That’s what happens when you fly by the seat of your pants and put policy formulation off until tomorrow. Eventually, the pants wear out and tomorrow arrives.
And so it has come to pass for the SNP which is, according to the Scotland on Sunday, shying away from the Eurozone. Eddie Barnes’s piece suggests the Scottish Government is opposed to proposals from Germany and France to harmonise taxes such as corporation tax. Apparently, “SNP sources” have also ruled out the idea of a separate Scottish currency post-independence. Keeping the pound is now cited by SNP Ministers as the “stable position for an independent Scotland to adopt”.
When policy is made on the hoof, when central tenets of the SNP’s case for independence have not been revisited and honed to keep up with the times, this is the result. What seems like a sensible piece of the policy jigsaw for governing now – as the demand for control over corporation tax is (leaving aside the debate around whether reducing it is good economic policy or bad in the current climate) – creates a mismatch in the jigsaw pieces for governing in the future. If, as has been SNP policy since the late 1980s, independent Scotland is to take its seat at the table of European nations, it will have to satisfy the Copenhagen criteria:
“Membership requires that candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights, respect for and protection of minorities, the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union. Membership presupposes the candidate’s ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union.”
I’ve put this latter phrase in bold to emphasise its importance, for this implies – and indeed, has meant to new members – joining the Euro and signing up to European wide fiscal measures, such as tax harmonisation.
The latter has come to the fore because of the Eurozone crisis, with German Chancellor Angela Merkel and French President Nicolas Sarkozy proposing greater fiscal integration as a solution to that crisis but also more prosaically, as the price the others must pay for their economies taking on much of the strain of bail-outs. As well as harmonising tax rates for business, another measure proposed is the issue of Eurobonds which would enable, presumably the European Central Bank, to issue government bonds on all Eurozone members’ behalf, thereby allowing members to borrow at less punitive rates and tackle their indebtedness more effectively.
In a suitably ostrich-like statement, a Scottish Government spokesperson suggested that “the position on Eurobonds is an issue for the members of the Euro area.” And with lancing insight, but a customary lack of detail, a solution was offered to those Euro area countries with “ongoing concerns”: “..promote growth and help individual countries take the necessary steps to restore their fiscal positions.”
But the position on Eurobonds is not just an issue for Eurozone members – if they come to pass, they will impact on everyone else’s economies too. And with an SNP Government hoping to lead Scotland into independence in Europe, even if there is no comment to be made on current implications of such a policy, it would be nice to know what the Government – or rather the SNP – thinks of how Eurobonds might affect the economy of an independent Scotland, whether or not the Euro becomes our currency.
On one level this is all fanciful – who knows if we will even still have a Euro and a Eurozone by the time Scotland becomes independent. But assuming there is still some form of central currency and economic union is still one of the central tenets of EU membership, the current muddy thinking on these issues by the SNP must be resolved, particularly as we move closer to the referendum.
If independent Scotland acceded directly to EU membership, there may be some scope for an opt-out from the Euro – as other existing members achieved, including the UK and Denmark when the currency was introduced. Moreover, some new members were allowed to join the EU with everyone safe in the knowledge that their chances of satisfying the tests for adopting the Euro were precisely nil.
But continuing to fly by the seat of your pants in policy terms while hoping for a suitably soft landing is hardly likely to endear the Scottish people to voting yes for independence. Folk want clarity on these kind of issues and the opportunity to make an informed choice. They will want to know the implications of independence, big and small. And they will want to know that all the pieces of the policy jigsaw are in place.
Perhaps not having to join the Euro might also result in not having to sign up for any other part of European fiscal policy. Aye right. A relatively wealthy member state seeking permission to do the economic hokey cokey is not going to go down well and Scotland lacks the political muscle to pull such opt-outs off. And even suppose the other 27 member states – more by the time Scotland comes calling – agree to this, not joining the Euro and not signing up to harmonised tax rates surely undermines the whole exercise of membership.
If independent Scotland knocks on the EU’s door, asking to come in, but can we keep our own currency, not sign up to tax harmonisation and not have anything to say on things like Eurobonds, it’s not hard to imagine the other European state members replying with a puzzled look and asking why bother.
It all starts to look totally against the point of being part of a union. Is this the intention of the SNP leadership? One presumes not. So why is it allowing woolly thinking on fiscal policy to create so many holes that they threaten to leave the policy of Independence in Europe utterly undone. By accident or design, when we live in a world of global interdependence, how many Scots would be prepared to adopt a Little Scotlander approach to independence? Indeed, how many SNP members would be happy with independence of that nature?
The SNP needs to stop flying by the seat of its pants. Moreover, it needs to start repairing the policy holes that are emerging. That involves stopping the day to day expediency required for government right now to get in the way of thinking through exactly why it is that Scotland should be independent in Europe and what coherent fiscal policy narrative is required to satisfy that aim. One of the immediate solutions might be to start separating out Scottish Government positions and statements from SNP ones.
This is A Burdz Eye View’s 300th post.