is surely just an attempt to build a strong basis for the negotiations.

However, having spoken to many Scots about this topic over the past couple of years, both on social media and in real life, I have to say that all the non-Scots (including my younger self) are mistaken.

Most Scots seem to be so strongly opposed to Trident for various reasons that I don't believe any real negotiations are possible. The nuclear weapons will need to be moved away or destroyed (and most Scots would prefer the latter). The Scottish anger at having these weapons stored on the Clyde, just outside our largest city, is simply too strong.

The Scottish negotiation team might be able to give the rUK five years to remove Trident from Scotland, but I'm doubtful the Scottish public would accept any more than this. Ten years would probably lead to riots.

If Scotland votes Yes, Trident will be gone before 2020. The sooner Westminster get their heads round this fact, the better.

A quickie divorce?

David Cameron and Alex Salmond
David Cameron and Alex Salmond, a photo by The Prime Minister's Office on Flickr.
The Scottish Government suggested in the White Paper that a year and half would be sufficient to conclude the independence negotiations, leading to an independence date of 24 March 2016 (in other words, 554 days including the end points). This has always seemed to me like a very sensible suggestion.

However, many unionists have been complaining for a while that a year and a half is a ridiculously short time to unravel a 300-year partnership, and recently they even started threatening that they could stall the negotiations.

This threat was first made by one of David Cameron's colleagues:

The planned Independence Day of March 24, 2016, will not happen, leaving the current set-up as the "default option", unless negotiations between Edinburgh and London are completed satisfactorily, according to one of Prime Minister David Cameron's most senior colleagues.

[...]

Dismissing the SNP Government's 18-month timescale for completing negotiations as "totally unrealistic", the source said: "A Yes vote in the referendum would be the start of a process, not the end of one; we would start negotiations. But if Alex Salmond made impossible demands, we would not just roll over and agree to everything he wanted. If we could not reach agreement, the status quo would be the default option."

The senior Coalition figure said one such impossible demand would be the First Minister's threat, repeated yesterday, that Scotland would not pay its share of UK debt if it were denied a currency union by Whitehall.

He was soon after backed up by a Labour peer:

Independence will “not automatically” follow a Yes vote in September’s referendum, according to a Labour peer and expert on the constitution.

Baroness Jay echoed claims of a senior Coalition source last week that the status quo could continue despite a vote to leave the UK.

[...]

Added Baroness Jay: “You can’t just start unpicking the constitutional arrangements. There would have to be paving legislation at Westminster first, then there’s the question of who would carry out the negotiations.

“These issues raise the idea that just because Scotland voted for independence in the referendum, it wouldn't automatically happen.”

Finally, David Mundell has now also joined the bandwagon:

On what many see as a hostage to fortune - the First Minister's declaration of March 24 2016 as Independence Day in the event of a Yes vote -- the Scotland Office Minister appears clear that the timescale is wholly unrealistic, has "no legal status" and is just "an aspiration".

"It's only achievable if he was willing to make huge concessions on what his position is. Either he is immediately going to throw the towel in on a whole range of issues or it's simply not achievable."

He goes on: "It's going to be more than 18 months if there is going to be meaningful negotiation on significant issues. I don't suggest it's a direct comparison but many people who have been through a divorce know that 18 months can be quite an optimistic timescale to get through that; that's just two individuals trying to disentangle their lives. It can only be achieved from very significant concessions."

However, if we look at other countries that have gained their independence, we find that most of them went through a much more rapid independence process.

For instance, when Czechoslovakia was dissolved, the amount of time from the Slovakian declaration of independence to independence day was 168 days (17 July to 31 December), although many details didn't get sorted out till years later. However, after 31 December the negotiations took place between two independent countries.

Most other cases I've found were even faster -- frequently practically instant.

It makes sense if you think about it. It will be almost impossible to concentrate on normal politics while independence negotiations are happening, and as the quotes above demonstrate clearly, there will be a huge incentive for Westminster to stall the negotiations until they get what they want. ("We won't agree to independence unless you agree to a 100-year lease for Faslane, sign over 90% of the oil fields and take on half the UK's debt.")

If the independence negotiations get stuck, it might become necessary to declare UDI, telling the international community that Westminster has reneged on the Edinburgh Agreement which compelled them to negotiate in good faith: "The two governments are committed to continue to work together constructively in the light of the outcome, whatever it is, in the best interests of the people of Scotland and of the rest of the United Kingdom."

However, threats such as the ones mentioned above make me wonder whether there is any point in negotiating for 18 months if it's likely we'll be forced into declaring UDI anyway. Wouldn't it be better simply to declare independence a few months after the referendum and then negotiate with Westminster as two independent countries?

The most likely reason why the White Paper is suggesting a long negotiation phase is to ensure that EU membership can be put in place before independence day. There's no reason for the EU to act in a petty or vindictive manner, so it makes sense to negotiate the continued membership terms slowly and carefully.

I'd like to think that the Westminster politicians will become reasonable soon after a Yes vote. However, I fear it will become necessary to say in no uncertain terms that Scotland will declare independence on 24 March 2016 whether the negotiations have been completed or not in order to remove Westminster's incentive to drag their feet.

We should also plan for the possibility that Westminster won't negotiate for real at all, in which case we might as well declare independence in 2015. It might become a quickie divorce after all.