Cry Freedom – examples for Scotland’s yes campaign

On September 18 Scotland is voting on whether to cede from the 300-year-old union with the UK. Conflicting reports point to prosperity on one hand and poverty on the other - but are there any lessons that can be taken from other countries’ experiences of going it alone?

There are hundreds of examples of unions breaking apart and countries gaining independence, however there isn’t an exact precedent for the dissolution of a country like the UK. The closest the UK came to “dissolving” was during Irish independence in 1922.

The Anglo-Irish Treaty officially concluded the Irish war of Independence and established the Irish Free State as a self-governing dominion within the British Commonwealth.

Apart from negotiating the end of the war and the withdrawal of Crown forces, the Treaty also included clauses on defence, Northern Ireland and debt sharing. After Irish independence the British Navy continued to defend the Irish Sea and held a number of ports on the Irish coast, it also agreed that the Irish Free State would assume responsibility for a proportionate part of the United Kingdom’s debt.

The most contentious clause allowed Northern Ireland to withdraw from the Free State, which it did. This led to the Troubles, and continues to cause discord to this day.

There could be a similar treaty for an independent Scotland. For example, it is likely that the British armed forces would continue to defend Scotland, if not out of as desire to help a brother, then out of a desire to protect itself from invasion.  

While Irish leaders signed a treaty that said they would assume part of the UK’s debt, in effect this debt was written off by the UK and Ireland never had to pay. There is a chance that the UK could do the same again. Back in January, the UK Treasury said that it would guarantee an independent Scotland’s debt.

This is no mean feat, the UK’s total debt load is £1.38 trillion and although the Treasury said that it expected a new Scottish government to pay its “fair and proportionate share” of debt, why would it, if the UK has said it will pay the balance?

On the surface this may seem like Westminster has a bum deal, but as with Ireland, the Treasury needs to make sure that the markets are comfortable. If a new Scottish government failed to pay its debts then this could trigger a default, not just for Scotland, but also for the UK, which could have serious implications for both countries’ ability to borrow.

While there is a blueprint for the economic and defence ramifications for an independent Scotland, other issues can be harder to untangle. The Northern Irish clause in the Treaty may be relevant for Scotland.  

The oil-rich Shetland isles have expressed a desire to abandon Scotland if it votes yes in September.  Thus, the referendum may not be as clean a break from the UK as some would like to believe. I doubt that Scotland would dissolve into civil war like Northern Ireland; however, if some parts of Scotland don’t want independence from the UK this could leave political, social and cultural scars.

[Could the Scottish Islands become the next Jersey?]

More recent break ups

Political break ups are often messy affairs, Yugoslavia in the 1990s is a prime example. After a series of political crises in the 1980s the Socialist Federal Republic of Yugoslavia split apart and returned to six republics: Serbia, Croatia, Bosnia and Herzegovina, Montenegro, Macedonia and Slovenia.

There were also two autonomous provinces: Kosovo and Vojvodina. But, when Slobodan Milosevic came to power in Serbia in 1987, he had other ideas and acquired de facto control of Kosovo, Vojvodina and Montenegro. While this was popular among the Serbs, it was resisted by Croatia and Slovenia. During the 1990s tensions rose, triggering the deadly Yugoslav wars that lasted from 1991-1999.

The Yugoslav example is a good reminder that political break ups can be both protracted and bloody. All it takes is for an unscrupulous, populist leader to come to power and relations can deteriorate which eventually lead to war. While I don’t expect in a million years that the Yugoslav experience will be repeated in Scotland, political change comes at a cost and tensions can simmer for many years before boiling over.

Perhaps Scotland will hope for a similar experience to Slovakia. Czechoslovakia existed as a federation for 74 years before it broke apart during the dying days of Communism. The Federation split into the Czech Republic and Slovakia, by mutual agreement, and it is sometimes known as the “Velvet Divorce”.

The process did not involve bloodshed and after making a decision to split in 1992, formal independence of the two states was declared in 1993. This is the type of time frame that Scotland is likely to want, so how did the Federation do it so neatly and peacefully?

Firstly, both sides wanted to dissolve this Federation and Czechoslovakia was always going to cease to exist. This will not be the case for Scotland since the UK is not voting to change anything and the political elite in Westminster do not want Scotland to leave the union.

Secondly, the debt load was distributed evenly, although the amounts were very small, so they did not pose any long term economic problems for Slovakia or the Czech Republic.

The monetary side was slightly more complicated. Slovakia tried a short-term monetary union with the Czech Republic; however it ultimately failed after 33 days. Long-term damage was avoided for Slovakia as it ultimately joined the euro.

Lastly, the political situation post the break-up of Czechoslovakia was also made easier as both countries joined the EU and had to operate under its rules. This is a useful lesson for Scotland, since joining the EU provides a political road map, trade privileges and the like it can make the transition to an independent state a smoother journey.

Will history repeat – and if so which one?

There is no exact blueprint for Scotland’s path to independence if the yes vote triumphs on September 18, however, Alex Salmond should heed the lessons from Ireland, Yugoslavia and Czechoslovakia.

Ireland can provide a useful blueprint for an independence Treaty, Yugoslavia is a good example of why, even if the yes campaign triumphs, they should listen to those who voted no and be careful not to marginalise those who don’t agree with independence. Czechoslovakia’s peaceful example suggests that Scotland should try to piggy back onto a bigger political organisation like the EU, which could make its transition to independence easier.

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Kathleen Brooks is author of Kathleen Brooks on Forex, published by Harriman House.