Will The 300 Year Old UK Survive?

By: Andrew_McKillop

No Longer Certain “No” Will Win
Unsurprisingly to me, the Yes voters in Scotland are getting more affirmative and less secretive about their preference for an independent Scotland. Because its a classic “first past the post” voting system and process, a minority will decide what happens – but few complain about that time-worn electoral process in Britain, except for example the Lib Dems who want proportional voting because it would give them more seats in the Westminster parliament. 

In any case, there is no such thing as a “Maybe” or “Don't know” or “No preference” voting choice available for the Scottish referendum.

Yougov opinion polls now report a tiny majority in favour of a Yes vote. In the remaining days before the referendum wildcards will be more important than ever in deciding the result, but the simple fact that the Yes movement has recovered from a 20% lead of the No movement in previous months shows that we have a “tidal shift” under way. The momentum is there.

The emotional appeal for continued Union among the No vote camp is predictably getting strident. We are told by people who haven't lived for centuries that “The UK we have known for 300 years will be gone”. They certainly didn't know it for 300 years!

Dodgy claims by the No camp are that full independence for Scotland will be even more of an economic disaster for it, than for England, are now everywhere. The most interesting point is the No camp now allows itself to say England will also be worse off. Its previous line of patter was that only Scotland would suffer from its foolish vote for Independence.

Suddenly we hear that Arab potentates and Russian oligarchs will no longer be “parking their funds” in either England or Scotland if they separate. The GB pound will plummet but with a much cheaper English pound the potentates and oligarchs should be happy to buy their London penthouses at 30% off the previous sticker price! What is the problem? Oh yes, the economy, debt and money.

Debt and Money
What happens to the pound also affects and concerns “the debt”, and that concerns both English and Scottish private banks. The extreme liabilities of the “Scottish” banks HBOS and RBS in fact concern two international private banks with a very large number of English shareholders, as well as Scottish, and very large liabilities in its English operations. The excesses of these two “Scottish” banks (like the excesses of “English” banks) in the run-up to the 2008 crisis, and subsequently, are well documented – but are these automatically sovereign national liabilities?

At present they are treated that way, and the SNP's Alex Salmond has sought to reassure all parties that an independent Scotland would keep bailing out the banks in the same way as the previous UK and in particular by the BOE-Bank of England..The BOE's ownership and a possible “share for Scotland” of the BOE following independence is a highly charged question!

However, the BOE has limits to the money printing feats it can get away with, whatever its ownership. Depending on how England reacts, politically, to a majority Yes vote this ultra-critical question may be very rapidly answered. The answer may also be ultra-radical. If England forces the hand of the Scottish there may be “unexpected events” in this domain.

SNP spokespersons have many times “caressed the option”, or merely hinted at an independent BOS-Bank of Scotland going it alone, but none of them ever mentioned Argentina!

Emotional spin in the patter from the No movement claims that the SNP's Salmond has already but implicitly-only said an independent Scotland “would dishonor its 120 billion GBP share of the UK national debt”. This is supposedly about 8.5% of the total for UK national debt but is unrelated to and vastly smaller than the total of all private bank (and finance sector) debt in both countries.

These amounts of “theoretical debt” are so massive it is not worth bandying figures around – perhaps it is 2 or 3 trillion pounds - and it is mendacious to pretend that the numbers bandied around, of “Salmond reneging on 120 billion” are anything like the real world of private bank (and finance sector) liabilities hanging on the knife edge of “constantly rising” stock exchange values. Neither Scotland nor England could pay these debts in a “worst case scenario” financial market crash as in 2008-2009.

The Wee Haggis and the Oil Derrick
We should not forget the whisky still, either, to print on the new banknotes of the new BOS central bank which has to go it alone due to English petulance and jealousy. Plenty of No vote hard liners are saying that independent Scotland will have absolutely no right to use the pound sterling – named for a city in Scotland! It will have to go it alone. It will be a disaster for Scotland, somewhat like Argentina but it was all the fault of the Silly Scots.

The subject of British-sector North Sea oil of which Scotland controls about 90% of the declining British production is another intensely-worked theme of the Yes and No camps. The No camp has however been less than forthright in simply admitting that for FX-foreign exchange speculators and traders, having oil behind your money is good, and not having it is bad – for England. The traders aren't very bright on the details and in some ways couldn't care less if your oil production is declining and is high-cost. They need to speculate every day and they know you have oil! Whisky revenues and taxation have been somewhat neglected, but are considerable.

By a rather predictable but extreme piece of hypocrisy, outgoing EC chief Manuel Barrosao, whose Commission has endlessly pleaded with oil-rich Norway to join the Union, has curtly said Scotland would not be welcome in the Eurozone or be able to use the euro. This in fact is nonsense. An independent Scotland could use either or both the euro and US dollar. “Dollarized” economies are in no way a rare or threatened species, and plenty of them have no formal relations with the US Treasury Dept to operate and use the dollar in their economies. Plenty of east European EU states which are not members of the Eurozone such as Hungary, Bulgaria, Romania have “euro-ized” their economies without incurring the wrath of the ECB in Frankfurt..

It is sure and certain the SNP wants “Sterlingization” or the continuation of using the GB pound, but if push comes to shove, they have other options. On several grounds, Dollarization may be the better of the “quick and dirty” options but an all-new, all-Scottish money cannot be ignored as a major and serious option enabling Scotland to negotiate with England from a position of strength over bank debt and national debt..These in fact are the key issues – the degree of “sovereignty” attaching to the liabilities of what are international private banks which, when they regularly get into the messes they create themselves, suddenly proclaim their “national identity”.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

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