Aug 26 2016

SCOTLAND IN THE AFTERMATH OF THE REFERENDUM

Eric Chester warns of the dangers of linking a call for Scottish independence with support for the EU.

SCOTLAND IN THE AFTERMATH OF THE REFERENDUM

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In Scotland, the result of the recent referendum has reinforced the widespread belief that its political framework is significantly different from that of the rest of the UK. As the UK as a whole voted to leave the EU, Scotland voted by a substantial majority to remain. This result has provided an impetus to the call for a second independence referendum.

Although the SNP has cited the referendum results as evidence of an enthusiastic endorsement of the European Union by the Scottish people, the fact is that the turnout was quite low with 56% of registered voters casting a ballot and an even lower rate voting in working class districts. Many Scots were unwilling to cast a vote that could be seen as reinforcing jingoism and yet they were unconvinced by the SNP’s lavish praise of the EU.

Since the referendum, the SNP has loudly proclaimed its support for a second independence referendum, although it has been reluctant to set a specific date when such a vote would occur. Arguments around the timing of a second referendum provide a convenient issue to divert attention from the pro-business policies the SNP has pursued in Holyrood.

The reality is that there is no chance that another referendum will occur for the foreseeable future. The Tories will remain in power until 2020 and they have no intention of authorizing another referendum. Furthermore, Nicola Sturgeon has said that she will not push for another independence vote until she is sure that it would be won. The latest polls continue to show that public opinion in Scotland has not significantly changed in the aftermath of the EU referendum and that voters continue to be evenly divided on the issue of independence. Finally, the SNP has made it clear that a vote for an “independent” Scotland will be taken as a mandate to negotiate an entry into the European Union. Since EU leaders are adamant that discussions with Scottish leaders can not begin while the EU is still negotiating the UK’s exit, there is no possibility of another independence referendum taking place for several years.

Nevertheless, the question can not be ducked. Much of the Scottish Left is already arguing for another referendum. Indeed, many leftists see their role as pressuring the SNP to move more quickly toward another vote. Rallies have already been organized to call upon the SNP to set a date in the near future for a second referendum. Socialists need to clarify their view of this complex set of issues.

With all of the rhetorical posturing by those demanding another referendum, very little thought has been given to what entering the European Union would actually entail. EU leaders have made it very clear that if Scotland were to leave the UK and apply to join the European Union, it would have to do so as a new member and not on the basis of its having been a part of the UK when it was a member state. Entry into the EU as a new member requires joining the Eurozone. A country seeking admission must go through a lengthy probationary period during which it must meet five different financial targets before it can be admitted as a full member. Ironically, the UK could not currently meet these targets. It is highly likely that Scotland would have to make drastic changes in its economic policies before it could join the Eurozone.

The UK has a national debt in excess of one and a half trillion pounds, about 90% of its total output. One of the EU convergence targets requires that this ratio be reduced to 60%. Should Scotland leave the UK, a negotiated settlement would determine its share of the UK debt. Given the recent precipitous fall in the price of oil and gas and a share of the debt roughly in proportion to its share of the UK population, about 10%, it is probable that the debt to output ratio of an independent Scotland would far exceed the EU target. As a result, joining the EU would require Scotland to run a sizable surplus in its budget. Efforts to achieve this goal are bound to result in a substantial reduction in social service expenditures. In addition, there would be substantial increases in indirect taxes such as VAT that fall disproportionately on the working class. In the end, bringing Scotland within the EU would require an austerity programme that was even more draconian than the one currently being imposed by the Tories.

Another EU financial target requires a new member to run a deficit in its public sector budget that is less than 3% of total output. The current deficit being accumulated by a Conservative government intent on slashing social services is about 5% of total output. Again, as with the debt to output ratio, meeting this target would require Scotland to cut essential social services while increasing taxes, thus further lowering the standard of living of working people.

A third financial target set by the EU requires a probationary member to maintain a stable exchange rate for two years. Even before the EU referendum vote, the pound was sliding downward in value versus other currencies as oil and gas prices dropped precipitously. Scotland would confront an even greater challenge than that faced by the UK given its greater dependency on oil and gas production. (It is very unlikely that the Bank of England would permit an independent Scotland to remain within the pound sterling zone.) A likely result of an effort to maintain a stable currency value would be the setting of high interest rates in order to attract a flow of speculative funds into Scottish banks. The result could be a perfect storm where cuts in government spending along with high interest rates trigger a downward spiral in output and employment.

In spite of the many problems inherent in joining the Eurozone, the SNP remains committed to a strategic vision of a Scotland inside of the European Union. Contrary to the image it seeks to project, the SNP is not interested in a truly independent Scotland. In fact, like the Unionists they despise, SNP leaders believe that the only future for Scotland is as a small component of a larger economic entity. The argument between the two sides comes down to the SNP’s desire to see Scotland end its dependent status within a UK dominated by the English to instead become a subordinate unit within a more integrated European Union dominated by Germany.

SNP leaders are convinced that Scotland’s economic viability depends on its becoming a member of the European Union, where it could carve out a niche in the global economy by luring banks and other financial institutions from London to Edinburgh. In their view, once the UK has left the EU a segment of the financial sector currently based in London would look for a new location within the EU.

Alex Salmond outlined this argument in a recent article printed in the Scottish Sun (June 25, 2016). (The fact that Salmond chose the Sun, a Murdoch paper, to present his article is indicative.) The decision of the UK to leave the EU would provide the opportunity for Scotland as a member of EU to become “the new pole star of the north.” Instead of the past, when “talented young Scots” were “heading to London, the pendulum would swing” and the talent flow would switch directions. The goal would be to initiate an “exodus of key companies and talented people from London to Scotland.”

Of course, the “talented young” that Salmond is so eager to attract are those who are most avaricious, driven to make huge sums in the shortest possible time and with scant regard for the consequences. It was exactly these “talents” that precipitated the 2007 crash that shook the world economy. Beyond this, Salmond’s strategic vision is highly dubious. Ireland has long pursued a similar strategy. Although it succeeded for a few years, the boom was soon followed by a monumental bust. Furthermore, for this strategy to have any chance of success, Scotland would have to implement policies designed to encourage businesses, especially banks, to relocate. This would require low income taxes on the affluent and wealthy, low corporate profits taxes and minimal government regulations. Indeed, very much the strategy that has been followed by the Tories in their effort to keep the financial sector in London.

Needless to say, the activists clamoring for a second independence referendum are not doing so because they share Salmond’s view of a future Scotland. Both the SNP leaders and the nationalist rank and file share the conviction that Westminster is a burden and that Scotland must cut its ties with it, but the underlying arguments diverge from there. For the activists, this is a time to reverse a series of national defeats. From this perspective, the English are the prime oppressors. Breaking up the UK would represent a significant step forward for the oppressed here and abroad and yet to accomplish this Scotland needs allies. In the distant past, Scotland had forged an alliance with the French against English rule, but now, Scotland needs to join the European Union, thereby gaining Germany as a counterweight to a UK dominated by England.

This is the actual argument lying behind the bland, nebulous platitudes about moving beyond a narrowly focused nationalism for the internationalism of the European Union. Mired in a long lost history, those advancing it are totally out of touch with the current reality. The Jacobite rebellion continues to hold a fascination for Scottish nationalists more than two hundred and fifty years later. Then, Scotland could receive aid from the French with few strings attached. Now, joining the EU will entail entering a tightly integrated economic unit in which Scotland’s ability to determine its own affairs will be drastically curtailed.

Furthermore, the UK ceased being a world power seventy years ago. Westminster carries little weight in world politics and it continues to decline as an economic power. In this context, the UK government is on the defensive and willing, albeit reluctantly, to concede a considerable autonomy to Scotland. Instead of pushing for a spurious independence as a member of the European Union, Scotland could be demanding a further devolution of powers as an immediate stepping stone toward a genuine independence.

The EU referendum has brought all of these issues into a sharper focus. Socialists need to state clearly that they will not support the SNP as it pushes for another referendum since this will not lead to a genuine independence, but rather, by bringing Scotland into the Eurozone, will result in further attacks on health care, schools and other vital social services. A republican Scotland independent of the European Union and NATO is worth fighting for; a Scotland embedded in the EU and NATO is not.

Instead, socialists in Scotland, as well as the rest of the UK, need to strengthen a meaningful internationalism by forging closer ties with radicals throughout Europe, and beyond, who share a belief that the creation of a just society is an immediate project, not just a distant goal. This will require breaking from the European Union, as well as all of the other organizations that sustain the global capitalist system.

 

27.8.16

also see other articles by Eric Chester:-

Leaving the EU: A Socialist Perspective

http://republicancommunist.org/blog/2016/03/24/debate-on-the-eu-referendum/

http://republicancommunist.org/blog/2015/08/02/the-limits-of-reformism-and-the-greek-crisis/

http://republicancommunist.org/blog/2015/06/10/scotland-after-the-westminster-election/

http://republicancommunist.org/blog/2014/12/14/the-curse-of-nationalism/

 

 

 

 

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