The Plan B Phoney War
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 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.