IT IS funny how regularly in politics that first impressions prove deceiving. How often the initial impact of a speech or moment can be interpreted one way by experts, analysts or the lobby, only to have “the view” completely overturned subsequently.
The 1863 Gettysburg Address by Abraham Lincoln is a stand-out example. He spoke for just over two minutes and finished to a whimper of “barely polite applause”. Criticised for its brevity and by himself as an initial failure, it went on to rank among the finest and most important political and constitutional speeches of all time: “government of the people, by the people, for the people”.
Many a Budget speech is wrapped in the initial raptures of a time- pressured media taking the government briefing, only for details they subsequently reveal to unwind the paeans later in the week. We still labour under the negative impact of some Gordon Brown budget decisions that were initially fêted as gifts from the “Hand of Gord”.
In my view, George Osborne’s “no to currency union” gamble, with Labour and Liberal campaign colleagues, was given an unbelievably easy ride by many news interpreters on both sides of the Border.
We were told this was all just grown-up power politics from a big country politician with real power. “Suck it up, Scotland, this is what happens”. And yet when our own First Minister made the perfectly reasonable and legitimate counter that this was not a one-sided negotiation he was dismissed and diminished without true thought. The UK government line was swallowed rather than scrutinised by those who wanted to believe it.
The evidence is mounting that the strategy has crossed the line from legitimate scrutiny, questioning and debate into wilfully reckless, destructive and irresponsible rhetoric. We know they want us to vote No, but at all costs? It seems so.
However, just as the London currency position could slowly unwind, so the strength of the Scottish Government’s resultant position on national debt– that if we are denied shared assets like the Bank of England then surely the same applies to the liabilities – could begin to dawn on those with open minds and engaged brains.
If this is all about “power politics” then Salmond doesn’t have an empty locker and his hand has been strengthened, rather than weakened, by the rashness of London’s currency gambit.
On 13 January, the Treasury issued guarantees to the markets that they would stand behind UK national debt – all of it – in the event of Scottish independence. Why? Because the direct consequence of their own insisted position, that Scotland is a new or successor state with rUK retaining the rights of the continuing state, means many things.
First, it means that Scotland would, legally, need to reach agreement with EU member states to retain its membership of the Union. We will have an expected 18 months or so after the referendum to secure this before independence day. This should be achievable, given a collapsing post-Communist East Germany was allowed to join in weeks. Scotland has been a member and fully aligned for four decades.
But second, it also has the legal consequence, which the Treasury recognised, that Scotland would have literally zero legal obligation over any UK national debt.
Of course, we have a moral, political and almost certainly a negotiated duty to reach agreement to pay our inherited way. Even if legal precedent suggests otherwise. But the Chancellor just announced the UK government wouldn’t negotiate. “No way.” Hardly the spirit of the Edinburgh Agreement – so who is being adult and who is being reckless?
The consequence of his invented intransigence could cost the rUK around £130 billion or more in debt, with an annual bill to service of up to £5.5bn. Ponder that.
Salmond was then accused of threatening “default” by a litany of politicians of all hues, some of whom do know better, some of whom seem to know little. This got me as close to anger as I ever get. The use of that word was reckless, destructive and crossed the line. It was literally a lie and an attempt to attach a dreadful reputational tag on a leader and a country just as it starts its journey to world debt markets.
Default occurs when a debtor is unable to meet the legal obligation of debt repayment. But as the Treasury confirmed, Scotland would have no legal obligation at all. You can’t default on debt that isn’t yours. If Team Scotland negotiated such an outcome post-Yes, it would enter world debt markets in a remarkably favourable position that markets would love rather than punish.
I don’t believe that will be the outcome. Common sense dictates that adults behaving like adults will agree the sort of sustainable outcome both Bank of England governor and the Nobel Prize winner-led Fiscal Commission outlined. Not simple, requires compromise, but both doable and the right thing.
Those who cried victory for the Osborne tactic don’t appear to have thought the reality through yet, and that’s before we consider the polls and the politics.
Things are heating up, and it truly is game on in this debate. Time for all sides to raise theirs. Also time for all politicians to remember that there will be a country to unify the day after the vote, whatever the outcome. «