Wednesday 26 November 2014

Celtic cousins Scotland facing a complicated future

Published 20/06/2014 | 02:30

A referendum on whether Scotland should be an independent country will take place on September 18
A referendum on whether Scotland should be an independent country will take place on September 18
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Next Tuesday marks the 700th anniversary of the battle of Bannockburn, at which a Scottish force defeated a larger English army. That the anniversary falls within the last 100 days of campaigning in September's referendum on independence is significant. Such is its resonance for the Scottish nation, and for Scottish nationalists in particular, it is expected to boost the cause of those advocating a "Yes" to Scottish statehood.

With opinion polls showing the "Yes" side not far behind those favouring the maintenance of a union that has joined Britain's nations since 1707, the chances of Scotland becoming independent are considerable. If that happens, the new sovereign state will formally come into existence on Holy Thursday 2016, just as Ireland prepares to mark the 100th anniversary of the Easter rising which ultimately led to Irish independence.

If the Scots do choose to go it alone, the implications for this island are big. One of the obvious advantages over the very long term is a more balanced relationship between Ireland and the UK. Although it is only in the past two centuries or so that the English core of the UK has really pulled away from Ireland in terms of population (as the chart shows) and economic clout, the gap between the two, is now huge. By any measure of relative power, Britain is streets ahead today. The economy of the UK is more than ten times larger than the Republic's, it has a sizeable military and a permanent seat on the UN security council, among other trappings of big powerdom.

The succession of Scotland, with a population only a little bigger than the Republic's, would create a natural alliance between two near neighbours of roughly equal size, while at the same time reducing the relative size of the UK rump. Both changes would lessen what is England's natural dominance of our shared region.

But there are limits to the benefits of this for Ireland. The above analysis is essentially a "realist" way of thinking about relations between states. For that school of thought, power is overwhelmingly the most important determinant in how states get along. But while this way of thinking explained international relations well in the past, it is less good at explaining them today.

In a world in which economies are deeply integrated and there are an almost infinite numbers of cross-border connections between individuals, companies and other actors, relations between states are about much more than the amount of power one leader wields compared to another. The declining importance of military might illustrates this well. That Britain has nuclear weapons – a source of great power in "realist" terms – is irrelevant to Ireland-Britain relations today as it is inconceivable that London would ever consider threatening Ireland with such weapons no matter how serious any dispute ever became.

The very good relations between Dublin and London today show that we now have very similar interests and, when our interests differ, it is not easy for Britain to exercise its much greater relative power to get what it wants.

All this means that, for Ireland, the most obvious upside of Scottish independence is limited. By contrast, the downsides and risks of Scotland's leap to independence appear considerable. Economically, our trade relations might be increased if an independent Scotland enjoyed more rapid economic growth than a Scotland in the UK, but there are more reasons to think it would suffer from independence than benefit (and a slower growing Scottish economy would mean less demand for Irish exports).

It is very difficult to see how two of our Celtic neighbour's biggest industries – defence and financial services – would not be adversely affected by the creation of a new border. Weapon-making is the most politically sensitive of industries and London would be unlikely to want core military technologies to reside in a foreign country. It is hard not to see chunks of the industry moving south.

As for the financial sector, that industry is currently greater relative to the size of the Scottish economy than Ireland's banking system was at the height of the bubble. It is has grown so large because most of its services are exported south (70pc of total Scottish exports go to the rest of the UK). With a new border to overcome, questions about what currency the new state would use and hard-to-resolve regulatory and central banking issues, the lure of London for Edinburgh's bankers would be very strong if Scots were to plump for independence in September.

And even if there is no growth penalty for Scotland from divorcing the UK, the uncertainty around Irish-Scottish economic relations at the very least risks loosening economic ties.

Currently, most trade matters are determined by EU rules. Among the biggest issues facing Scotland in the event of a "Yes" vote is its place in Europe because it is far from certain that it would become the EU's 29th sovereign member in 2016.

That is because there are many in Europe who believe that offering automatic EU membership to any region or nation breaking away from an existing member state would encourage secessionist movements everywhere. But even if none of the existing 28 members were to exercise a veto over Scottish accession to the EU, negotiating membership in the short period between the referendum and formal independence would be tricky and time-consuming.

If Scotland was to find itself out of the EU in April 2016, economic ties with the rest of the bloc, including Ireland, could, at the very least, become more complicated.

Another consequence of Scotland's succession would be the likely raising of questions about relations between the remaining parts of the United Kingdom – Wales, the English regions and Northern Ireland. This would inevitably be destabilising for the other jurisdiction on this island.

That the people and politicians of Northern Ireland are still unable to reach agreement on how to deal with the past, who marches where and the symbolic issue of flags shows just how fragile things remain north of the border. Questions about the break-up of the UK could only add to uncertainties and insecurities and, in a worst-case scenario, lead to another bout of radicalisation and a descent back into violence.

If the Scottish people choose independence on September 18 it will be in Ireland's interests to help them make a success of their new state in every way possible and to develop the strongest possible Dublin-Edinburgh ties. But that will require very considerable effort and present many challenges. With much still to do to stabilise the North, Britain shaping up to leave the EU and the EU itself still in great flux, Scotland's future makes our future even more uncertain and complicated.

Irish Independent

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