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By Mark McNaught
 
Over the past week, Scots have vividly seen the institutional boulders the EU and the UK have dropped on Scotland's road to independence. Manuel Barosso and George Osborne clearly do not believe in facilitating self-determination through cooperation, and are using threats of expulsion to cower Scots into voting for continued Westminster subservience.

While becoming a separate member state within the EU and forming a currency union with the r-UK may remain the preferred objectives of the Scottish government after a 'yes' vote, we have seen that the UK is willing to break up its currency and shoulder all of its debt, and the EU is willing to deprive current citizens of their rights to maintain the current borders of their member states. Although we can hope that prudence, reason, and self-interest will prevail after a 'yes' vote, last week clearly demonstrates we can no longer count on it.

While the EU and the Sterling Zone have an interest in being expansionist rather than exclusionary, alternate plans must be adopted in case they really are that suicidal. Besides, will Scotland really want to join such dysfunctional institutions if there are alternatives which afford them more liberty?

The Catalans are running out of patience with EU intransigence, and are discussing simply joining European Free Trade Association rather than haggle over EU membership with a Spanish veto. Scots should also consider this option. Currently composed of Iceland, Norway, Switzerland, and Lichtenstein, EFTA members enjoy many of the same rights as EU member states, but their entry cannot be blocked by EU member states because they are not members. Admission simply requires approval of the EFTA council.

EFTA members are not represented in the European Commission or the European Parliament, but inhabit the same economic and social space as the rest of the EU. They must abide by many of the same EU laws and regulations, while only having an advisory role in drafting them. Members have the same rights as EU members concerning the free movement of persons, goods, services, and capital.

Scotland would make no financial contribution to EU, nor be the recipient of any subsidies. Given that Scotland's vast oil wealth would likely make it a net contributor, Scotland could set up its own system of farm and other subsidies that the EU currently finances.

This may ultimately be a much more appealing option than going through rancorous negotiations with the EU and the UK after a 'yes' vote, leaving Spain, the UK, or even Croatia with the option of vetoing Catalan or Scottish adhesion. Why not seek to join the EFTA, and if accepted would thus alleviate the immediate crisis of treaty cancellation after independence. Scotland can take its time and consider whether to join the EU, carefully considering the options as to whether it is in their best interests or not. 

In terms of currency, the Scottish government must propose a credible alternative if the UK government insists on blocking a currency union, even though this is the least disruptive option. Scotland can emulate Gibraltar and the Falkland islands, and does not need UK permission set up a currency board and stabilisation fund to peg the Scottish pound to the UK pound. Trade and commerce with the r-UK can continue unabated, as Scots consider their longer-term options.

An important consideration of a currency board is that the Bank of England would not be the lender of last resort. However, sound financial regulation can mitigate risk far better that the BoE has shown itself capable of doing. Scotland can establish exemplary banking rules, and a stabilisation fund using the oil wealth. Perhaps the EFTA members can seek a closer banking and currency union. Only independence will afford the opportunity.

In any case, the short-term bluster from the EU and the UK must not obscure the magnificent future held by Scotland and Catalonia if they play their cards slowly and carefully, knowing that they are in the drivers seat. When threats of expulsion arise, however improbable and illogical, there must be a credible alternative just in case they carry through regardless of the collateral damage. If the UK and the EU don't want Scotland to participate as a willful and productive partner, there are other alliances and currencies that can be devised, that are immeasurably fairer and beneficial than what is currently not on offer.

The unionists are rattled, the threats will keep flowing for the next seven months with increasing scope and intensity, and negotiations promise to be a nightmare. The more the Scottish government thinks beyond how they initially envisaged independence, the more leverage they will have, and the brighter future for Scotland they can build.

Comments  

 
# UpSpake 2014-02-19 07:59
Mark. The UK govenment cannot 'block' Scotland from using the pound sterling as it is a fully convertable currency available to all who wish to use it.
However, if the UK are telling us it is no longer convertable then that's a game changer for them, not us.
Again, Scotland could simply use sterling without any debt obligation which in international law they are not obliged to do. Then of-course, we could always have a currency of our own pegged to the pound, for stability. What price that stability ?.
As for the EU, I don't care all that much as I wish to be divorced from all Unions. Scotland, independent should join the EFTA side of the EEA and still have trading relationships with the EU but without all the cost.
 
 
# H Scott 2014-02-19 10:34
The more hostile the UK and EU to Scottish independence, the more people will be put off currency union and continued EU membership. The EU is playing a risky game. If Scotland and Catalonia both vote for independence and decline continued EU membership it would be a significant reversal for the EU project.
 
 
# Taighnamona 2014-02-19 16:25
I have now reached the stage where I would prefer the Scottish government to indicate to us that EFTA and our own currency are the preferred long term options. I fully appreciate that we will continue to use the pound until or even after Independence Day in 2016, but I have no desire to enter a currency union with the UK govt. They have proven themselves to be liars and thieves and not friends to Scotland.
I know that the EU has been a mixture of success stories and frustrations but why should we have to put up with all the aggro and bluster? I want to see a statement from the EU that Scotland and her citizens would be welcome. Democracy is a grown up process, but I feel that the unionist politicians and their media propaganda are treating me as if I am worthless.
 
 
# Breeks 2014-02-21 12:38
I've been pro Europe for a long time, ever conscious bad news was amplified, good news suppressed, & I don't like my opinions being crassly manipulated. I grew up with Thatcher sticking two fingers up to Europe in her own affected style. It embarrassed me & made my skin crawl, not unlike Farage.

WW2 ended with firm resolve to establish a new world order, an end to the Empire building and exploitation of weaker nations by war, intimidation or economics. We are much too good at destruction to risk war again.

I look at the US. What did they learn? Might is right?
China? Quietly buying up Africa.
Middle East? Still paralysed by religion.

Only in Europe, (bar the UK), has there been a fundamental shift in collective attitudes which I believe does bear relevance to that new world order. I'm not hostile to EFTA, but it exists in the holistic stability created by the EU.

I just wish the EU would articulate a little more support for us.
 
 
# cirsium 2014-02-21 11:35
will Scotland really want to join such dysfunctional institutions if there are alternatives which afford them more liberty?

That is the question. Thank you for an illuminating article, Mark.
 
 
# MacSenex 2014-02-22 07:30
To my knowledge nothing has Ben written on the practical difficulties of Scotland departing the EU.

There are huge consequentials for the EU.

1. The tens of thousands of EU citizens in Scotland cease to have a right to live and work here as the free movement of EU citizens will have no legal basis.

2 will the EU pay the tuition fees of EU citizens to complete their courses in Scottish Universities?

3. How can EU citizens be stripped of their rights because of their place of residence?

4. Can the EU institutions strip their Scottish employees of their employment?

5 what happens to cases currently before the European Court involving Scottish litigants?

6 if the Scottish government or a Scottish company challenges the Council of Ministers' in terpretation of rUK as the successor state then Scotland's departure will be held up for years during which time an accommodation among the states will be required.
 

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