German parties back an independent Scotland in the EU as election approaches

Two German parties voice support for independent Scotland in the EU

TWO political parties who may form part of a German coalition government after the election next month have given support to an independent Scotland within the EU.

The Free Democratic Party (FDP) and Alliance 90/The Greens (The Greens) have both made clear that they support the Scottish Government’s position on Brexit, as part of their election platform for the upcoming elections for the Bundestag, Germany’s federal legislative body.

“Should they decide to leave the UK, the door to the EU should remain open - as it should to the UK.” Free Democratic Party

Both parties have been billed as potential partners within a coalition government led by either Angela Merkel’s Christian Democratic Union (CDU) or the Social Democratic Party (SDP), which is the CDU’s strongest contender.  

Coalition governments are commonplace in Germany due to their electoral system, and the centre-right CDU is in a strong position to be the largest party, but the question of which parties will form a coalition government remains open.

The election manifesto for the Greens, who currently have 63 out of 630 seats in the Bundestag, has said: “We welcome openly and with understanding the wishes of the Scots and Northern Irish, as well as the many people in the UK. who want to remain in the EU. We make clear that our door remains open.”

The FDP, which previously formed a coalition alongside the CDU in Merkel’s second term, lost out on any seats in the 2013 election. However, their polling numbers suggest that it can expect to make a comeback this year, and may have a role to play in forming a coalition.

READ MORE: Exclusive: “It is Independence or nothing” - The German conditions for Scotland in the EU

The FDP has called for the ongoing Brexit talks “to consider the interests of Scotland and Northern Ireland fairly”. Speaking of the possibility of Scottish independence, the party said that “should they decide to leave the UK, the door to the EU should remain open - as it should to the UK”.

Angela Merkel’s CDU has not mentioned Scotland in its party platform, and Brexit has not been a central focus of its electoral campaign. By and large the position of the German government has been to treat Brexit as a matter for the UK.

Earlier this year, CommonSpace spoke with a number of sources close to the German government who suggested that the German government would be sympathetic to an independent Scotland rejoining the EU.

The Scottish Government continues to push for Scotland to remain within the single market and for powers returning from the EU to be devolved

Picture courtesy of Hernán Piñera

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Comments

MauriceBishop

Thu, 08/31/2017 - 13:36

When the ACTUAL government of Germany explicitly says "we support fast-tracked admission for independent Scotland", then that will be news - sort of. Such a change would require treaty change, which requires the unanimous consent of all the EU countries. The Nat Onal has been doing a good job of illustrating why that will never happen, by running a series of articles on the separatist movements inside Spain, France, Belgium and Italy. So that four guaranteed vetoes, as those national governments will not want to establish a precedent that encourages the movements within their own borders.

In reality, all that is on offer to Scotland is admission through the normal process, which will take decades.

hbob

Thu, 08/31/2017 - 17:52

Maurice Bishop - The National's series on what you call 'separatists' is about autonomy movements more than independence ones. The only independence movement of any consequence at the moment is the Catalan one.The ACTUAL Spanish government has explicitly distinguished between the Spanish situation and the UK one with Scotland.
Many of the eastern European countries that were communist until the early 1990s became members of the EU in 2004. These countries, some of them newly independent, had to do a great deal to become acceptable candidates for joining, but managed within 13 or so years. Scotland is already a member of the EU, all our legislation meets EU requirements. There would only need to be negotiations on Scotland's membership terms. The idea that that would take 'decades' is ridiculous.

MauriceBishop

Thu, 08/31/2017 - 19:00

@hbob
Watch this interview with Charles Grant, who is an advisor to Nicola Sturgeon. He says: "In Brussels, the EU countries do not really want one part of a member state, even one that is leaving the EU to have a special deal. They have problems with separatist movements. Spain's do not want to encourage the Catalans. They think they can have their own special deals with the Basques. Other countries like Belgium have regional problems too, so do Italy, and France, and some others."
https://profile.theguardian.com/user/id/15013941/search/charles%20grant?...

Going through the normal channels would take decades, because independent Scotland would first that to have its own central bank and currency before it could even start the process, something that even pro-independence Patrick Harvey says would take a decade. And then after that it would take at least another decade for indy Scotland to prove it is stable enough and its budget deficits sufficiently low even to meet the most basic of the admission criteria.

Thy-Robocop

Thu, 08/31/2017 - 21:10

Maurice, you seem to be mixing up the requirements for accessing the EU (the Copenhagen criteria, see here https://en.wikipedia.org/wiki/Copenhagen_criteria) with the requirements needed to adopt the Euro (https://en.wikipedia.org/wiki/Euro_convergence_criteria). A nation that wishes to join the EU is expected to meet the criteria to join the eurozone, but only AFTER it has joined the EU (see Croatia, the most recent nation which joined the EU in 2013, but which still has its own currency, and has yet to meet several requirements to join as of this year)

Therefore, in terms of joining the EU, you ONLY have to look at whether Scotland fulfills the Copenhagen criteria to see how fast it would be able to join the EU.

Of these, the most time consuming step in joining the EU is when the EU checks whether the laws of the applicant nation are in line with the EU's own laws. And since the UK is a member of the EU, all laws made by Westminister and the devolved administration must already be in line with EU laws. As long as these laws are retained in an independent Scotland, and that there are no significant changes, then the time needed for the EU to check for compliance will be significantly reduced, as they will not need to make any recommendations for changes.

(Of course, this would only work if the laws both devolved and reserved don't diverge significantly from EU law once Brexit is complete, and that Scotland copies the UK laws in reserve matters into it's own legislation upon independence. Some delay may occur if iScotland decides to make it's own laws in reserved matters, but so long as they are designed to be aligned with EU law anyway, delays will be minimized. The real source of delay may arise if post-Brexit UK then enacts laws in reserved matters that significantly diverge from EU law, and how long it might take to reverse the damage, but how long the UK will be able to do that will be dependent on when iScotland leaves the UK)

And before you start saying that Scotland would need to join "the back of the queue" to access the EU, let me just state now that there is no back of the queue. If a nation meets the requirements, it can join before others who have applied before them. For a more recent example, see Croatia, which applied for membership in 2003 and got membership in 2013, skipping ahead of Turkey, who became a candidate for entry in 1999, and is still negotiating to be part of the EU.

MauriceBishop

Fri, 09/01/2017 - 00:20

I didn't say Euro and I didn't say "back of the queue", so I hope you enjoyed slaying those straw men.

Here are the Copenhagen Criteria:
http://eur-lex.europa.eu/summary/glossary/accession_criteria_copenhague....

Until indy Scotland has its own Central Bank and currency, it will not meet either (2) or (3).

DaveS

Fri, 09/01/2017 - 10:21

Since current thinking is that an independent Scotland will have its own currency and a reserve bank, there should be little difficulty.

MauriceBishop

Fri, 09/01/2017 - 21:50

@DaveS

Bringing that currency and reserve bank into being is going to be a HUGE difficulty, because independent Scotland will need to amass billions more in reserves than it would get in the "divorce settlement".

This is why Nicola Sturgeon runs away whenever the issue is raised.

Even pro-independence, pro-independent currency Patrick Harvey says it will take a decade to sort out.

Only then can the application process begin, which will take another decade.

Thy-Robocop

Sat, 09/02/2017 - 00:11

@Maurice: First off, you CAN'T amass foreign currency reserves for a new Scottish currency using someone else's foreign currency, you need to give them Scottish currency (for sake of simplicity, let's call it ScotCoin from now on) issued from a Scottish Central Bank. I think you'll agree with me that the pounds that Scotland would get from the "divorce settlement" are most definitely not going to be ScotCoins, since no Scottish currency exists yet, but plain old pound sterling issued by the Bank of England. Using £ to buy foreign currency to back a ScotCoin that has yet to even be created would only serve to exchange those pounds with whatever foreign currency gets bought, a move that ends up increasing the £ reserves of the country issuing said foreign currency, and does nothing to increase the reserves for ScotCoin (because no ScotCoins were involved in the transaction).

In order to build foreign reserves for ScotCoin, the Scottish Central Bank needs to create that money from scratch (as it does not exist yet), establish that certain services and taxes in Scotland can only be paid in ScotCoin (so that the ScotCoin is actually worth something) and then use that to pay for the foreign currency it needs to build the foreign reserves (which foreign Central Banks would buy so that they can be given to businesses who trade with Scottish businesses, who need the money in ScotCoin otherwise they can't pay their taxes). And if the Scottish Central Bank is creating new ScotCoin from scratch for its foreign reserves, it is not taking the money from the "divorce settlement", so the "costs" for the foreign reserves that you mention are simply not relevant to the cost of setting up a new currency.

So, what are the sources of expense for setting up a new currency? Well, you need staff and civil servants to run the Central Bank, IT equipment, and money to print off the physical version of ScotCoins. So a more accurate assessment of the costs for setting up a currency would therefore require us to know how much it costs to pay the staff at a central bank, and how much it costs to print off a new currency. Common Weal's paper on currency (link here http://www.allofusfirst.org/tasks/render/file/?fileID=623E7E3F-C530-92A4...) estimates the former to be about £1-2 million (unfortunately I can't find some equivalent data to compare it with to see if it's reasonable or not), and the latter to be £50 million (based on a conservative estimate on how much Australia spent to replace all its banknotes with polymer ones scaled to Scottish needs. A CNN article http://money.cnn.com/2015/07/07/news/economy/greece-drachma-currency-cas... estimated that Greece would need to spend about 50 million euros to reprint the drachma, so the £50 million estimate by Common Weal is not unreasonable). I believe in a previous comment you mentioned that the "divorce settlement" would amount to £15 billion, right? So the set-up costs for a new currency are definitely affordable within the budget you mentioned.

Having settled this issue, all that remains is how long it would take to create a Scottish Central Bank and a new currency. Fortunately for that, we do have some recent examples provided by the nations that arose from the former Yugoslavia. A quick look through the wikipedia articles on the Central Banks for Bosnia and Herzegovina, Kosovo, Montenegro and others show that they were formed within three to six months from legislation regarding the formation of the bank being passed (Croatia cheated and nominated an existing bank as it's central bank when it passed it's Constitution legislation). As for setting up a new currency, a transition period of three years was needed to establish the Euro for the first Eurozone adopters of the currency, and three years passed between the Dayton Agreement of 1995 and the establishment of the convertible mark (Bosnia and Herzegovina's currency). Using the above timings as a reference, and, say, adding another year to allow the Scottish Central Bank to prepare a new currency, an estimated total time for iScotland to set up a new currency and fulfill the criteria to even be considered for the EU would come out as slightly less than five years.

Which brings me back to the Copenhagen criteria you linked above in response to my own post. Under criteria 2, a nation applying to join the EU is required to have "a functioning market economy and the ability to cope with competitive pressure and market forces within the EU". Which is a rather vague condition to fulfill, and doesn't explicitly mention the need of a central bank or own currency (Eurozone members show that they can have a functioning market economy without their own currencies, to varying degrees of success). Arguably criteria 3 is the one where you'd expect to find the "needs a Central Bank" requirement, but even then, it doesn't say that a nation needs to have fulfilled specific criteria before accessing, just that it has to have "the ability to take on the obligations of membership". iScotland could arguably achieve this without the need of it's own currency, so long as it demonstrates that it has the ability to do so (like, say, having a Central Bank working on it by the time the EU does its initial inspection before starting the application process, or even better, having a digital only currency ready, which can be achieved at the start of the transition period I outlined above). So the period for being considered for accession could come even sooner than expected. And having parties in other nations arguing for Scotland's case as an explicit part of their manifesto, as this article indicates, could help guarantee that. But even if that doesn't help, the points I outlined here can hopefully show that Scotland could be considered for application to the EU much sooner than one full decade. And as I described earlier, Scotland's laws being already compatible with EU laws will streamline the application process to that it, too, could be completed in a relatively short amount of time.

MauriceBishop

Sat, 09/02/2017 - 13:54

@Thy-Robocopy: The Scottish people aren't going to risk their futures on the crank theories of amateur economists. The new Scottish currency has to be pegged 1:1 with sterling or the Scottish economy will suffer regardless of which way the exchange rate swings. So the market will be deciding what level of reserves is adequate. And we can easily predict the number by looking at Denmark, which is a similar size and level of prosperity, which is also in Northern Europe and which has a great deal of overlap with us in terms of its major trading partners; and which, like us, shares a border with a much larger currency area with which it does the preponderance of its trade. Their experience leads them to the conclusion that £55 billion is the correct level. So why would indy Scotland, so similar in so many respects except for experience, need only a fraction of that amount? There is no reason, other than the fact that "independence at any price" types such as yourself find they need a way to make the currency issue go away.

Thy-Robocop

Sat, 09/02/2017 - 22:54

@MauriceBishop: I am not disputing the fact that the Scotland would need an equivalent of £55 billion in foreign currency reserves (or whatever that number is when Scotland actually becomes independent, as reserves tend to very in response to market forces) to back it's own currency. Where we seem to disagree is where the money to pay from those reserves comes from.

This is a quote from your comment in an earlier CommonSpace article about Alex Salmond backing an independent Scottish currency.

"With that in mind: Denmark finds it needs over £50 billion in reserves to back its currency. At most iScotland would leave the rUK with £15 billion in cash, but will be losing Barnett at the same time and also runs a massive budget deficit, which means that there are going to be a lot of immediate claims on that already inadequate sum.

So, how will the iScottish government make-up the shortfall? The only way is years of savage austerity to create primary budget surpluses. This is not the kind of "austerity" that we have now. but the kind of savage austerity that is happening in Greece."

Your comment implies that you believe iScotland would have to use the £15 billion from the divorce settlement to acquire the foreign reserves, and you rightly point out that it's not going to be enough to reach the target £50 billion required to establish the right amount of reserves.

But in what currency is the £15 billion going to be in? Since it's UK that's issuing it, it's obviously going to be in pound sterling, and not in the new Scottish currency, which can only be issued by a Scottish Central Bank. Now, a foreign currency is defined as being any currency other than the national currency of a nation. Under that definition, if Scotland adopts the newly created ScotCoin, then all other currencies, including pound sterling, become foreign currency with respect to it.

This document by the Bank Of England (http://www.bankofengland.co.uk/education/Documents/ccbs/handbooks/pdf/cc...) outlines in pages 9 and 10 how a central bank acquires foreign currency, which basically boil down to:

-borrowing foreign currency from the central banks that issue them
-exchange a certain amount of your national currency with the foreign currency you desire for a certain time limit
-pay outright for a certain amount of foreign currency using your own national currency.

Two of the methods outlined require a national currency to trade with the foreign currency desired, and that national currency can only be issued by the national central bank. In other words, ScotCoin's foreign currency reserves can only be paid for in ScotCoin, which, as it doesn't exist yet, has to be created by the Scottish Central Bank for that purpose. The other method involves borrowing foreign currency directly, which does not require using your own national currency, or your foreign reserves, to do.

None of the methods described above involve obtaining foreign currency using someone else's foreign currency, which is what you are advocating iScotland should do by using the money from the divorce settlement. Remember, if ScotCoin is Scotland's national currency, then pound sterling is considered itself a foreign currency. The Scottish Central Bank would still have to issue ScotCoins in Scotland to exchange with any foreign currency it starts with, whether it is in pounds, or whether it exchanges those pounds for some other currency.

In short, the "foreign currency reserves to back ScotCoin" problem can only be solved once the Scottish Central Bank issuing ScotCoins has been created. Using the divorce settlement money to acquire foreign reserves for the new currency BEFORE the currency is created is a pointless exercise that makes no progress to the establishment of a new Scottish currency. A much better use for that money, therefore, would be to create the Central Bank and infrastructure to issue ScotCoins, the costs of which, and the rest of my argument, I've already outlined in my previous comment.

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