Sunday, May 12, 2013

The law of debt

The temptation might be to laugh at this headline but you have to understand why. Dr. Qvortrup is no nationalist patsy. As he points out, international law and actual precedent says that where two countries disengage, and one of them insists that it's the successor country, then it (the successor country) keeps the debts as well as, say, existing treaty rights. The rough with the smooth. So, if the UK says it's going to play hardball and that only it is the successor state in, say, the EU, then the UK can keep its debt. If Scotland is to be an entirely new country it starts from scratch, with its own resources but nothing else. That would be consistent. That's what happened when Ireland left: they didn't pay a penny (AND they kept using sterling in a monetary union with the UK).

The point is that this is what Scotland has to negotiate with. And though it's obvious to us all that Scotland would want to negotiate, not seek to walk away, we have to realise that the corollary is that the UK would equally do the same. All this nonsense about no sterling zone and exclusion from the EU is just that. Ultimately, as a matter of law, we are entirely entitled to say "OK. We tried but you're not being fair. We're off. With the oil and leaving you with the debt." Equally, the UK could agree to such a deal. However, neither side would want that, because it would harm both, which is why it won't happen. The UK could certainly decide to take a stance on things that would harm us (for example, make life difficult with the Bank of England) but this would harm them too. The UK government doesn't want us to leave and for that reason will say, now, that it might do X or wouldn't have to do Y but that's part of the campaign and we need to see through it. They won't cut off their nose to spite our face. But, another way of looking at it is to realise that we could always say "OK. So be it. Then we'll do Z". Like tell you to stuff your debt, take the oil and watch as there's a run on sterling.

We have a very strong negotiating hand. Before you start thinking about Trident.

A vulgar diversion

I know. Sorry. But I feel I've kind of earned the right to post it on the basis of the man-hours involved alone. You would not BELIEVE how many languages there are in the world.

The big picture

Oil & Gas UK, the independent offshore industry body, estimate that there are more than 24 billion barrels of oil and gas equivalent to be recovered from the North Sea and that of that 90% (85% of gas) lie within Scottish waters. The Scottish/English maritime border would be determined by the UN Convention on the Law of the Sea and no-one seriously disputes that this would mean an independent Scotland inheriting the vast bulk of this resource (see for example, Vince Cable recently).

So, lets say 22 billion barrels. That puts us in the top-20 oil producing countries. So how do we compare with  some of the others?

Iraq (pop. 33 million) 143 
Kuwait (pop. 4 million) 102 
Russia (pop. 143 million) 74 
Libya  (pop. 7 million) 47 
United States (pop. 316 million) 27 
China (pop. 1,325 million) 20 
Brazil (pop. 194 million) 13

So, we've got nothing like Kuwait but for a country of 5.5m to have reserves that are proportionately (by population) comparable to those held by Iraq, approaching a third of Russian and half of Libyan reserves, about the same as the US and actually more than Brazil, and China makes the point: we have a LOT of oil.

This debate is about what's best for our children, and theirs, and what we can do to leave them something better than we have now. A fairer society and a more prosperous country. International dialling codes and the price of parcel delivery are, to be charitable, details to sort out later. Let's not lose sight of the big picture.