12 Dec 2016

And a Brexit in a Pear Tree...

Hello readers!

It has been sometime, alas, since I have been active here on the Magical Realm. This is due to several reasons. Firstly, university has taken a great deal of my time: I have two substantial papers to write; there is preparation for two exams; and there are assignments on top of it. The Wednesday of last week also required me to travel in order to be present in a lab session. All in all, this has proven time-consuming and demanding.

I have also been busy with several other necessities, including applying for huurtoeslag (rent benefit), tuition loans, and seeing the doctor.

Anyway, I have found a window of opportunity to write to you, dear readers. The topic of this post? Brexit. (Yes, it’s overdue.) But before I go into that, allow me a quick recap of the writing situation.

The Necromancer and the Ark

I am undertaking a ‘read and review’ session on Goodreads for the Necromancer. This means that I review 4 books from different authors, in the space of about 2 months; in return 4 authors (none of them the ones I’m reviewing) review my own book.

There are two benefits to this approach. Firstly, I get free books. Free books are always great. Secondly: I get reviews from people who are at least half-way competent at reviewing. The downside, of course, is that this process is rather time-consuming.

As for the Ark, I am concocting something special (and surprising). I will say no more than that.

Finally, do remember that the Necromancer will be getting a Kindle Countdown deal on Christmas. As I say—give someone a gift. I’m sure we’ll both appreciate it :)

The Brexit Bus

Some developments have occurred since I last blogged on this issue. Many of them are unsurprising. Theresa May is calling for hard Brexit—just like I said she would. Boris Johnson is making a fool of himself as Foreign Secretary: his undiplomatic remarks regarding Saudi Arabia’s proxy war in Yemen, while justified, are ultimately stupid, since the Tory government policy is to ignore it.

The Brexiters have also managed to come up with some more vacuities (I guess I ought to be surprised, but the Brexiters have shown limitless imagination in that regard.) One such is that the ‘Remoaners’ (what a charming neologism) ought to stop moaning; instead they should keep quiet and work for a successful Brexit.

The idiocy of this viewpoint is too great to unpick point by point; we would be here all day. Instead, it can be illustrated much more simply using an analogy. A bus is driving across a mountain road. Half of the people in the bus are shouting at the driver to drive the bus off the cliff; the other half is begging him not to. The former group, 52% to the other’s 48%, wins out. The bus drives over the cliff, killing most of the people onboard.

You cannot blame the 48% for shouting at the driver. It is not their fault that the bus is lying in ruins and several people are dead. Driving the bus off the cliff was a stupid idea. There’s no such thing as ‘successful Brexit’; it’s an oxymoron.

Another vacuity trotted out—this one favoured by Unionist Brexiters—is that Scotland voted for the UK to remain in the EU. The Unionists then go on to say, through a disingenuous reductio ad absurdum, that if the SNP had their way, why—we’d expect London, Bristol, Oxford, Liverpool and Manchester to split off from the UK!

The first argument is an exercise in desperate pedantry. The second argument is disingenuous because it assumes Scotland is a region, a bit like London or the Midlands—it’s the only way the argument from analogy can work. Of course Scotland is not a region; it is a nation. A nation with hundreds of years of history, its own devolved government, and the right to self-determination.

But how would Scotland, in practical terms, actually manage it? I have not addressed the constitutional, political and economic challenges of continued EU membership for Scotland, until now; and therefore these will be the last topic of this post.

Tough Choices for Scots; but a Bright Future Ahead

Economically, EEA membership and EU membership are, as far as Scotland is concerned, identical. The Accession procedure however is different: to accede to the European Union Scotland must meet the criteria (it already does, obviously); and it must be agreed unanimously by Member States. Some have floated the possibility that Spain might veto Scotland’s entry. I personally am skeptical of this; thankfully, as far as economics is concerned, this shouldn’t be a problem. To join the EFTA (and by extension to participate in the EEA) Scotland’s entry needs only to be agreed upon by Switzerland, Norway, Liechtenstein and Iceland.

These countries have not suggested that they would oppose Scottish membership; indeed, considering the similar size and economies of the countries involved (Scotland has the same population as Norway, and an oil and gas sector) it is probable that such an arrangement would go smoothly. There is good will politically between the countries as well—and that’s just as important.

To be honest, I think most people in Scotland would be happy with this arrangement. The other problem that remains is the same problem that Scotland would have faced had it gone Independent back in 2014: currency.

The rUK has already clearly stated that Scotland cannot use the Pound Sterling. So Scotland has two choices: it can issue its own Scottish pounds, or it can join the euro. (There’s also a possibility that it may have to do the former before it does the latter, but I’m not too sure.) Obviously this decision will have to be thought through, but I think the evidence clearly points to the latter as being a better option.

Scotland would be a small country facing a period of uncertainty: this would likely mean that its currency would start out weak (which would cause problems with inflation) and subject to volatility as international money speculators assess and reassess its position. Moreover, two other serious problems present themselves. Scotland’s oil sector would likely—after the initial years of uncertainty—cause the Scottish pound to appreciate. Scotland will then suffer Dutch disease. On top of that, the volatility would make it more difficult for Scotland to trade with the rest of the EFTA.

Scotland could try and peg its currency to the euro in order to ameliorate these problems, but as Black Wednesday showed us—this is not so easy as it appears in theory. It is the forex that decides exchange rates, not central banks, and especially not the central banks of countries with a few million people.

There’s also a personal side for me. My parents are funding me to study in Amsterdam; I don’t want them to earn a weak Scottish pound. It would be far easier if their salary were paid in euros.

The last economic issue I wish to address is rUK trade. Unionists like Ruth Davidson (and some in my own party) proudly point out that most Scottish trade—64% to be precise—is with the rest of the UK. Presumably UK membership would be more important than EU membership, at least as far as economics is concerned. Right?

Well, not quite. For one, as autonomy Scotland claims, that 62% figure is questionable; it’s very difficult for companies to separate Scottish and rUK business operations. (And it is business operations we’re talking about—exports don’t just include physical goods.)

Leaving that aside, the trouble with percentages is that they can change. The 64% is a metric of Scottish exports now, as they stand with this constitutional arrangement. But may I remind Unionists that the rUK has 60 million people; the rest of the EU has 450 million, and EU trade agreements cover nearly the entirety of the rest of the world (population 6.5 billion, albeit most of them poor).

It is hardly inconceivable that Scottish exporters could export elsewhere—Europe after all is a huge internal market, with a highly streamlined regulatory framework, no tariffs, passporting rights, and countless other benefits the likes of which no other trading zone can match. And it’s close to Scotland too, and already well integrated, unlike Brexiter fantasy trade with countries that are thousands of miles away and lack anything close to what the EU is. (Just look at May’s bumbled trip to India.) Plus Scotland might benefit from rUK companies relocating to maintain preferential EU market access.

Anyway, with that out of the way, let’s look at the deeper questions of politics and constitution.

Clearly, Scotland wants to stay in the EU. And not just for economics—as Nicola Sturgeon has shown us, the EU means more to Scotland. There are, dare I say it, patriotic feelings involved. The EU represents something: the European Dream, openness, human rights, prosperity—take your pick.

So how does Scotland stay in the EU? As I’ve already mentioned, the Accession process requires Scotland to meet criteria (which it mostly already meets since it’s already in the EU, obviously). Some of these of course are to have a government and central bank, and for this reason Scotland would need to be independent.

The other side of the coin is unanimous agreement. Spain might veto Scotland’s entry because of Catalonia; but this should not be taken as granted. I’m sure Rajoy will not veto it if he gets Gibraltar. Or, Scotland can join the EEA and then simply wait. Rajoy’s position as Spain’s head of state is extremely fragile, and he could quite plausibly no longer be head of state within a few years.

Another possibility is that Scotland gets to stay in the EU by becoming the successor state to the UK. Apparently, this is legally feasible.

Anyway, let’s assume Scotland keeps its place in the EU. What about its relationship with the UK? There are some complicated problems to work out. If Scotland joins Schengen, it will have to have border checks with England. If Scotland doesn’t join Schengen, then again—it’s complicated. Scottish citizens would have freedom of movement to the EU, but UK citizens wouldn’t. But would UK citizens have freedom of movement to Scotland?

To be honest, I don’t see why Scotland can’t have its own arrangement with the UK. It could offer UK citizens freedom of movement (though only to Scotland, unless the UK citizens claim dual nationality) and the UK could reciprocate to only Scottish citizens.

Also, bear in mind that freedom of movement does NOT mean there is no hard border; that’s what Schengen is for. When I go to Romania by car, I have to pass border checks. But being a Romanian citizen I obviously have free movement, as do all other EU citizens.

Can Scotland therefore maintain an open border with the UK? I believe the answer is no, for a number of complicated reasons. The UK will likely be out of the customs union, so goods would have to be inspected. As for people, EU counter-terrorism is one thing to think about. Freedom of movement is another: UK citizens could enter Scotland then (if Scotland is in Schengen) head illegally to work in the EU.

Anyway, let’s not get worked up about this. So long as freedom of movement exists between the UK and Scotland, people will be fine to go to either country. A ‘hard border’ sounds scary but it’s really not the end of the world—it’s just formality, no different from passport checks at the airport. I do it all the time. Heck, UK citizens do it all the time when they go to Europe.

Final Thoughts

This has proven a long and complicated post on what is a long and complicated issue. I hope you have found me intelligible (do leave a comment if anything is unclear!) and interesting. Now, work calls. Keep following the Magical Realm for a Christmas special!

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