Mark Carney, the governor of the Bank of England made a much anticipated speech in Embra on Wednesday giving his opinion on the sterling currency union the Scottish Government proposes post-independence. His opinion boiled down to “we can work it out”, saying that the Bank of England would implement whatever agreement Holyrood and Westminster came to during independence negotiations following a yes vote.
For those of us who are neither economists nor central bankers, that’s pretty much all we need to know. A sterling currency union between an independent Scotland and the rest of the UK is perfectly possible, and perfectly sensible. Yes, there will be issues to be sorted out, but they can be sorted out.
Carney took pains in his speech to state that he was neither pro nor anti Scottish independence, but that hasn’t stopped a barrage of negative commentary in the Unionist press telling us that Carney’s speech means we’re all doomed and will have to buy the weekly shopping with cowry shells. It’s all very predictable from a UK media which tells Scotland that winning £1.5 trillion on the oil lottery is a very bad thing.
Better Together have already rushed out a press release saying that Carney’s remarks “quietly demolish Alex Salmond’s claim that Scotland could keep the UK pound” when Carney had in fact said no such thing. But then Better Together are doubtless employing the same speed reading skills they used when the White Paper on independence was published last year.
The Guardian’s resident ray of sunshine, Severin Carrell, warned us that an indy Scotland would have to “cede sovereignty” if it wanted a sterling currency union. Which kinda implies we have sovereignty just now under the Union, an obvious nonsense. It was a misrepresentation of Carney’s words, what the Governor of the Bank of England actually said was:
“An independent Scotland would need to consider carefully how to develop arrangements with the continuing United Kingdom that are both consistent with its sovereignty and sufficient to maintain financial stability.”
This is not quite the same as “an independent Scotland would be in thrall to George Osborne”, which is what the Guardian was trying to imply.
However “ceding sovereignty” is not the “ooo you’re not really independent then are you” which Carrell would have us believe. Independent countries cede sovereignty all the time. The UK has “ceded sovereignty” to the UN, NATO, the EU, and to just about every other international organisation or country with which it has signed a treaty. Because that’s what treaties mean – two or more nations commit themselves to an agreement, and in the process surrender a part of their sovereignty by the mere fact of making a commitment to one another.
However what Carrell fails to point out is that while an independent nation can choose to cede sovereignty by entering into a treaty with another independent nation – the other nation which is party to the agreement also cedes sovereignty. It’s not just Scotland which would “cede sovereignty” by entering a currency union, it’s the rUK as well. It’s this element of the rUK ceding sovereignty to an indy Scotland which has got the Unionist knickers in a twist, as they typically fetishise the supposed sovereignty of the Westminster Parliament. But that’s their problem, not ours.
The other point Carrell fails to mention is that an independent nation which cedes sovereignty in this way has not lost that sovereignty forever. If times and circumstances change, an independent state can withdraw from a treaty commitment at a time of its own choosing.
The difference between this set of circumstances and what we have now ought to be clear. At the moment Scotland has ceded all sovereignty to Westminster and we won’t get any back unless we take it from them in the independence referendum. They’re certainly not about to give it to us if we ask nicely. Independence means Scotland has choices it does not have just now – that is the real point.
If at some point in the future a Scottish government decides that it wants to join the euro, create a Scottish currency, or use Norwegian kroner, it could do so. Westminster will not be in a position to refuse or to prevent us. That’s what sovereignty really means.
During independence negotiations Scotland will hold some very strong cards. The UK Government has already conceded that it will remain responsible for the UK’s existing national debt, currently sitting around an eye watering £1.5 trillion. Scotland may take on a portion of the UK’s national debt, and become a debtor to the rUK Government, in return for a share of UK national assets, but the bottom line during negotiations is that the debt remains Westminster’s problem. In theory the Scottish delegation will be able to say “stick yer debt”. This would cause a serious economic crisis in the rUK which would be in no one’s interests, however it does give Scotland the freedom to decide which of the UK’s debts we are going to shoulder. Westminster will not be able to unilaterally decide which debts we will be lumbered with, and if they want us to take on any of their debt – well they’ll have to cede part of their sovereignty to Scotland by agreeing to a currency union won’t they.
The thing that always intrigues me in Unionist discussions of independence is the underlying assumption that Westminster will always get its own way. That’s certainly the case just now under the Union. Unionists inhabit a mental universe where it would remain the case even after independence. That’s not merely missing the point, it’s completely misunderstanding the entire argument. And that’s why they’re going to lose.