DCSIMG

Peter Jones: Independence will need UK assistance

For Scotland to move smoothly apart, it will need UK help. Picture: Phil Wilkinson

For Scotland to move smoothly apart, it will need UK help. Picture: Phil Wilkinson

  • by PETER JONES
 

Even if there is a Yes vote, Scotland will require co-operation from UK parliament to smooth the way, writes Peter Jones

Two government Cabinet meetings in and around Aberdeen in the same day – when is that likely to happen again? This deliberate coincidence is more than just a delight for lovers of historical curiosities; it is deeply symbolic: of how titanic a struggle between nationalism and unionism the independence referendum has become, of how important oil revenues are in this contest, and of how much Scotland, if there is a Yes vote, will depend on the UK to make a success of independence.

Even the locations of the two meetings – just five miles apart – can be imbued with all sorts of meanings. The UK Cabinet took the commanding imperium of the city’s unyielding granite centre, while the Scottish Cabinet lurked outside, in an unlovely suburban sprawl of cluttered modern bungalows and businesses. Symbolic of the power relationship between the two administrations, or of who represents the past and the future?

And of course, they both brought gifts to seek favour from the natives – funding for a gas-based carbon capture and storage project in Peterhead from the one, and money for an oil and gas industry innovation centre in Aberdeen from the other.

I do not think I can recall the UK government ever making such a big effort to impress voters, not just in Scotland as in this case, but in any part of Britain. Even pre-election and election campaigns, notorious for pork barrel politics, don’t quite match this particular effort by David Cameron and Nick Clegg.

While these symbolisms will be hotly argued, one thing is clear – the central importance of offshore oil and gas production to the debate. The numbers involved – in billions of barrels and tax revenues – are so complex and uncertain as to merit discussion another day.

It is sure, however, that without oil and gas, the economic case for independence would not have much going for it. Without the offshore tax revenues, an independent Scotland’s public finances would be in a far worse state than are the UK’s. The better the argument that these revenues will carry on flowing, the more credible is the Yes campaign.

But they are also important to the No campaign. Because of the big size of the offshore economy, independence would mean the UK losing 8.5 per cent of its population, but about 10 per cent of its economy, worsening the prospect of reducing the public spending deficit, national debt, and getting the UK economy back on an even keel.

This, I think, plays quite nicely into the hands of the Yes campaign. If the oil resource was not incredibly valuable, they can say, why is the UK so desperate to hang on to it? It is a common sense-sounding debating point that any amount of number-crunching by the No campaign, pointing out the many uncertainties and volatilities involved, doesn’t quite answer.

The big symbol of the UK Cabinet’s trek to Aberdeen, however, is the centrality of what that government does to the future of Scotland, whether or not the country votes for independence.

This may seem counter-intuitive. After all, independence is supposed to be about throwing off the shackles of a government which is argued to be insensitive to Scottish needs and gaining the ability to implement policies specifically geared to Scottish circumstances without UK interference.

But on any rational assessment, that cannot be a with-one-bound-Scotland-was-free event, it will be a process. And it will be a process in which the UK has the power to make things easier or more difficult as it pleases.

Take Sir Ian Wood’s review of the offshore industry, the publication of which was central to yesterday’s political jousting in the North-east. The key recommendation is for a new offshore regulator which will have the ability, through the deployment of a mix of carrots and sticks, to increase production.

This will be a UK regulator. If independence occurs, Sir Ian’s view is that it should continue to be a UK regulator, but responsible to two governments instead of one. While there are difficulties in imagining how that might work, especially if policy priorities of the two governments diverge, it seems a sensible approach.

But what if the UK government, thinking that its offshore assets are nearly all gas (Scotland’s are mostly oil) and wanting perhaps faster progress on offshore fracking, decides it wants its own regulator? Scotland, which has no regulatory capacity of its own, would have to build it from scratch unless it could persuade all the UK staff to defect across the Border. That would create a period of uncertainty, which could only hamper achieving the goals of more production.

Another potential problem with the North Sea could affect Scotland’s accession to the EU. European Commission sources tell me that it is an unwritten rule of accession that new member states must resolve all disputes they have with neighbouring states before they are allowed into the club.

This rule, which you cannot find written down anywhere, was decided on by member states after the accession of Cyprus in 2004. Cyprus has a dispute with Turkey because of the Turkish occupation of northern Cyprus, which (Greek) Cyprus wants ended.

The EU, which thought this was a trilateral mater to be sorted out between Greece, Cyprus, and Turkey, got dragged in. This has entailed tens of thousands of hours being spent by EU diplomats in search of solutions, all of which so far has been fruitless. So the member states decided “never again”.

There are several such border disputes holding up accession processes by new Balkan states. So what if the UK, perhaps for other strategic reasons, such as winning concessions from Scotland over currency matters and debt division, decided to dispute the North Sea boundary for which there are several possibilities?

As such a dispute would take years to sort out in international courts, this could also hold up Scotland getting into the EU well beyond the proposed 18-month timetable.

You can argue about whether that is likely or not until the cows come home. All I would say is that this possibility underlines the fact that, for independence to happen as smoothly as Alex Salmond predicts, he needs the co-operation of the UK government. And given the bitterness which is now emerging over sharing the pound and dividing the debt, the prospects for that do not look good.

 

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