Duncan Hamilton: Independence is not the problem for wounded Celtic Tiger

LISTENING to Scottish Labour celebrating the economic troubles of the Irish Republic last week was a timely reminder of the corrosive negativity that too often defines Labour's contribution to Scottish political debate.

Sure, Ireland is in trouble, albeit that things are not as bleak as many would want you to believe. But I can't be alone in treating with contempt the schadenfreude from Iain Gray in the Scottish Parliament on Thursday when he described Ireland as "teetering on the brink of collapse" and sought to derive from that country's difficulties some blinding insight into the perils of an independent Scotland. It was a cheap, ill-informed and predictably pedestrian response.

He isn't alone, of course. With the exception of the BBC, most of the UK coverage of the Irish government announcement bailing out the banking sector and the inevitability of still further spending cuts and tax rises has carried a superior tone. There is an unmistakable sense that in the UK the Irish "Celtic Tiger" had come to irritate rather than inspire. We deal better in these parts with a vision of Ireland as a poor desolate bogland than we do with the reality of a modern and vibrant country.

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Rather than honing his anti-Irish rhetoric, perhaps a few moments leafing through this week's copy of Global Finance might have assisted Iain Gray. It provides an up-to-date list of the wealthiest countries on earth per capita. Gray cites the downturn in fortunes for Ireland and Iceland and seeks to extrapolate the extraordinary conclusion that this proves that small independent countries can't succeed. Were it not for the inconvenience of fact, it might be taken more seriously.

First, Ireland and Iceland remain above the UK in terms of GDP per capita. Don't take my word for it, just ask the IMF. Secondly, the richest country on earth by miles is Qatar, population 1.3 million. The country in second place? That would be Luxembourg with a population of 500,000. What about third? Oh yes, Norway with a population of 4.9 million. Want to keep going down the list? Yes, me too. Switzerland (eighth place) and the Netherlands (ninth) might just have something to say about the suggestion that they are unsustainably small, as indeed might Austria (11th), Sweden (16th) and Denmark (17th). Now, to be fair, the United Kingdom does eventually feature in 20th place, immediately after mighty Belgium.

To be clear, I don't say the UK isn't economically viable. It is. I also don't say Scotland is like, needs to be like or would want to be like any or all of those small nations at the top of the charts. All I ask in return is that we all accept that there are lots of small nations who are beacons of success, just as there are large nations struggling. None of that tells us whether Scotland should be independent, it simply tells us that it readily and sustainably could be.

To the bigger picture.Ireland's troubles are deep and will take a decade to resolve. But let's put this in context. I salute the approach taken by the Irish. Read their newspapers and you will understand that there is real and justifiable anger. But there is also an acceptance that this is not the time for grandstanding, that this is the time that every person in Ireland needs to put their shoulder to the wheel. The Irish Examiner put it this way: "We may be shocked and angry but we don't seem to have many choices, either we accept our situation and deal with it or we waste energy fighting each other and, inevitably, finish the job of destroying this country." That is not a country teetering on the brink of collapse, it is one which has seen the cliff edge and understands the imperative of collective remedial action. This is about nation first. Personally, I find that impressive.

Consider too the reflective comments of Peter Sutherland, former European commissioner and director general of what is now the World Trade Organisation. He made the point that Ireland has now provided what the market wants: certainty and transparency. That's why the bond markets responded favourably to what Ireland did, rather than punishing the country still further. The message from Ireland is that the country has identified and will now honour their debts. Beyond that, remember too that the Irish government does not need to seek to issue new bonds until the middle of 2011, by which time the credibility of the austerity measures due to be announced in November and December will be plain. There is also the solace of a sovereign wealth fund which sits at 20 billion.

There is a vast difference between being small and being isolated. Ireland is one, but as a part of the Eurozone is emphatically not the other. Ireland is determined not to rely on the European Financial Stability Facility, the IMF or anyone else. But the point is that wider support is there if needed. Did being in the euro damage Ireland by removing the option of raising interest rates to slow the boom? Probably. But the flip side is that Germany, France and the rest of Europe can't and won't let Ireland fail.

No-one is pretending that Ireland is in good shape. But the country will recover in the fullness of time and will take pride in having done so. There are many lessons which emerge out of this financial crisis. The merits or otherwise of being an independent nation simply isn't one of them.