Seven: That which is done is real
There is one remaining aspect of the process of independence which is an area where we can offer greater reassurance to those voters who are not yet confident enough to vote Yes – which is the post-referendum process. Another area where the No camp tried to make ground with its ‘all too uncertain, don’t take the risk’ pitch was the process of negotiating independence after a Yes vote. I think the Yes side rather played into their fears by basically refusing to talk much about that process.
This was ostensibly on the basis that ‘we can’t talk about negotiating positions because you can’t show your hand in public’. Of course there is an extent to which you don’t really want to reveal every detail of your negotiating strategy in advance. But there is a world of difference between a negotiating strategy (how low you’ll go, what secret weapons you have to increase the pressure, what is your nuclear option and so on) and a negotiating position (an opening statement about what you think is the fair outcome). It is absolutely normal practice to outline a negotiating position in advance.
Again, this was probably not doable last time because the work couldn’t be done in the timescales. There was probably also a little bit of a desire to control as well – senior SNP people set out the argument that this was their negotiation to run and that they had the mandate (which was not true in any sense since no-one had elected them to negotiate independence). But we did at least get as far as a promise to have a ‘Team Scotland’ approach (though how many people in the ‘team’ would not have been part of Scotland’s wealthiest five per cent was far from clear). Either way, as a natural result of timescales and the normal political desire to remain in the driving seat, little was known about either the content or process of negotiation.
This of course fed into the No campaign’s determination that it would not ‘pre-negotiate’ anything. Of course it wouldn’t – it was largely predicated on creating an overbearing sense of uncertainty and doubt. But was it true? Well, if it was, it would have been a gift. We could have just written our own terms for independence (what proportion of UK debt we would take, what assets we would own and control and so on). And they would have to refuse to contradict that list because they weren’t negotiating. So our list of demands would have been the only and unchallenged picture of the future.
In reality, had that happened, they’d have been ‘negotiating’ within minutes. If we said ‘OK, we’re only taking X proportion of the debt’, they’d have said ‘no, we won’t accept that’. That’s negotiating. They could have been pushed on lots of things and would either have had to bite their lip or at least hint at their position.
But in any case, it’s not really the opposition you want to negotiate with before a referendum vote has taken place, it’s the voters. You are gradually trying to persuade them that the future is foreseeable and understandable. The other side are trying to do the opposite. So it’s not the other side that you’re designing your opening negotiating position for but the voters. Your aim is to show them what looks like a highly reasonable, broadly desirable picture of what is going to happen next. You want them to believe that it’s not as tricky as all that, not as massive an upheaval as all that – and that Scotland will end up in a strong position.
Now, there’s quite a lot that would require some kind of negotiation or another – all those thousands of often obscure international treaties, the division of assets, the allocation of ongoing liabilities and much more. I’m not suggesting that this all needs to be done in detail miles in advance (though, on the other hand, it’s going to have to be done sooner or later so why not sooner?). Nor am I suggesting that many people care about this level of detail. Once again, it is not the specific that matters but the general – the general sense that someone has done this, it’s not a problem and all is in hand. Nothing to worry about here.
So I’d suggest that at some point after the general case document is published (in late 2018 or early 2019), it would be worth publishing a starting position for negotiation, an outline of what the Yes side thinks is a reasonable starting position. It would be necessary to think through some of this to be able to produce a budget for day one of independence anyway – we need a rough idea of how much debt we should accept to be able to price in the cost of debt servicing. We can’t just avoid this altogether if we want to be more prepared.
During the last referendum I felt a little unease that there wasn’t enough understanding of the negotiation process and the international legal framework in which it would take place. So I went and read the two relevant international ‘Vienna Treaties’ which govern the creation of two separate states from one. I really don’t want to go into the rather obscure details of what is in them or the extent to which it would necessarily govern the process – they haven’t been ratified by the UK so they wouldn’t necessarily be legally applicable anyway. But they do outline the legal precedent so it’s worth just taking a second to understand the very basics.
Broadly, they conclude that there are two ways an existing nation state could turn itself into two states. One assumes that one state has ‘left’ the other, with the leaving state becoming a successor state and the remaining one being a continuing state. The other assumes that one state breaks into two different states, that both of these states are successor states and that there isn’t a ‘continuity’ state. There isn’t really any discussion about which of these models would be adopted because that decision has already been made by Westminster – the UK would be a continuity state and Scotland would become a successor state. That is the only means via which the UK can say things like ‘It’s our Bank of England, not yours’. It is also the only means through which the remainder UK can keep all its existing treaties.
Because a successor state, in international law such as it is, leaves a continuity state. But it leaves it with all its assets and liabilities – subject to negotiation. Very, very simply, if the remainder UK says ‘you’ll need to renegotiate all your treaties but we won’t and the Bank belongs to us and not you’, that principle applies to absolutely everything other than in-territory assets. So things which are physically based in the geographic area which is to become the new nation (such as hospitals, schools and roads) belong to that new nation. But absolutely nothing else – or at least not automatically.
There is actually quite an interesting debate to be had about whether the UK has the right to take that stance unilaterally – can one partner in a divorce just claim that assets held in both their names actually just belong to one person? But it’s an academic debate because the UK is never going to accept that it is a ‘new’ country. And I have always believed that, if we get our negotiating position right, this plays right into our hands. Because there are really two big games to be played here – who owns the currency and who owes the debt? The rest is mostly dividing up assets, signing bits of paper and agreeing who gets what ‘access to the children’ (by which I mean institutions like the DVLA). And as it plays out, each side (last time round) had a big ask of the other. Scotland decided that it really, really wanted to have access to the currency. The UK was determined that Scotland really, really had to take its share of the UK’s massive debt.
Just to be clear again, so long as the successor state/continuity state split is the one the UK government insists on, Scotland really doesn’t have any rights whatsoever to the Bank of England or Sterling. As far as international law exists at all in this area, George Osborne was sort of right when he claimed that Sterling wasn’t like some kind of CD collection to be divided up. However, there is an important corollary of that – Scotland was due none of the UK’s debt. Not a penny. It was Westminster that signed the IOUs so it was the UK which would be 100 per cent responsible for paying off those IOUs. We can debate the morality of it all to our hearts’ content, but the legal position was that Scotland could sail off into the sunset debt-free.
In negotiations the first rule is that the person who wants least is in control. If it was only an asset division process, it was entirely for London to persuade Edinburgh to pick up a share of London’s debt. London wanted more than we did (the debt is much, much bigger than Scotland’s share of the UK’s non-Scotland based assets), so we were in control. Unless we wanted something big too. Which we did – to have a currency union. We made that ask absolutely unconditional, something that we were 100 per cent committed to getting. In fact, by not having the fabled ‘Plan B on currency’, we wanted a currency union even more than London wanted us to take a share of the debt. So immediately the balance of control swings decisively in London’s favour. Far from not pre-negotiating, we opened the negotiation with ‘we’re totally begging you for currency union and we don’t have any alternative so state your terms’. That’s a desperately weak negotiating position.
That is one of the many reasons I favour an independent Scottish currency. We can simply take the UK government at its word, that it is the continuity state, that it owns the currency and that we’re not getting it. Fine, we can set up our own. In return, we’re due none of the debt. For anyone who can’t see the significance of that, Scotland’s fiscal deficit as seen in the last GERS report disappears overnight. Our borrowing capacity shoots up because we’re one of the very few nations in the world borrowing from a debt-free position (although some credit ratings agencies which are entirely intertwined with the City of London financiers may well seek to punish Scotland by reducing our rating). And if we do decide to adopt some of the debt, we can claim a concession for every percentage point we take. It may be cynical, but a Scottish currency makes our negotiation position immensely strong.
Because (and I’ve been thinking about this for a while) I can’t really see what else we need – other than a reasonable transition period. Personally, I’d suggest that far from pressing the UK for our share of the boats and planes that make up our share of the UK armed forces’ assets, we’d be better off working out what we need and commissioning as much as possible from Clydeside. Since we’d be sort of rolling in money (or more specifically, borrowing power), it’s not exactly a difficult world in which to procure military hardware. And that applies to a lot of other aspects of the division of assets. OK, it’ll cost us money to set up a Scottish DVLA, but once we do that’s jobs in Scotland. And yes, we could demand a room in each of the UK’s embassies be deemed ‘Scottish’ (and effectively pay for them). But it would seem to make more sense to decide where we really want embassies and rent office space.
There is potentially a substantial economic boost available from a policy of ‘if we can build it, don’t inherit it’. And to be honest, there is not as much as people think that we really need to inherit. I mean, what were we really going to do with our share of the London Underground? We were going to cash it in. So why develop a negotiating strategy from that direction? Why not budget for what we need, not to piece together a kind of hand-me-down country, but to order a bespoke new nation?
Because we probably should accept some proportion of the debt, simply because it is the people of England and Wales who will suffer if we don’t. But if we go in with the stronger hand, it could be on our terms. Let them keep the assets and the institutions. Work out how much it will cost us to replicate them in brand-new, shiny modern form. Call that the start-up costs (including the costs of setting up a currency as a result of London’s refusal to give us any access to the one we currently use). Borrow those from a Scottish National Investment Bank. Then subtract that from whatever we believe would be Scotland’s debt share and say we’ll agree to service that much of the UK’s debt. But since international money market IOUs can’t be transferred to third parties, we’d have an agreement to pay the remainder UK a sum equivalent to our share of debt costs. And this would need to be fixed – if the UK makes a mess of its economy and its borrowing costs go up, that’s its problem. We should agree to pay an annual fixed amount for an agreed period and no more than that.
The UK negotiators might not like it. But since (in theory) we could just walk away with no debt whatsoever and do the same thing anyway, it would probably be a pretty solid starting point to negotiate from. I do of course realise that this is quite an aggressive negotiating position. Last time round Scotland did backflips to try and sound incredibly reasonable about how we’d negotiate (once again, this can hardly be described as refusing to show our hand in advance). The UK on the other hand virtually laughed in our face. I can only say again that if we’re trying to give confidence to the people who are nearly there with a shift to a Yes vote, a strong and unapologetic negotiating position is hardly going to be unhelpful.
Now as I’ve been clear, my preferred option of a Scottish currency may not be the option that is settled on as Plan A. In which case we’d go back into negotiations for a currency union and once again be more on the back foot. But in my opinion it is therefore absolutely essential that we have a self-sufficient Plan B which means that we can fall back on a more aggressive negotiating stance if the UK just won’t play ball (by which I mean during the referendum rather than afterwards). Plan B could be a Scottish currency or Sterlingisation (though that poses a number of other problems), but it must leave Scotland able to walk away. We then set out two negotiating positions – the terms on which we’ll accept a currency union and the debt we’ll accept in that position, and then the terms we will impose if a currency union isn’t accepted.
Frankly, all we need is anything that is sufficiently reasonable to look like a legitimate starting position, clear answers to questions about how things would work and how we’d set up that new state, reassurance that the smaller detail is in hand and a clear idea of what it’s all going to cost us. Issues like whether the UK would accept dual nationality and whether it would impose border guards (it wouldn’t) are issues on which we can state a preferred position but over which it is not crucial we reach a final position.
And to cover all the rest of the detail for the sake of reassurance we should just stick out a couple of bog-standard academic tenders. The thousands of obscure international treaties and how we’d treat them? Task that to the Foreign Affairs Policy Academy (if set up) or get an international relations think tank to write a paper. The various tangles of existing domestic constitution that need to be detangled? Advertise a contract for a constitutional academic to write the paper or commission an international constitutional NGO (there are loads). The to-ing and fro-ing over maritime borders and the like? Get an international arbiter to come up with a fair solution. No-one is going to look at these, but they will be reassured that when people ask what we’re going to do, we can give them a web reference.
And there is another reason to do so much of this work in advance. Anyone who has ever read a John Le Carre novel or saw the recent BBC adaptation of the Night Manager will know that the British civil service is world class at being obtuse. Ten minutes in a room with a few Whitehall mandarins and Usain Bolt would be reduced to a crawling pace. The UK is quite likely to want to slow down the pace of negotiation to a virtual stand-still as a means of turning the screw. Because there is of course one other thing it really, really wants but which is non-negotiable in Scotland, which is continued basing of Trident in Scotland’s waters. Every year the UK can delay the actual secession of Scotland, the happier it will be.
But here’s the thing. I want out. I really, really want out. I don’t want to be stuck in this United Kingdom given the awful direction it is headed. I want to be in an independent country where we can make different decisions. And I want it as soon as I can get it. The more work we have done to negotiate our departure in advance, the faster will be that departure. It’ll also help us persuade people it’s time to go when they see the deal we put on the table.
There is a fascinating psychological response to the idea of ‘facts on the ground’. When something appears to become real, people start to accept it. When the details of how Scotland would rebuild are written down for all to see, they start to look tangible. When things look tangible we respond differently to them, we react as if they are more real than they are. If someone points to a field and says ‘I’m going to build a house there’, it still looks like a field. Show the architects drawings and suddenly you can almost see a house. Let’s get the architect’s drawings for an independent Scotland done. Because that which is not done is unreal – but that which is done is real.