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Scotland Independence Referendum Agreed

Monday, 15 October 2012
     

The agreement paves the way for Scottish independence, but raises more questions than it answers. There is particular concern over possible conflict over North Sea Oil.

Scottish independence has clearly been a goal of the Scottish Nationalist party since it's inception, and being the majority party in Scotland since 2011, it has inevitably planned a referendum of the Scottish people. The referendum will not be legally binding, but given that the United Kingdom is a democratic nation, and the days of imposed government on empire have long since past, a vote for independence would inevitably lead to separation of Scotland from the rest of the UK.

The official UK government position is to accept independence should a majority of the Scottish people desire it, but to oppose any such campaign, in the interests of Scotland and the rest of the UK. Among the Scottish population, the most recent YouGov poll, in July, show that 54 percent of respondents are against independence, versus 30 percent in favor (16 percent were undecided).

Today's agreement includes the wording, the franchise, and the rules under which the referendum will be carried out. Essentially the question will be a single question of independence or not. The SNP were keen to include a third option of 'Devolution Max', in which they would dictate their own share and contribution of UK tax revenues unilaterally, but this was dropped, not least because they had no way to enforce any such change of the settlement on the rest of the UK, without their agreement. The franchise determines who can vote, and the SNP have achieved their goal of extending the vote to 16 and 17 year olds for this referendum. The rules will be legislated by the Scottish Parliament in accordance with the agreement and governed by the Electoral Commission.

What is not covered by the agreement is the terms of independence, should a yes vote win?

The two biggest bones of contention are North Sea Oil and Gas revenues, and the National Debt, including £470 billion of liabilities with regard to the nationalised Scottish Banks. The Scottish Nationalists lay claim to 90% of the North Sea Oil and Gas revenues (about £6.5billion a year), and only 8.4% of the National Debt.

Given that Scotland only represents 8.4% of the UK population, it seems unlikely that the rest of the UK will concede 90% of oil and gas revenues without a fight. To add to the uncertainty, the oil rich islands of Orkney and Shetland who have geographical claims to a third of the 90% of North Sea Oil claimed by the SNP, have declared that they may choose to remain with the UK, or even seek independence themselves, meaning that even in the most optimistic case, Scotland will only be able to expect half of current oil and gas revenues.

Even with all the oil and gas revenues, Scotland will still have to bear a deficit of £10 billion, against an economy size less than 10% of the UK as a whole, which has a deficit of £14.4 billion. It's hard to see how these numbers could be sustainable. Currently, Scotland receives a £30 billion grant from the UK as a whole (which receives the oil and gas revenue), which would end with Scotland's independence.

If the UK retains liability for Scotland's privatised banks, these banks would clearly also be retained in the UK economy, leaving Scotland without any significant domestic banking.

Other concerns include Scotland's status with regard to the US, the expensive and time consuming relocation of UK military bases (particularly Britain's Trident Nuclear Submarine base at Faslane and Coulport on the Clyde), the currency to be used in Scotland, border controls, and cross border issues.

 

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