Tuesday, January 17, 2012

Hadrian's Wallet: Scotland's independence referendum and oil

Depending on who’s talking, the prospect of an independent Scotland would see either the arrival of a new, modern and confident state or it will be fed into the Euro-blender to be destroyed forever. The idea of an independent Scotland is not new – it dates back to those unhappy with the original Act of Union in 1707. What is new is the proposed referendum in 2014 to give Scots a chance to vote on the matter.

The governing Scottish National Party put the cat among the constitutional pigeons with their announcement on 10 January they would hold a referendum in autumn 2014. The referendum will ask two questions. The first is whether there should be an extension of the powers and responsibilities of the Scottish Parliament, short of independence; while the second asks whether the Scottish Parliament should "also have its powers extended to enable independence to be achieved".

In many respects, the controversy over the referendum is a storm in a tea-cup. All the polls suggest that voters will turn down the proposal. YouGov’s polling from 1990 to 2009 show support for full independence hovering around the high 20s to low 30s percentiles. A clearer majority – though never more than 60 percent – are happier with more tax raising powers for the existing Scottish parliament created in 1999. The referendum that created that parliament two years earlier showed most Scots wanted power over their own taxes (currently they can vary the basic rate of personal income tax by a maximum of 3p in the pound). The issue with that was as First Minister Alex Salmond said in October 2010, “there is no point in being a pocket money parliamanet when the pocket money stops.”

The 2011 study of Scottish attitudes showed 70 percent of the population saw themselves as Scottish first compared to about 15 percent who thought they were British. The study also showed that support for increased devolution is also on the up but there was a lot of ambiguous findings on specifics that show there is much to play for. Specific questions on who should pay for what and by what amount narrowed opinion in a way that was rather different than the ungranulated question of whether you support nationalist or unionist.

Opinion is also divided as to whether Scotland would do better alone with its annual £6.5b North Sea oil wealth. According to Michael Moore, the secretary of state for Scotland, the year on year variations of oil prices in 2011 were better managed in a UK wide economy where Scotland could share in the risks as well as rewards. But Scottish finance secretary John Swinney disagreed saying Scotland contributed far more to the UK Exchequer than its share of population which underlined the strength of Scotland’s finances and the opportunities of independence. Scottish opinion polls consistently support the latter view with most Scots thinking those south of Hadrian’s Wall do better from the Union than they do.

Yet opinion polls are less clear on the economic benefits of independence. Most people think they would pay slightly more tax under an Edinburgh administration and there is no consensus on whether the nation would be better off financially. The debate reflects a strong and complex intertwining of English, Scottish and British traditions that make most Scots slightly ambivalent about their nationality.

Unlike the Irish Act of Union a century later, the English-Scottish Act of Union of 1702 was a genuine marriage of near-equals. Scottish kings had sat on the throne of England for over a hundred years (until ousted by the Glorious Revolution). Scotland was still the minor party in the marriage, and as in the case of Ireland, bribery was needed to get the Act passed in Edinburgh. Scotland was still reeling from the economic catastrophe of the Darien Scheme which hoped to set up a Scottish colony in Panama. But the Act of Union was good for Scotland; it gave its economy free trade with England and led directly to the Scottish Enlightenment of the mid 1700s. Thinkers like David Hume and Adam Smith had an immense effect not only on Scotland but on the newly United Kingdom and beyond.

Scots became a driving force in the new British Empire, despite the continued rebellions of the highlanders. The lowlands were transformed by the Industrial Revolution with linen, coal and steel and a massive financial centre. Glasgow became a powerhouse city based on shipbuilding and railways. Scottish cities paid a terrible price for their industrialisation in World War II with extrensive bombing by the Luftwaffe. The deindustrialisation of the post-war years was balanced by the discovery of oil in the North Sea in 1970. Though production has fallen in recent years, a 2010 report said there was still 25 billion barrels of oil in Scottish waters, though they are in harder to reach areas near the Shetlands.

The importance of oil in any border negotiation between England and Scotland cannot be underestimated. 85% of British oil is in Scottish waters. The nationalist site Oil of Scotland claims Westminster moved Scotland's marine boundaries in 1999 from Berwick-upon-Tweed to Carnoustie “illegally making 6000 miles of Scotland's waters English.” The website called the Scottish Adjacent Waters Boundaries Order 1999 an “unjust act secretly passed, without the consent of the Scottish People” that took 15% of oil and gas revenues out of the Scottish sector of the North Sea and £2.2 Billion out of the Scottish economy. “This lost revenue is more than the proposed £35 Billion Scottish budget cuts for the next 15 years,” the group said.

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