MercoPress. South Atlantic News Agency

The Scottish referendum

The British pound would start to fall against other currencies, not because Scottish independence, but because the markets hate uncertainly.

By Gwynne Dyer - If the Scots vote “yes” to independence on Sept. 18, as one opinion poll now suggests they will, three things are likely to happen in the following week.

First, David Cameron may cease to be the leader of the Conservative Party and the prime minister of the United Kingdom. He would be removed by his own Conservative members of parliament, who would hold him responsible for allowing the break-up of a very successful union that has lasted 307 years.

Secondly, the British pound would start to fall against other currencies, not because Scottish independence would necessarily be an economic disaster for the rest of the United Kingdom, but because the markets hate uncertainly.

To prevent a serious decline of the pound, the British government would have to act on its pre-referendum warnings that a post-independence Scottish government could not have any say in managing the currency. Nobody can stop the Scots from using the pound if they want (and the “Yes” campaigners say they will), but they would be using it the same way that Panama and Liberia use the US dollar. No control over interest rates or anything else.

And thirdly, Spain would block automatic membership in the European Union for an independent Scotland (perhaps with support from some other EU members). Maybe Scotland could become a member eventually, but at least it would have to join the end of the queue for membership and go through years of convoluted negotiations. And it would have to accept the euro as its currency.

The Spanish government has already said it would insist on this, because the Spanish province of Catalonia is holding its own (unauthorized) referendum on independence in November. Madrid has veto power, and it is determined to show that breaking up an existing EU country is not easy or painless.

On the other hand, it would not be like South Sudan or East Timor: there would be no bloodshed and no refugees. Some businesses, particularly banks, would move their head offices from Scotland to England, but in five or ten years the Scots would stop blaming England for all their problems and start blaming their own politicians. And the English would simply have forgotten Scotland.

The right question in this situation, therefore, is not “What will happen if...?” Nothing very extreme would happen, although Scotland is unlikely to enjoy the economic and cultural boom that First Minister Alex Salmond, who called the referendum on independence, frequently predicts. The better question is “How did it end up like this?”

How did a country that has shared a monarch with England since the early 1600s, and freely joined a union with the rest of the “United Kingdom” in 1707 (although there was a lot of political jiggery-pokery involved, as was normal at that time), end up on the brink of leaving the Union in 2014?

Scotland shared in Britain’s wars, and Scottish emigrants settled in all of Britain’s colonies. The Scots had their industrial revolution almost as early as England and far ahead of the rest of Europe. They played a large part in managing the British empire, and profited immensely from it.

Post-industrial Scotland has its deprived inner-city areas, just as England does, but the two countries have pretty much the same standard of living. Scotland always kept its own legal and educational systems, and for the past 16 years it has had its own elected parliament and government, with powers comparable to those of a U.S., Indian or Australian state. So what’s wrong with this picture?

The real grievance that fuels Scotland’s independence movement is the fact that Britain keeps electing governments that are either explicitly Conservative or (like Tony Blair’s three terms in office) conservative in all but name. They take Britain into stupid foreign wars, and they impose austerity on ordinary British people while looking after the rich.

Scots see themselves as being more socially conscious and more egalitarian, and there is some truth in that view. (Only one of Scotland’s 59 members of the British Parliament is a Conservative.) So the “Yes” campaign argues that the only way to avoid perpetual rule by Margaret Thatcher clones in London is to break away and build a separate Scottish state.

That argument is getting a lot of traction in Scotland at the moment, and voting intentions have swung from 61% for No and 39% for Yes in early August to a knife-edge difference in the latest polls. The other recent polls still show a small advantage for the Noes, but it could go either way.

If it goes Yes, then the change is forever, and everybody will just have to live with it. But since Scotland’s current dissatisfaction with the Union is mainly about the political color of recent British governments, a No to independence might also be permanent. A couple of genuinely left-wing British governments and a strong economic recovery (which is actually happening), and the whole thing might blow over.