Letters Extra: Yes, Scotland CAN be independent in the EU

Mr Fairlie regards the EU as a superstate. While I agree there has been a surprising degree of integration over the years, I would argue this is not the case. The EU is a supra-national organisation as opposed to a centralised state, and the EU rules we follow are in areas of trade and movement of finances, people and services. Not red tape, not bureaucracy – they are the opposite and they truly are the four freedoms.

The EU also coordinates foreign policies in some instances and they insist that member states are functioning democracies and respect citizens’ human rights (that’s why Theresa May as Home Secretary kept losing cases due to EU laws – she has low regard for human rights). The EU is therefore providing some protection against the rise of dictators and those who oppose democratic freedoms. It’s generally a force for good. And it’s a force for peace, which is my second and main point.

In the Second World War, the expected carnage of First World War proportions didn’t materialise for UK troops and we sometimes therefore forget that in Europe and further afield, the Second, not the First World War, was the war to end wars. The number of military and civilian deaths worldwide in the Second World War has been estimated at 60 million, about 3% of the world’s population in 1940. When war-related famine and disease is included, the figure rises to around 80 million people. About 20 million Soviet Union soldiers and civilians died. Poland lost around six million people. I could go on.

After such an unprecedentedly terrible war, surely we would naturally turn our back on militarism? I would argue not, because the whole first half of the 20th century was characterised by wars in Europe as indeed were most previous centuries. The 20th century started with two Balkan wars and the second one of those spread into the horrendous First World War. Some historians regard the Second World War and the First as basically the same war with a pause for rearmament. So at the end of the Second World War further European conflict sadly seemed likely, if not totally inevitable.

In a bid to help rebuild Europe as a peaceful grouping of small old nations, the US Marshall Plan, amounting to assistance conditional on European states becoming interdependent rather than fully independent, financed the European Coal and Steel Community. Euratom and the fledging EC followed. The EU has enlarged seven times. The UK desperately needed, for trade reasons, to join at the first enlargement but the following six enlargements have seen the number of states grow to 28, including Croatia two years ago. No wars. The Marshall Plan vision has been delivered brilliantly.

And the Balkans, where modern unrepeatably horrendous warfare began over 100 years ago and where warfare and ethnic cleansing raged into the 21st century, is also now getting the peace and prosperity dividend that we in the rest of Europe have enjoyed for 60-plus years. More former Yugoslav states are in the EU queue to join Croatia. The EU may not have been the most powerful enforcer of peace in that region but it now has a crucial role in ensuring the current peace lasts.

President Putin wants to destabilise that region for his own ends – currently he is targeting Montenegro – and Donald Trump transparently backed him up on Fox News a couple of days after the Helsinki summit, so the role of the EU is unquestionably positive in the Balkans.

An independent Scotland needs to be in the EU for both reasons of our economy and because there is an undoubted peace dividend. We can live with the well-defined and fully appropriate areas where national sovereignty is ceded.

David Crines
Hamilton

READ MORE: Letters: Control over currency is essential to independence

I HAVE always been a great admirer of Jim Fairlie, a man of independent mind and unbending integrity. Like he and Jim Sillars, I would have been inclined, indeed philosophically duty bound, to vote Leave in the EU referendum.

Not because, as Jim argued, of xenophobia or racism but because large economic units are inherently unwieldy and unable to make decisions that favour local conditions. They are bureaucratic and sclerotic, even when well-meaningly so.

However, I am equally happy to accept the will of most of the people of Scotland who voted in the EU referendum and live with the decision to stay a part of the EU single market and customs union. I would strongly prefer a Switzerland-like relationship (and then for a Switzerland-like governance system in Scotland itself, including regular plebiscites on all sorts of economic and social matters) but that is by the by.

But I need to take issue with Jim (and our mutual friend, Jim Sillars) on one matter, the "sterlingisation" of the new Scottish currency. In the run-up to the independence referendum I wrote a report, issued under my company’s letterhead, supporting Scottish independence (not a costless decision, I can assure you). I argued in favour of the currency union supported by the Scottish Government’s White Paper, even though I felt it to be the second best option available.

So why write in disagreement with Jim’s letter? Because there seems to be some misinformed belief that an independent Scotland adopting its own currency would somehow, miraculously, be in charge of its own monetary policy and interest rates from that point onwards. I wish that that were so but it is just naïve in the extreme in today’s globalised world.

I live in Asia and I have researched and studied Asian economies for the better part of the last 30 years. All of the countries I cover, with the exception of Hong Kong, have independent currencies. None of the countries that I cover, including capital-closed China, have the ability to operate entirely independent monetary policies. All of them are governed, to some extent or another, by the vagaries of the international markets as well as the realities of domestic market signals (interest rates, exchange rates and tax rates).

Unless we are prepared for Scotland to move towards the status of a closed economy operating capital controls and participating only marginally in international trade, we have to a) accept the rules of the international trading club (World Trade Organisation rules at least), b) accept that our currency will be traded freely on international exchanges, and c) that our domestic interest rates will be influenced by the level of international interest rates or our exchange rate will be subject to extreme volatility.

Given that I suspect most of us would think that it would be madness to move towards a closed Scottish economy (one which none of our EU friends would want to participate in as expatriate workers), we need to deal with realities. An independent currency, monetary policy and fiscal policy is no longer an option in the globalised world. Setting marginal policy differences and finding innovative ways to promote economic growth and develop societal policies (as is the case in much of Scandinavia) is most definitely possible, but let’s be clear about the parameters.

Is ‘“sterlingisation” the best option for a newly independent Scotland? Probably yes, for a short period of time but only to ensure the birth pains of the new nation are minimised. Can “sterlingisation” be eased into something more "independent" (like the Norwegian krone)? The answer is also yes, but bear in mind that the Norwegian krone has been exceptionally volatile against the euro – with which it has a single market and customs union arrangement – for the last 20 years. Its interest rates, although slightly different in magnitude, closely monitor those of the US over time.

Switzerland, my favoured political model, has had the darnedest time managing its currency against the euro and is in, arguably, one of the worst shapes of any developed country were its central bank balance sheet to catastrophically unwind (which is a real possibility).The Swiss National Bank is now one of the biggest owners of S&P 500 shares on earth. Is that what we want in a central bank?

We need to get real on the currency argument. There is no easy choice and there is no fully independent alternative that would allow us to set interest rates independently of the rest of the world. "Sterlingisation" does not imply giving up responsibility, management and control, it is merely a recognition that we live in a global world and that we have to smooth the transition to a better-managed system (probably consisting of a basket of currencies) slowly and with a degree of clarity for the economic actors involved.

I am all for the adoption of a Scots pound at the end of any transition phase. I am not, however, divorced from the reality that that will only give us very limited scope to run an independent monetary policy if we wish to remain part of the international trading community and, even less scope for manoeuvre, if we remain part of the European Union as is. Let’s stop beating ourselves up over theoretical dead ends. The world has changed; Scotland needs to be ready to join the international community on its terms or not at all.

Dr Jim Walker
Asianomics Group Limited, Hong Kong

READING the Long Letter of July 30 was fascinating. I for one do not regard those who voted to leave the EU as idiots because they did so, nor do I condemn those who voted to remain in the UK to be idiots either.

Voters make their decisions as best they can, given the information available to them at the time of the vote, and their experiences in the past. The former includes Vows, messages writ large on the sides of big red buses, and pictures of refugees looking to escape war, and the latter is generally a very personal aspect, and often built upon repeated experiences. My experience of recent rapid change is in the approaches to sustainable infrastructure,working with some of the best practitioners from several nations in the EU, has led me to conclude that there is much to be admired in the various EU approaches to technical change, and the future technical change, if sufficiently guided in a constructive manner.

I was involved in a joint project supported by the UK and Scottish governments, two Scottish universities, the EU, Scottish Enterprise, the Unitary Authority, Scottish Water, and SEPA. Given that the UK was a net contributor to the EU, and that the remainder were public bodies, it would be fair to say that the UK public were footing the bill for the UK nation participation. Subsequently the Scottish public would reap the most benefit, the UK and the EU citizens benefiting also.

The project result was not prescriptive to any one nation or country but provided a series of possible outcomes and different ways of getting there, from different starting positions, and embraced interdependence, without rigid constraint to a single independent action. This is therefore how I view a possible “independence” for Scotland, as being an interdependent nation state within a grouping of other interdependent nation states, ie the EU, without overly rigid constraint to independent action. It will not be a perfect fit, no shared sovereignty ever is, but to my mind it will be better than isolation in an independent silo.

So, does Scottish self-determination or independence require a separate and stable currency? Stable enough to maintain a close link to 50 million people next door, and/or 500 million people down the road? This appears to be at least the initial question. We see from Brexit that a cheap Great British Pound can be a problem for imports, and that an expensive Great British Pound can be a problem for exports.

Personally, I would like to see an attachment to the euro envisaged, unless the people of Scotland with their newly won self-determination decide otherwise. I do think it will be a decade-long process to run a dual currency until a switch with minimal sudden disruption can be made. Perhaps the first step is to have multiple currency current accounts available to the public, so that citizens can make informed choices based upon their own experience.

If the UK remains in the EU then I consider the Great British Pound the more likely choice to generate a Yes vote, but if there is no deal or a bad deal then the euro appears a possible vote-winner, avoiding Scotland and its society being dragged relentlessly down by the rUK.

Stephen Tingle
Greater Glasgow