The Plan B Phoney War

Lillians Kinsman-Blake

Lillians Kinsman-Blake

No human being would decide the destiny of their country on the existential basis of a ‘Plan B’ for currency union. For Better Together the issue is, however crucial because, as demonstrated by Alistair Darling’s single-mindedness; it is the only argument left in the Better Together locker. No entry to the EU? Gone. Scotland is too wee, too poor, to stupid to survive? Gone. The UK is financially safe? Gone. You can trust Westminster? Gone. The currency? Let us discuss the currency.

Incidentally, Alistair Darling flip-flops on currency union. Interviewed by Gordon Brewer on the BBC Newsnight Scotland programme (Thursday, 10 January, 2013), on currency union he said “there may well be one”. He went on: “Of course it would be desirable to have a currency union, but you also have to understand there are consequences. Because a currency union means you have both got to agree your budgets.  You’ve both got to agree how much you can tax, spend and borrow”. But why stick with what you believe is desirable?

Why indeed. We have arrived at the current Better Together united-front of all three Westminster political parties, via a u-turn; to refuse a currency union, post the referendum vote. Of course, none of this will last long; nothing does in UK/rUK. There was to be no pre-negotiation on anything regarding independence, remember? But actually Better Together has already unilaterally pre-negotiated currency union; there will not be one. This is pre-negotiation without any negotiation, or should I say it is a bald assertion without reference to the other party involved; but we are not supposed to notice the lacuna. Like everything else in this argument, it doesn’t matter.

The proposition is that Westminster can do anything; it can even have its cake and eat it.This is not quite in the spirit (and certainly not the letter) of the Edinburgh Agreement, which agreed to work in harmony in the interests of both countries,  which was signed by David Cameron and Alex Salmond; but in the Union, what is the worth of an agreement?  What is the worth of a signature? What is the worth of a piece of paper? What is the worth of a ‘pledge’? Nothing.

All this tough-talk and finger-pointing in which Better Together is wont to indulge as a substitute for persuasion, is based essentially on Westminster’s reliance on a constitutional legal opinion; a belief that rUK is the continuator state, and crucially, therefore calls all the shots. This is the basis of Better Together’s assertiveness. A position that is based in turn, somewhat adventurously, on the Crawford & Boyle Legal Opinion on the constitutional implications of Scottish Independence – the HMG Opinion.  It is found as an attachment to the HMG publication on 11 February, 2013  of ‘Scotland analysis: Devolution and the implications of Scottish independence’, as ‘Annex A Opinion: Referendum on the Independence of Scotland—International Law Aspects, by Professor James Crawford and Professor Alan Boyle (together, the HMG Opinion.)

The HMG Opinion rests essentially on the proposition that following Scottish independence there is “one state that is the continuator of the UK [rUK] and one new state [Scotland]” (HMG Opinion, Part IV (2), para.49. (a); p.77). Everything flows from this premiss, including currency. This continuator-state thesis has been challenged by the American lawyer and diplomat, Professor David J Scheffer, who served as an ambassador-at-large under President Bill Clinton. Scheffer confesses to a personal longstanding interest in Scottish constitutional issues going back to the 1970s, and his writing on the subject has been consistently prescient, both politically and constitutionally. He responds to the HMG Opinion in the Postscript appended to his paper ‘International Political and Legal Implications of Scottish Independence’ (January, 2013). Scheffer begins this paper by establishing that the issue of Scottish independence is distinctive and not built on legal ‘terra firma’:

Scotland’s past, present, and future are sui generis and that fact alone makes an enormous difference in how law and politics pragmatically join in coming months to chart a pathway either to a state of continued devolution of political and economic power within the United Kingdom or to a state of independence for Scotland apart from the United Kingdom.

If there were ever a debatable area of law to examine publicly, this is it. International law issues bear greatly upon any upheaval of State sovereignty, but in the end political factors will shape the legal parameters of the quest for Scottish independence. Politicians will do what they must to reflect the will of the people and international law will be so instructed and influenced when they do.

The most important principle regarding the legal implications of Scottish independence is that while nothing in international law prevents Scottish independence, nothing in international law or European Union Law is certain about the consequences of Scottish independence. This is not terra firma. It is an exercise that should draw upon both the heritage of a distant sovereignty and the pragmatic realities of modernization (Scheffer, p.4).Scheffer notices that international law is “instructed and influenced” by politics and “the will of the people”. For Scheffer a core principle in this rich mixture of historic sovereignty and pragmatic reality is “self-determination”. In Scotland’s case it currently represents what Scheffer describes as ‘sub-state’ self-determination and Scotland is moving from ‘internal’ (devolution) self-determination towards ‘external’ self-determination – independence.

“The novel feature of the Scottish experience is that one is dealing primarily with a dual-state historical phenomenon, of two states joined in 1707 and now on the verge of potentially splitting apart. The sub-state of Scotland actually is the former independent state of Scotland, of more than three centuries past, reasserting its full sovereignty” (Scheffer, p.6).

Scheffer contrasts this analysis with the HMG Opinion in his paper’s Postscript, responding to the publication of the HMG Opinion:

“The HMG opinion emphasizes how the Treaty of Union united the two nations into ‘One Kingdom by the Name of Great Britain’ and thus ‘…Scotland certainly was extinguished as a matter of international law, by merger either into an enlarged and renamed England or into an entirely new state’. A major premise of self-determination is to overcome such rigid presumptions on highly principled and contemporary grounds of legal and political theory, particularly where the historical record favors challenging conventional thinking. The sui generis character of Scotland derives from its past sovereignty reasserting itself in a modern application of self-determination” (Scheffer, p.17-18).

In his Postscript Scheffer critically argues that the HMG Opinion “seeks to establish a fait accompli for the continuator state theory of State succession”, concluding that in a series of arguments the HMG Opinion (Part IV (2), para.50-70; p.77-83), builds “a pyramid of presumptions based upon the initial premise of the continuator theory and yet little of which relates to the sui generis character of the Scottish situation” (Scheffer, p.16). Scheffer argues that the “HMG opinion presents a false dilemma” (p.16). Regarding the current circumstances in the referendum as at August, 2014 Scheffer’s analysis is prescient:

“If Scotland votes for independence in the referendum, then the rUK will act pursuant to the continuator theory and essentially refuse to cooperate, through negotiations, for a reasonable transition for both Scotland and rUK that sustains membership in international organizations for both States and provides an amicably negotiated continuation of treaty relations for both States.

The HMG opinion assumes a confrontational negotiating scenario rather than a cooperative one. It erects the confrontation by insisting on the continuator theory and then letting all of the difficulties for a transition flow from that single presumption. A far more constructive way of approaching the transition to independence if there is an affirmative vote on the referendum would be to adopt a methodology of both approval and acquiescence, namely mutual approval of or acquiescence in continued membership for both States in international organizations and approval or acquiescence with respect to most treaty relations. That would be a constructive negotiated basis for transition respectful of the rights of the citizens of both Scotland and the rUK that would avoid a clean slate approach with slash and burn consequences that surely would deepen the rift between Scotland and the rUK for generations. Why go down such a politically destructive path?” (Scheffer, p.16).

It is interesting to note that in HMG Opinion’s anxiety to perpetuate the continuator state thesis it is obliged to reject Dr Robert Lane’s  (Edinburgh University, specialist in European Community Law) emphasis on the principle of self-determination in negotiation, and it makes no reference to Scheffer.

Scheffer points out that the problems that Westminster (or presumably Better Together) create for Scotland in terms of the EU, NATO, UN are a product of the continuator theory; which, “locks in all of that power and status quo for the rUK without much fuss, so it would be expected that they [UK/rUK] and their legal advisers advocate it” (Scheffer, p.17). Scheffer dismisses what he describes as the HMG Opinion’s “debatable legal theory”, arguing that “the HMG opinion seeks to create the most difficult pathway when in fact there is a much easier one to take if only London were willing to help pave it following a majority vote for Scottish independence in the referendum” (Scheffer, p.17). Indeed Scheffer’s closing remarks are reflected in sentiments often expressed by the Scottish Government regarding the nature of negotiations pre-and-post a ‘Yes’ vote in the referendum:

“Perhaps one cannot expect London to admit to this [accommodating the sui generis situation in Scotland through a transition plan] prior to the referendum in light of
the HMG opinion, but if there is a majority vote for independence, then following the referendum the continuator theory should be shelved so that the fairest and most efficient transition process can be negotiated and then followed, including marketing it to other governments and to international and regional organizations” (Scheffer, p.17).

Turning now to the specific issue of currency union, which flows naturally (and probably deliberately) from the structural presumptions of the HMG Opinion pyramid of presumptions; Scheffer robustly attacks the position of George Osborne (and therefore of Alistair Darling and Better Together) “laying down the gauntlet of rejecting any currency union with Scotland even before any referendum vote has taken place” in a separate article ‘The flaw in Osborne’s pre-emptive strike against a currency union’ (the New Statesman Online , 28 February, 2014).  Scheffer sweeps away all Osborne’s arguments. There will be negotiations following a pro-independence vote: “Otherwise, the rUK would have far too much to lose on other fronts that also require negotiations”. The Scottish government, if it simply chose to follow the Osborne “punitive example”, could present serious difficulties for rUK. We would hope and expect that Scotland would rise above Osborne’s UK/rUK standards of negotiation, but Scheffer makes the position clear:

“Scotland need not negotiate sharing the UK debt and could simply let Westminster shoulder the entire estimated UK debt of £1.6trn in 2016/17. That is certainly the logic of the rUK being a continuator state.  Nothing in international law requires Scotland to pay one sterling pound of UK debt if the rUK is deemed the continuator state.  Nonetheless, the Scottish government has already  offered to accept the liability of an estimated £100-£130bn as an independent Scotland’s share of the overall UK debt, but only as the end point of post-referendum negotiations”.

The standard Better Together response; that Scotland would immediately either have a) defaulted, or b) undermined Scotland’s credibility in financial markets; Scheffer demonstrates overlooks “two simple facts” that follow inevitably from the decision by rUK to assert the continuator state thesis and negotiate intransigently:

“First, the UK Treasury already has agreed to cover all UK gilts in the event of independence, a point Osborne made in his speech.  So there is no default on the horizon to panic investors.  Second, Scotland would start fresh as a debt-free nation with the apparent agreement, indeed blessing, of the rUK.  Perhaps Westminster really has decided to absorb completely the UK debt and thus not negotiate, but rUK taxpayers may wonder about the wisdom of such folly, particularly by a Conservative government.  Creditors and investors might view the Scottish position—one of willing to pay, in good faith, its fair share of the UK debt but reluctantly avoiding that financial burden if London insists on being a continuator state and rejecting negotiations—as a sign of financial strength and political acumen,  rather than weakness or naivety in Edinburgh”.

Scheffer insists that none of this “silly face-off has to happen”. All this is entirely a consequence of Westminster’s approach both to the constitutional issues and to negotiations.

This is not the end of the critical assault from authoritative independent legal opinion, against the HMG Opinion. Sionaidh Douglas-Scott, Professor of European and Human Rights Law, University of Oxford in, ‘(How easily) Could an Independent Scotland Join the EU?’  (July, 2014) very clearly, unambiguously, and decisively challenges the HMG Opinion:

“despite assertions to the contrary from UK lawyers, EU lawyers and EU officials, any future independent Scotland’s EU membership should be assured, and its transition from EU membership qua part of the UK, to EU membership qua independent Scotland relatively smooth and straightforward. In other words, it would take the form of an internal enlargement of the EU using the procedure for treaty amendment in Article 48 TEU. These arguments are made on the basis of EU law itself, which, it is argued, provide all the resources necessary to assure an independent Scotland’s EU membership through EU treaty amendment, and not through a cumbersome accession process as a new member state. In particular, the values, norms and ‘special ethos’ of the EU, expressed in concepts such as EU citizenship, fundamental rights and duties of loyalty, combine to provide a reasoned justification for such internal enlargement” (Scott, p.2).

It is striking that Douglas-Scott appeals to concepts like ‘democracy’, ‘self-determination’ (indeed, p.4, p.10, p.21 quoting Scheffer; and also Lane), ‘citizenship’, ‘rights’ and ‘values’; compared with the HMG Opinion which presents such terms as precedents (that elusively never apply – to take one example ‘self-determination’ is considered only to have relevance in a “Colonial context”) but not as fundamental principles;  struggling to maintain antiquated concepts redolent of past centuries (or in Scotland’s case irrelevant). Douglas-Scott systematically counters the HMG Opinion on Scottish EU membership, which relies on an at best doubtful interpretation of EU law: closely following Professor Sir David Edward, past Judge of the European Court of Justice’s view that:

“while the EU is a creature of international law, it has become ‘a new legal order’ in the words of the European Court of Justice in the Van Gend case. It can be distinguished from international law in that it generates both rights and obligations for individuals as well as states …”  (Scott, p.11).

Edward goes on to propose that:

“the solution to any problem for which the Treaties do not expressly provide must be sought first within the system of the Treaties, including their spirit and general scheme. Only if the Treaties can provide no answer would one resort to conventional public international law (including doctrines of state succession)” (Scott, p.11 quoting David Edward, EU Law and the Separation of Member States, 36 Fordham Int’l L.J. 1151 (2013) at 1162).

Douglas-Scott closes by quoting Neil McCormack on the EU as a ‘commonwealth’; while Scheffer offers an uplifting peroration to his paper and Postscript:

“The objective of both parties [Scotland and rUK] in the event of an affirmative vote for independence under the 2014 referendum should be to create the least resistance to a transition to the emergence of two independent States richly endowed in history and to demonstrate a model for how self-determination can work, not only for the benefit of the peoples of the isles but also for the continued strength of the critical bilateral and multilateral treaties and international and regional organizations bonded to the United Kingdom at present. Such an outcome is not mission impossible” (Scheffer, p.18).

On the other hand UK/rUK and Better Together continues to argue over continuator state status, currency and Plan B in bad faith; if they are determined to negotiate in bad faith beyond a ‘Yes’ vote they will pay a very heavy price; not least, they will need a Plan B.

Comments (29)

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  1. Auld Rock says:

    There just seems to be a major flaw in the above argument. In 1707 both the Scottish and the English/Welsh Parliaments voted themselves out of existence and created the New State of England/Wales and Scotland. So I believe that following from the 1707 Act of Union and a ‘YES’ vote for Independence then there is not one but two successor states. Now my logic is that of scientist/engineer/mathematician which maybe too logical for the twisted minds of most lawyers that I know, especially when they are being handed a big fat fee to support a particular view. I rest my case, mee lud.

    Auld Rock

    1. I am not quite sure what you believe is the “flaw”? You will see that Scheffer subscribes to a position that there will indeed be two states formed out of one: Scotland and rUK. The issue is the matter of that little word “successor”. Two “successor” states? Successor in legal terms carries enormous implications. I respectfully invite you to think about it.

    2. You’re right that this theory produces two new successor states but they would both be equal in terms of legitimacy and their inheritance of current UK’s treaty obligations. How Scotland and rUK would carve up their obligations between themselves would primarily be a bilateral issue.

      I don’t really get economics but I really don’t understand why the UK would give themselves a hostage to fortune now on the currency union issue. They can’t possibly know the economic situation in March 2016, nationally or internationally. Even if they had a good idea of the future, prudence would suggest caution and not making a decision now when there is no need to. I can’t see how they are acting in the best interests of rUK on this one.

      I put similar arguments to Mr Warren from the English perspective in a letter I sent to the 3 Westminster party leaders recently. It’s on my blog at http://upholdingenglishhonour.com/2014/08/11/selling-england-and-scotland-by-the-pound-and-down-the-river/ I don’t expect any sensible reply but if I get one, I’ll print it.

      1. MBC says:

        George Kerevan argues this too.

        http://newsnetscotland.com/index.php/scottish-opinion/9584-a-currency-union-would-save-the-rest-of-the-uk-from-ed-balls

        It’s worth noting that the Scottish Government’s advice on this in its Fiscal Commission came from two Nobel Prize winners on economics, Joseph Stiglitz and Sir James Merrilees. Both advised that is in the interest of everyone in the current UK to keep sterling in a currency union.

        As to being hostage to fortune? I think they will just spin another story in any post-Yes climb down and the press will obligingly circulate it for them. It is a big story up here in Scotland, but not, I suspect, a big story south of the border.

  2. Ken says:

    I find it rather curious to see the way in which people try to explain just how the post-referendum negotiations will pan out based upon their wishful thinking of what the UK will do. Actually we have no idea what will happen because that is conditional upon who holds power in London.

    In an ideal world everyone south of the Tweed will shrug their shoulders and the negotiations will begin, with London trying to conciliate Edinburgh by making concessions. Edinburgh would respond by doing the same and everything would proceed agreeably forward.

    However, it is quite likely that a political crisis will hit the UK, with the current government coming under attack as the men who lost Scotland. The Cameroonians could fall, and a new leadership would take over that was determined to get the best deal possible for the UK. Under those circumstances, all Scotland could get would be what she could grab. In other words the national territory and its continental shelf. Everything else – the embassies, military hardware, as well as the debt, would stay with the UK – and Scotland would have to start from scratch.

    Until after the vote we have no idea which version will pan out because we have no idea which crew will be in power in London.

  3. MBC says:

    Crawford and Boyle’s Opinion has also been challenged in a recently published article in the London Review of International Law. The authors cite Scheffer and refute C&B’s Opinion that the Treaty of Union was not an international treaty, or that Scotland was thereby ‘extinguished’ whilst ‘England’ posing as ‘UK’ somehow wasn’t. They argue that if Scotland leaves the Union is it dissolved and there will be two continuator states, the original kingdoms of Scotland and England, and that the legal sophistry of ‘rUK’ is a chimera designed to give ‘rUK’ the upper hand in any negotiations.

    See:

    http://lril.oxfordjournals.org/content/early/2014/08/12/lril.lru007.full.pdf

  4. On matter that is seldom discussed in these debates about continuator & successor states is the fact that rUK voters will not have a say in whether Scotland becomes independent. Imagine that Wales voted to become independent or that NI voted to join the Republic of Ireland. Would it be fair that we in the rUK would have to go through all sorts of negotiations to retain membership of the EU and to settle the question of currency when we had no say in whether the UK remains in its current form or not?

    The fact that the voters of E,W & NI are not a party to the decision that Scotland makes is, I suggest, a strong political argument in their favour to be regarded as the continuator state. Having said that, it would be interesting to see the arguments advanced in the event that England voted to become independent. Would English politicians happily accept that the rUK in that event be regarded as continuator state?

  5. MBC says:

    When Norway voted to leave the Union with Sweden in 1905 the Swedish voters were not consulted. I don’t think it follows that both electorates have to agree. In that respect it’s not like dissolving a marriage. The treaty of union was an international treaty and if any party to an international treaty wishes to be absolved of the treaty obligations then the treaty is dissolved as logically you no longer have a treaty agreement.

  6. MBC says:

    The referendum has been legally agreed by an Order in Council so it is not like Wales unilaterally holding a referendum as the Catalans propose. It carries the weight of UK law. Cameron took a big gamble in hoping we would vote No. If he wanted to save himself all the bother of the implications of a Yes vote and the dissolution of the Union he should have agreed to a devo max question. The UK has accepted the legal validity of the Order in Council.

    It has already been decided by the Belfast Agreement of 1998 that NI is no longer an integral part of UK territory (or the Republic’s) and that a plebiscite of the population can decided the future of the six counties. So far the population chooses to remain British, but they are free to go following a plebiscite.

  7. yerkitbreeks says:

    To this I would add Carty & Clyde’s scholarly piece in :

    London Review of International Law Advance Access published August 12, 2014

  8. Dave Gladman says:

    If after a yes vote, the rUK asserts that it is the continuator state and Scotland objects to this, what happens then? What process will be followed? Who arbitrates? The United Nations? Does international law have anything to say?

    Haven’t Crawford and Boyle essentially been hired by HM Government to provide the view they want? I daresay the Scottish Government can hire its own guns to assert that the Act of Union is relevant and provide an opposite view.

  9. HMG have been provided with an “Opinion”, no more nor less. There are good pragmatic reasons for Scotland to accept rUK formally as the continuator state; a fact related to issues (for example) surrounding the National Debt (all £1.6 trillion in 201617) and the 14,000 (perhaps overestimated) UK treaties. The Scottish Government has not appeared to challenge the principle; but there are clearly important (by which I mean fundamental and essential) caveats.

    It is worth pointing out that the UK has already effectively publicly committed rUK to accept full responsibility for the debt in its entirety. There are very good reasons for doing this; but in doing this rUK has not only embraced responsibility as continuator state, but restricted its negotiating flexibility. Scotland is already prepared to accept its share of the debt, and also publicly offered that commitment (and since the Scottish Government has not challenged the way the UK has announced this, by implication accepted rUK as continuator state), but only on the basis that this is underpinned by an understanding that there will be negotiations between Scotland and rUK on UK assets and liabilities that are conducted on a fair, good faith basis. If rUK reneges (as Better Together has implied through for example total intransigence on currency), then there will be no obligation on Scotland to accept £130 billion of debt, and there will be no question of ‘default’: a mere canard. This is simply the non-negotiable price of rUK asserting itself as continuator state. This status comes at a price: rUK is thus faced with far greater consequential problems if it negotiates intransigently, than Scotland (on a whole raft of issues). It is reasonable to conclude that in the event of a ‘Yes’ vote sober realism, realpolitik and perhaps even common sense will prevail – even in rUK. There will be sensible negotiations.

  10. Dave Gladman says:

    Yes, hopefully there will be sensible negotiations but I was asking what would happen if Scotland were to challenge rUK’s claim to be the continuator state. Is there a mechanism to resolve such a dispute? The rUK has much to lose if it is not regarded as the continuator state.

    1. Too much to lose or even contemplate (hence the Treasury statement on Gilts, 13 January, 2014). I have seen no evidence that the rUK claim will be (or has been) challenged by the Scottish Government.

    2. There are other readers who are more learned on this but, from my understanding, there is no international court which could arbitrate any such dispute, never mind enforce its judgments against states or international bodies.

      Public international law is much more about trying to identify customary principles from past political practice and interpreting international treaties, so as to inform politics. To call it “law” is perhaps misleading if we tend to think of law as binding law, like contract or tort law (ahem, or its Scottish legal equivalents).

      I guess that rUK and Scotland could agree to an ad hoc arbitration by distinguished lawyers, much like investor-state disputes, but would they want to entrust their international relations to lawyers?

      1. Allow me to quote from Scheffer again:

        “Perhaps one cannot expect London to admit to this [accommodating the sui generis situation in Scotland through a transition plan] prior to the referendum in light of the HMG opinion, but if there is a majority vote for independence, then following the referendum the continuator theory should be shelved so that the fairest and most efficient transition process can be negotiated and then followed, including marketing it to other governments and to international and regional organizations” (Scheffer, p.17).

        Scheffer does not propose disputing the formal assertion of continuator state and obviously thinks the reasons are too obviously unsatisfactory to discuss, but considers the consequences of negotiating intransigence by rUK an invitation to a “silly face-off” that is easily avoided. The prospect of a dispute over ‘continuator’ status ex-ante negotiation is the worst possible outcome for both sides; which is presumably why the Scottish Government will not challenge; it is just a very bad idea.

    3. MBC says:

      I’m not too clear as to you line of reasoning, JSWarren. By saying that the continuator state theory should be shelved, isn’t Scheffer saying that it should not inform negotiations? Isn’t he saying that there are in fact two continuator states? If Scotland is not also a continuator state, i.e., there are two continuator states, as in the dissolution of Czechoslovakia, how can Scotland negotiate meaningfully for a share of the assets? She will be negotiating from a position of weakness as a colony of England (secession, as with Ireland in 1922 as a colony of England) and not as a partner which established the UK. But Scotland was never a colony, but entered into a voluntary union as a kingdom which she is entitled to withdraw from. Scotland’s union with England founded the UK. There was no UK before 1707. The treaty of union is the UK’s foundational document. Without Scotland there is no UK – because Wales was not a kingdom, but (sadly) a conquered territory, which was annexed by Henry 8, and she was not therefore a signatory to the treaty of union.

      And surely Scotland, being of equal legitimacy, must also be bound by the 14,000 treaties that the United Kingdom of Great Britain has entered into since 1707? Otherwise England/’rUK’ will be party to those treaties but Scotland would not be bound by them. Surely that is an uncomfortable and perhaps unstisfactory for England? For instance, one of the first treaties we (UK) signed was the treaty of Utrecht (1713). Amongst other things it awarded Gibraltar to the UK. What might be the significance of England/’rUK’ being bound by that treaty recognising Gibraltar as ‘British’ and iScotland not being obliged to any longer recognise this? It wouldn’t make any sense for iScotland not to be bound by these 14,000 treaties made in the name of the UK.

      Finally, as to your point that the Scottish Government appears to recognise the Opinion, because it has not formally challenged it, how can you assume that this apparent omission signifies agreement? I certainly did not gain that impression watching the debate of the 8th June of the SG European and External Relations Committee when they called Adam Tomkins as an expert witness and he was challenged by Willie Coffie MSP.

      1. I suggest that holders of UK Gilts do not wish a discussion with one state, still less a negotiation with two states. rUK formally as continuator state is the simplest, most effective, smooth and secure way of ‘transferring’ the debt to the party which in any case has the largest obligations. This is a practical, pragmatic solution over a matter that is a Big Deal for both sides. It does not mean the HMG Opinion has merit or is the reason for Scotland accepting the solution. This is merely a practical device. Meanwhile, good faith negotiations between rUK and Scotland will establish Scotland’s contribution to interest and capital repayments as they fall due (among many other matters from Trident to currency). Better Together has attempted to use rUK’s status as continuator state to suggest a confrontational negotiating scenario in which rUK has all the power. This is political opportunism; but it is mere propaganda. If they persist after a ‘Yes’ vote (operating in bad faith) it is rUK that will de facto pay the heaviest price. The HMG Opinion is to all intents and purposes irrelevant – it does not inform the decisions; nor is Scotland bound by it. Indeed I would argue that the strength of the Scottish position is that rUK is the continuator state.

      2. MBC says:

        I agree that it can be a matter of pragmatic negotiation that both sides may come to agree that one state alone shall assume the continuator state status. But that is not the same thing as accepting the Opinion, which implies that Scotland is not of equal legitimacy and therefore in a weaker position during the negotiations. As I understand it that is the point Scheffer is making.

        As others have pointed out, ‘international law’ may inform political negotiations, but politics trumps law.

  11. On the point of the rUK people not having any say in the dissolution of the current UK, I think that international law would only consider this a relevant factor if there was an absence of democracy. David Cameron purported to act on behalf of the UK people in agreeing the terms of the referendum without any major objections from MPs or the rUK people.

    If you think about it, is astonishing that the legitimacy in UK law of a referendum which could dissolve the UK rests on the lowest form of statutory life – an order in council. Such is the wonder of modern Westminster democracy.

    1. MBC says:

      Yes, I thought so too. I think more people need to be more aware of the constitutional legal process by which this is effected if there is a Yes vote. Especially those in England, but MPs were informed of the Order in Council and raised no objections to it. Thus as the elected representatives of the people, they gave their assent.

  12. Churm Rincewind says:

    Assuming Scheffer is correct (and of course there are other expert lawyers who take a different view) I still don’t see how his arguments make a currency union likely. His point seems to be that after independence there will be bottom-line discussions between Scotland and rUK which will trump previously held positions (presumably on both sides) and that Scotland will have a far stronger hand in negotiations than is generally acknowledged. This may be true. But in the end of the day rUK will not agree to a currency union if it’s against their perceived interests – why would they?. And as any fule kno, expert economic opinion on the desirability of a currency union from rUK’s point of view is by no means a given.

    1. This takes us back to the arguable legal basis of both sides’ contentions – for the UK, that the currency is theirs to keep and share only if they decide – and for Scotland, that the currency is a shared asset. No court can adjudicate this. If both sides hold their lines to the end, we are looking at a diplomatic stand-off which would probably cause damage to sterling. So Scotland and rUK will be fighting over a diminishing asset. This is why no-one sensible thinks it will get to this. Mr Warren’s piece refers to the phoney war, very aptly.

      1. MBC says:

        Exactly. Markets don’t like uncertainty. Whatever they say now, it is actually in the ‘rUK’s’ interests to agree to a currency union. Scottish GDP strengthens the sterling area, and if Scotland were to retaliate to being excluded by refusing to take a share of the national debt, which she could legitimately refuse to do, ‘rUK’ would be left with 10% more of a burden, but with 10% less of an income (from Scottish taxes). I.e., a net differential of 20%. That’s a huge differential to meet. The risks to ‘rUK’ of a currency union have been grossly exaggerated, and are blown away by a 20% gap in the balance of payments which would ensue by not agreeing this.

    2. The question is, what is the substance to this rUK point of view that you propose? I have no idea, but very well; so be it. From Scotland’s perspective, rUK having from Scotland’s perspective failed to negotiate in good faith will then begin independence with an economy with a substantial balance of payments surplus, and no debt; having been given a gift of around £130 Billion by rUK. This is very appropriate compensation for depriving us of currency union – but I do not believe this can be in rUK’s interests, so I do not believe it will happen. Nevertheless the underlying point is that Scotland can live very comfortably with either scenario; currency union plus debt, or no currency union and no debt.

      1. Churm Rincewind says:

        You ask for the substance of “this rUK point of view”. I’m not sure which rUK point of view you mean, but if you mean currency union then a useful summary of macro-economic views on the desirability of a currency union with an independent Scotland from an rUK perspective can be found here:

        http://cfmsurvey.org/surveys/economic-consequences-independent-scotland

      2. Thank you for the clarification. The CFM survey suggests a majority of the sample of 46 economists disagree with monetary union, but there is a very large minority who do not think refusing monetary union is in rUK’s interest. I could only identify 44 economists (presumably) from the sample, of whom 10 (22%) were from a single academic institution – LSE, which perhaps seemed a little narrow, but nevertheless the point is made.

        The main issues on currency union concerning the economist sample was fiscal constraints and ‘moral hazard’, in which the experience of the EU seemed to be the measure of comparison used. I think 300 years of Union provides a far more convincing framework for a workable settlement than the EU; and I am surprised that this somewhat glib comparison is trotted out. One economist actually puzzles how such an arrangement could be considered ‘independence’; which seems to me to beg the question: if it is acceptable to the Scots, so what? Metaphysical speculation on the meaning of ‘independence’ is utterly pointless.

        A significant number of the economists thought the problem was soluble, and;

        “Two respondents, Sir Christopher Pissarides (LSE) and John Driffill (Birkbeck), think that the UK’s stance is purely motivated to influence the referendum”. I think they have hit the nail on the head.

        In any case, as I said the underlying point is that Scotland can live very comfortably with either scenario; currency union plus debt, or no currency union and no debt.

  13. John mcgrory says:

    Alastair Darling. What more excuse do we need? Tory ball licker, labour my arse.

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