Conversation: Analyzing the Implications of Scottish Independence

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Ben Sheen: Hello. My name is Ben Sheen, and I'm a managing editor here at Stratfor. I'm joined here today by Mark Fleming-Williams, Europe and economic analyst. Today we'll be looking at the Scottish independence argument. So Mark, with the referendum on Scottish independence rapidly approaching, for the first time the polls are largely neck in neck when it comes to the yes or no vote. What do you think we will actually see if Scotland did vote to devolve from the union?

Mark Fleming-Williams: The answer is, first of all we'd see panic. The UK government up to this point has been woefully unprepared for a yes vote. There is no timeline laid out for what will happen immediately after an independence vote. The SNP has stated that they would be expecting an independence day in March 2016, but with such knotty negotiations required, it would be very unlikely that this could suit the UK government.

Ben: So what we'd expect to see perhaps is a process of negotiations immediately afterwards, where both Edinburgh and Westminster would discuss the various options open to them.

Mark: Absolutely. And there's a whole lot for them to discuss. The main negotiation would be over currency. That’s the big issue. The SNP have been clear that they would expect the UK to agree to a currency union. Mark Carney, the chairman of the Bank of England, came out to say this morning to say that the currency union would not be in the UK's best interests. This follows up to the three leaders of the biggest UK parties earlier this year all agreeing that they would not support a currency union. So the Scots are slightly gambling on the idea that the idea that they're bluffing. Meanwhile, Alex Salmond, the leader of the Scottish National Party, has suggested that if the UK isn’t willing to enter a currency, then perhaps Scotland doesn’t need to take up its part of the national debt.

Ben: And that’s problematic in this case, isn't it, because the debt is heavily linked to future assets?

Mark: Well absolutely. If Scotland were unwilling to take on debt, then perhaps they lose the right to national assets, which in this case, the major one being North Sea oil.

Ben: So what are the implications then? Because Edinburgh put a lot of emphasis on the tax revenue they can gain from oil and gas exploitation from the North Sea fields. Is that realistic for Scotland?

Mark: There is a huge unknown going on currently about exactly how much oil there is, not to mention questions over delineation, if we just draw the equidistant line between Scotland and the UK. and there are various other legal terms that are currently under dispute. So there's a lot of uncertainty around exactly how much money will come from the oil.

Ben: So there are some difficult decisions that will have to be made in the Scottish parliament in Edinburgh. Likewise there are some touch calls for Westminster as well.

Mark: Absolutely. The repercussions of this in UK politics will be seismic. If there is to be a yes vote, the initial calls are to suggest that David Cameron would lose his job. The likelihood would also be that Ed Milliband would be forced to resign, as he was the leader of the Labour party, which spearheaded the no campaign. So the two key figures in UK politics would lose their jobs. Added to this, the Labour Party in Scotland holds 41 seats compared to a minimal showing for the tory party. The joke is that there are more pandas in Scotland than Tory MPs. And so as a result, there could be a change in the political calculus and the political balance going forward, which would make it very hard for Labour to win a majority again or in the foreseeable future.

Ben: And most Scottish politicians are pro-Europe, aren't they?

Mark: Absolutely. Well, most Scottish politicians are pro-Europe, and the populace is very pro-Europe as well. And that's interesting because it means that with a large chunk of pro-European voters leaving the union, the 2017 EU referendum, which has been suggested by David Cameron, would be much more likely to vote yes to a out vote in itself. So secessionism would become catching.

Ben: And that’s something we've been focusing on here at Stratfor, looking at the wide implications for Europe, the fact that there are various succession movements around Europe. And if Scotland would devolve from the union, what would they take away from that act?

Mark: Secession tendencies are very fashionable across Europe at the moment. We've seen in Catalonia a growing call for independence. Its not new but its been rising, potentially sparked by this coming referendum in Scotland. But there are no end of other secessionist tinderboxes that are ready to ignite across Europe. There are parts of northern Italy that have long been desiring independence, along with a big dividing line, which runs through the center of Belgium, as well as some Hungarian ethnic minorities in Romania. So its quite possible that the precedent set by Scotland could lead to a huge increase in the protests and an increase in these secessionist movements across Europe.

Ben: Unfortunately, that’s all we've got time for today. But thank you very much for sharing your insight with us. Stratfor will be tracking the Scottish independence referendum on the 18th and beyond. Thank you for joining us today.

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