Europe: Who else may follow in Scotland’s footsteps?

September 13, 2014 By administrator

Scotland’s independence referendum could lead to the founding of the European Union’s first new state. DW presents some of Western Europe’s other separatist movements.

In Europe’s eastern half, the disintegration of the Soviet Union and Yugoslavia created many new countries. In Western Europe, however, borders of the old nation states seemed to be carved in stone. There have been secessionist tendencies, some of them militant, but they never seemed to have a shot in reality.

That has changed with the planned referendum in Scotland. London has stated it will respect the Scottish people’s will and would even release them from the United Kingdom. And polls show that a “yes” to independence is possible. This could embolden a host of other independence movements across Western Europe.

Scotland

The union between Scotland and the rest of the United Kingdom has existed for more than 300 years. But it could soon come to an end, if the majority of Scots votes for independence on September 18. The straight forward yes-or-no question about secession might not even have been necessary, had the British government allowed a third option of more autonomy. Most Scots would have almost certainly decided on this.

But London didn’t permit that, apparently assuming that full independence would scare off most Scottish people. This plan could now go awry. If a majority votes for secession, Europe could witness the rebirth of the Scottish state on March 24, 2016.

Catalonia

Nowhere in Western Europe has Scotland been more of a role model than in Catalonia. During the Franco regime, Catalan was prohibited. The region currently has a high level of cultural and political autonomy and its own regional parliament. But that’s not enough for many Catalans. They want their own state, mainly for economic reasons. They say that rich Catalonia is being sucked dry by the whole Spanish state.

Since the beginning of the economic crisis, the number of supporters of independence has significantly risen. The regional government in Barcelona wants to hold a referendum just like the Scottish one in November. But unlike the British government, Madrid doesn’t want to comply. A confrontation seems inevitable.

Basque Country

Basque nationalism and the Basque language were also oppressed during Franco’s dictatorship. But the Spanish Basque Country is in worse economic shape than Catalonia. A minority of today’s Basque nationalists is a lot more militant, though. The Basque underground organization ETA has killed more than 800 people in 50 years to efforts to achieve secession from Madrid. Three years ago, ETA renounced violence. But neither assaults nor negotiations have brought Basque Country closer to a referendum – let alone independence. The Spanish central government alone would be able to hold such a referendum and Madrid rejects this just like a referendum in Catalonia.

Flanders

In Belgium’s most recent parliamentary elections, the New Flemish Alliance under Bart de Wever became the strongest power in Flanders. De Wever is convinced that the Belgian state will go up in smoke anyway, so he wants to establish an independent Flanders in negotiations. Flemish separatism is a special case: Belgium only consists of the Dutch-language Flanders, the French-language Wallonia, which also includes a German-speaking community, and the officially bilingual Brussels.

Should Flanders secede, Belgium would lose significantly more than half of its population and economic power. There’d be little left of Belgium. A big contentious issue in that case would be Brussels, which is also the seat of EU and NATO. It also remains unclear what would happen to Wallonia. There has been talk of joining it with France, Luxembourg or even Germany. But so far, the Belgians have always managed to pull together.

“Padania”

The northern Italian secessionist movement has a solely economic motivation. The North with the regions Lombardy, Aosta Valley, Piedmont, Liguria, Venetia and Emilia Romagna generates a big part of Italy’s national product with its industrial companies and banks. Many northern Italians believe that the people in central and south Italy fritter away their hard earned money. In the 1990s, the Lega Nord party called for a full secession of “Padania,” a name derived from the Italian “pianura padana” for the Po Valley. Today, Lega Nord is more moderate. At the moment, the group only asks that the North can keep three quarters of the generated money instead of transferring it to Rome first.

South Tyrol

In South Tyrol, economic and historic-cultural factors come together. South Tyrol belonged to Austria-Hungary until the end of the First World War and was then adjudged to Italy. After a phase of Italianification during Mussolini’s regime, South Tyrol gained more and more political and linguistic autonomy after the Second World War. The wealthy region is even allowed to keep a large part of their state income.

For a long time, South Tyrol’s citizens seemed satisfied. But the national debt crisis has lit new fire under the separatist movement. After Greece, Italy is the most in-debt country in the eurozone. Many South Tyrol citizens who are doing very well themselves don’t want to have anything to do with Italy’s problems, so more and more of them call for a secession from Rome.

Corsica

For a long time, the French state tried to completely crowd out the Corsican language from public life and the island’s schools. Attempts to gain autonomy were fought. Militant groups, mostly the FLNC, have tried for years to get rid of France with violence, by attacking representatives or symbols of the French states and continental French citizens’ vacation homes.

This summer, the FLNC announced that they would not use violence anymore. But the potential for conflict remains: careful suggestions for autonomy by the socialist French government under Lionel Jospin in 2000 angered the conservative opposition. They believed that if autonomy was granted, other regions like the Bretagne or Alsace would also ask for independence. Traditionally, Paris has little respect for regional languages, since politicians in the French capital consider them dangerous for the unity of the country.

Bavaria

Few Bavarians probably seriously consider founding their own state. Bavaria already has “state” in its official name of “Freistaat Bayern” – the free state of Bavaria. But Germany’s southernmost state could probably survive on its own. It’s the largest German state area-wise. With more than 13 million inhabitants, it has more people than Sweden or Portugal and one of the highest economic performances of any German state. Should the wish for more Bavarian autonomy arise, then it would be because of the “Länderfinanzausgleich” – an agreement that the more wealthy German states support the poorer ones. Bayern would like to pay less into the large pot. Bavarian secessionists do exist: the conservative politician Wilfried Scharnagel (CSU) calls for Bavaria’s separation from Germany in his 2012 book. But so far, no larger movement has arisen.

Source: DW.COM

UK The currency options for an independent Scotland

September 8, 2014 By administrator

On September 18, voters in Scotland will decide whether the country becomes independent or remains in the UK. What they cannot decide on is what currency an independent Scotland would use. DW analyzes the options.

Uncertainty is to investors what daylight is to a vampire. It drains them of energy and triggers an automatic flight response. So, the idea of investing in a possibly to become independent Scotland that may not know for quite some time what currency – and in what form – it will use, has not inspired confidence.

Nor has the heated debate about the currency issue among the ‘Yes’ camp around Scotland’s First Minister Alex Salmond and the anti-independence campaign “Better Together,” led by Alistair Darling, also a Scot.

“Most of the arguments are vague. There’s been no negotiation and the quality of information on which the Scottish voters are deciding is decidedly mixed,” Ewen Cameron Watt from BlackRock’s Investment Institute told DW. BlackRock is the world’s largest asset manager.

Initially, investors were almost nonchalant about an independent Scotland, as it seemed unlikely to come about. Until a – after the last TV debate – showed a substantial jump for the ‘Yes’ camp to 47 percent.

The next YouGov poll on September 7 even tipped the balance towards those in favor of independence, sending sterling and UK shares sharply lower on Monday.

“A ‘Yes’ vote would clearly be reflected in weaker currency values although the Bank of England has stated it will ensure that financial stability is not affected by any vote,” Watt told DW.

Analysts at Morgan Stanley had even suggested the pound could decline by between 7 and 10 percent, should Scotland become independent. While a weak currency may be good for exports, it can also scare off investors. The UK had the second-largest inflows of foreign direct investment (FDI) of any European country in 2013, according to OECD statistics.

Talks could drag on

What many businesses and investors fear most though in the event of a ‘Yes’ vote are prolonged negotiations between Westminster and Holyrood on economic and financial issues – whether Scotland should or could continue to use the pound and how to divvy up sovereign debt.

In case of a ‘Yes’ vote, Salmond has said he hopes to wrap up talks not long after the UK’s general election next May. But many are skeptical.

“I find it hard to believe that a 307-year-old union can be effectively and completely separated in 18 months with a general election sitting in the middle of it,” according to Watt.

The ‘Yes’ campaign favors a currency union with the rest of the UK – also called rUK – which both the ‘No’ campaign and the British parliament have rejected.

“The Scottish government take the view that it’s not that difficult an issue to resolve, because they say that it’s in the interests of business operating in the UK as a whole…But having taken such a strong political stance I think that might be an optimistic view,” BlackRock’s Watt believes.

Keep the pound officially?

One major issue is the UK’s debt and how it would be shared. “Because it’s not possible technically to transfer that [share of the] debt to Scotland, the UK would ultimately remain liable for the debt and would expect Scotland to repay its share over the next 10, 20 years,” Monique Ebell, research fellow at the UK’s National Institute of Economic and Social Research (NIESR), told DW.

Alex Salmond and the ‘Yes’ campaign have repeatedly pointed out that a currency union would keep transaction costs for businesses down, as rUK is its biggest trading partner.

“Yes, there are benefits from being in a currency union, but our opinion is that those benefits are outweighed by the risks of the currency union breaking down in a disorderly way,” Ebell believes.

She cites the collapse of an initial currency union between the Czech Republic and Slovakia when the two countries separated in the 1990s, which ended in capital flight from Slovakia to the Czech Republic and sparked a crisis.

From an investors’ point of view, too, “sterling union would be the least happy outcome… as it would introduce many of the drawbacks of the euro -a common currency without common sovereignty – into sterling,” Watt told DW.

…or unofficially?

Despite the ‘No’ campaign’s insistence that an independent Scotland would not be allowed to use the pound, it could very well use it informally, and there is not a lot Westminster could do to prevent what is called sterlingization.

But it would leave Scotland without the ability to print its own money and provide liquidity to its banks in times of crisis. Given that Scotland’s second-biggest industry after oil and gas is financial services, it needs to think carefully here.

Panama, for example, uses the US dollar in what’s called a dollarized economy, and Hong Kong has a hard peg to the dollar, which is very similar. Unlike Scotland, however, HK has large foreign currency reserves to cushion a possible blow of its banks falling on hard times.

But BlackRock’s Watt sees sterlingization as the “most likely interim arrangement” and therefore “probably the best outcome.”

…or maybe join the euro?

Salmond is keen for Scotland to join the EU, but he is decidedly less keen on adopting the euro.

“You cannot be forced compulsorily to be in the euro,” Salmond said in Belgium at the end of August. “It’s a voluntary thing. Because England is our biggest market, we should stick with sterling.”

But Brussels stipulates that all EU member states are required to sign up to joining the common currency at some future date. Candidate countries normally peg their currency to the euro for a period of time before formally introducing the single currency.

The EU also requires sound fiscal management from candidate countries, who have to keep total debt at or below 60 percent of GDP.

…or launch its own currency?

As Scotland already prints its own sterling banknotes, it has already passed one hurdle for its own currency, which some commentators see as the best option.

“Given the high level of government debt that Scotland is likely to start its life with – we predict a debt-to-GDP ratio of around 86 percent – a currency union would be too much of a straitjacket in terms of the policy options that Scotland would have,” Monique Ebell said.

Scotland could struggle to make up for possible future shortfalls in its budget if it cannot have its own monetary policy or the ability to depreciate the currency, for example, Ebell explains, adding that those constraints apply to sterling union, euro membership and informal use of sterling.

Whatever you do…be reliable

The ‘Yes’ campaign has said it wants to share in the assets and liabilities of the UK, but Alex Salmond “has recently quite openly threatened to not take on any of the UK public debt” should Scotland become independent and not be allowed to formally keep the pound.

And here is where that fear of uncertainty among investors rears its ugly head again.

“It would send out the wrong signal,” Ebell believes, as Scotland would almost certainly have to borrow on international markets, and a reputation for not paying back debt is certainly not going to make you appear creditworthy to investors.

“A currency’s value is its reputation…if you’re an independent country, you need to build up your own credit history, your own reputation for sound, macroeconomic management.”

‘Can Scotland’s independence afford not to vote Yes?’

June 11, 2014 By administrator

The UK economy is heading towards massive inequality on a historic scale and towards intensification of poverty and social deprivation, meaning Scotland needs independence, co-founder of a Radical Independence Campaign Jonathon Shafi told RT.

RT: Is Scotland strong enough economically to go it alone?

Jonathon Shafi: Absolutely. The questions are always posed about whether Scotland can afford it. I think we have to pose another question which is “Can we afford not to vote ‘yes’ to independence?” And the reason for that is that the way the economy in Britain is run now is leading towards massive inequality on a historic scale, it is leading towards intensification of poverty and social deprivation. So the question is “Can we afford not to vote ‘yes’ in September?”

RT: British Chancellor George Osborne has said an independent Scotland would not be able to keep the pound. And there are doubts over whether Scotland could join the eurozone. If Scotland were to have to form its own currency, wouldn’t that bring major risks?

JS: [Scotland’s] own currency is a big question. But what we have seen from Westminster is billing over the question of currency because after all, it’s not in the power of George Osborne or Treasury or anyone in Westminster ask what currency Scotland chooses to use. It may be debated, it may be negotiated as well whether or not there should be a currency union. I think it is inconceivable that there would not be a currency union.

I have to say that I don’t want to do anything with the City of London or with the establishment in London. We want to see an independent currency, we want to see a Scottish pound that can actually start to break the trend of increasing poverty and inequality, that can start to propose something much definite as to how our economy should work, not just in the interest of the GDP, but in the interest of the people of the country as a whole. And that’s the way we want to move in. We should as well understand the people of the world who clearly think that the things that are going on are unjust and unequal.

RT: As part of the UK, Scotland has a big say in the UN, the EU and NATO. Wouldn’t this influence be lost if Edinburgh were to break away?

JS: What influence has the UK had? It has had the influence to buttress the US imperial power over the question of Iraq over the number of last decades. We have had the influence to kick things like trade nuclear weapons, which we spent billions on, when we should be spending that money on our schools and hospitals. If you look at what sort of international play we really want to bring to bear, it is about peace, about progress, and actually staying inside the United Kingdom is going to tie us to the narrative of expansion, the narrative of military adventurism.

[US President] Obama has come out recently and said that he thinks that we should stay together. No wonder that he thinks that. If he thinks that because Britain is a vassal state for the US, the 51st state of the US, and we want to break with that and everything that it means. But we want to have influence with partners across the world on the basis of mutual aid and mutual trust.

RT: One of the SNP’s main economic arguments is that Scotland should not share its oil revenue with the rest of the UK. But the oil will run out, and independence is permanent. Is it worth basing the decision on this?

JS: Oil is a bonus to the Scottish economy, it is not actually the thing that you would base entire economic planning on. That’s said if we were to use the benefits of oil to invest in developing industries, for example, the renewable industry which Scotland is hugely rich and wealthy in, then we could start [to place our trail] not just in terms of economic development but in terms of environmental justice as well.

When we look at the question of oil, one of the questions we have to pose is look what happened in the number of last decades with the money that has been raised from oil. The people of Scotland, I would argue that the people of the whole UK haven’t seen that. It is always the people that are left last, and it’s corporations and the elite at the very top of this estimate benefit from everything.

Independence is a platform, a possibility to start redressing this balance to something more fair. I would say, on oil, it’s a bonus to the Scottish economy. It’s not going to be the thing you place your entire economic argument on.