Crisis rocks Scotland’s dream of independence
EDINBURGH–Fresh from a surprise election victory, Scotland’s leader, Alex Salmond, vowed last year to win independence from the United Kingdom and with it, bring a wave of prosperity.
Salmond, whose separatist Scottish National Party won control of Scotland’s national Parliament last May from Britain’s governing Labour Party, has long aspired to end the 300-year union with England. He wants to take control of lucrative oil and natural gas reserves, slash corporate tax rates and transform this country of five million into an economic powerhouse.
But that was before the global financial meltdown redrew the economic map. Salmond once dreamed of a North Atlantic "arc of prosperity" stretching from Ireland through Iceland and Scotland to Norway. Now, his nation’s similar-sized neighbours are struggling with the ravages of the downturn.
Iceland, held up by Scottish nationalists as an example of how smaller nations can transform their fortunes, is possibly headed toward bankruptcy, while Ireland has slumped into recession.
At home, two of Scotland’s iconic businesses – the Royal Bank of Scotland and the Halifax Bank of Scotland – have found themselves savaged by the economic turmoil.
RBS is now partly owned by British – not just Scottish – taxpayers, who’ll also have a major stake in HBOS if it finalizes a combination with Lloyds TSB after a rescue deal was brokered by Salmond’s nemesis and fellow Scot, British Prime Minister Gordon Brown.
It has left Salmond’s claims that Scotland can cope without leadership from London, and his hopes of winning an independence vote in 2010, in tatters.
A year ago, RBS – Scotland’s largest business – was a proud emblem of economic prowess as it led buyouts of Dutch bank ABN AMRO and the Belgian-Dutch Fortis bank, turning in pre-tax profits in 2007 of £10 billion, or $20 internet pay day loans.3 billion (Canadian). Now it’s partly nationalized and has taken a £20 billion handout from the British government. If the combination of HBOS and Lloyds TSB goes ahead, the new bank will take a similar £16 billion cash injection.
Brown – a robust defender of the United Kingdom – claims that without England, Wales and Northern Ireland, Scotland could never have afforded to bail out its own banks. He suggests an independent Scotland would have an annual GDP of only about £100 billion, in contrast to a British annual total of around £2 trillion.
But Salmond argues that membership in the United Kingdom seems only to be dragging Scotland down.
Unemployment in Scotland rose by 19,000 people in September, economic growth slowed to 0.1 per cent and, according to the Nationwide Building Society, the nation’s once-booming housing sector saw prices drop by 5 per cent.
He said Brown’s "age of irresponsibility" was over. "The new age of responsibility means Scotland taking charge of its own destiny with independence," Salmond wrote.
Though Salmond, a former economist with RBS, has enjoyed an extended honeymoon in the 18 months since his party took power as a minority government at the Scottish Parliament, support for independence remains low. Most polls show that less than a third of Scots currently want to leave the union.
But Salmond’s SNP trounced Brown’s Labour Party in a special election for a British Parliament seat in Glasgow in July and is predicted to win again on Nov. 6 when a second special election takes place.