Brian Monteith: Time to tell the truth about separating Scotland

The pressure to explain himself is at last mounting on Alex Salmond and it is entirely of his own making.

Last week there was a volley of shots coming from different vantage points, some academic positions of relative objectivity and others political and therefore partisan. Whatever their motives, it suggested that the First Minister will not be allowed to get away with offering a vague and misty-eyed prospectus for Scottish independence, and that if he tries to do so it will be so obvious to the Scottish public as to lose him any credibility.

So it was last week that serious and considered opinion that could not just be swatted away was offered about which legal entity had the right to hold a referendum. Then there was the perennial argument that Scotland has no automatic right to European Union membership, and that to join will have to bargain away the very independence it strives for in fisheries, energy and tax competition – and accept membership of the euro from day one.

From another piece of research it was argued that were an independent Scotland inside the euro, we would face a bill of some £8.4 billion as our share of the eurozone bail-out fund – something quickly denied and no wonder: it is a frighteningly large sum.

The answers from the nationalists have so far been glib brush-offs that amount to no more than a finger in the dyke. Eventually that dyke must burst; surely the public will lose patience with the SNP’s prevarication and evasion and they will be all at sea?

Now a new report has been published that, quite unintentionally, prompts a response from the nationalist camp as to how Scotland would conduct itself, be it in the European Union and the eurozone or outside it and with its own currency.

In the paper produced by Professor Baldur Thorhallsson of the University of Iceland and Professor Peadar Kirby of Limerick University, the question is asked: did membership of the EU and the euro make a difference to the economic crises faced by Ireland, that is in, and Iceland, that is out?

Now this is an important question for the SNP, for we all know how the First Minister liked to talk of the arc of prosperity encapsulating Ireland, Iceland and Norway before the first two nations contrived to become the arc of insolvency.

Now Thorhallsson and Kirby cannot be accused of having any particular axe to grind in relation to Scotland’s thoughts on possible membership of the EU and the eurozone. In what is a very thoughtful, balanced and considered paper, reviewing all the academic and political contributions made to the respective debates within their own countries, they do not mention Scotland once.

Their study considers whether small states benefit by being members of multinational organisations such as the EU and the euro that provide them with shelter, especially at a time of economic crisis, and they suggest it is not clear-cut.

Ireland’s crisis was not only exacerbated by euro membership but made possible by it, through the availability of easy liquidity for its banks and no check from an Irish Central Bank. Since then its recovery has been slower than Iceland’s and it continues to face high costs from Europe and strong pressure to give up on lower taxes. For Iceland, it has had greater flexibility to use the kroner to recover but has been isolated by European nations.

The authors favour giving far more importance to domestic policy having an influence in the outcomes that affected Ireland and Iceland than is usually given credence by those who see the euro and its European Central Bank – or other international institutions such as the European Commission and the International Monetary Fund – as the most important factors in providing shelter and support to small nations.

For Scotland this is an important consideration for it tells us that as we approach a big decision on what is our nation’s future, we need to know what arrangements would be put in place regarding the currency and financial regulations that have an impact on it.

There is no perfect system – independence and how we manage our currency is a political choice rather than an economic one.

We already know a great deal about what went wrong in Britain, such as the error of taking banking supervision away from the people who understood it best – the Bank of England – and we also know what measures are being proposed to correct those mistakes.

By comparison, we know absolutely nothing about what arrangements an independent Scotland would have in regard to its relationship with the European Union, the euro currency and the regulation of our banks.

Of course, an independent Scotland might, like the UK, manage to be in the EU without being in the euro, but to negotiate such a position must come at some cost and we have the right to know what we would trade to achieve it. Just why the SNP thinks it would be advantageous to continue with sterling in Scotland – but have less of a say than we currently do in the economic, fiscal and interest rate policies that affect it – mystifies me.

It is just not credible for the SNP to avoid these questions. Indeed if they are not answered then any referendum can only be seen as little more than a straw poll, for the terms of the separation with the UK would remain to be determined and any negotiations for EU membership would require hammering out.

In such circumstances there would undoubtedly have to be a second referendum to ask the Scottish people if the costs and benefits that had finally been arrived at were worth proceeding with. I’m not a supporter of a second referendum but if it is to be avoided, the first must put all available knowledge of what it will entail before the Scottish people.

Will the First Minister be honest with the Scottish people or does he wish to be forever caricatured as a ducker and diver?

• Brian Monteith is policy director of www.ThinkScotland.org

The report can be found at: http://stofnanir.hi.is/ams/sites/files/ams/Iceland-Ireland-Report%20final%20version_Kirby_Baldur.pdf