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US economists and politicians pile in: 'Don't do it, Scotland!'
Former Fed chief Alan Greenspan is latest to warn Scots: Bank of England will never bail you out
It has long been agreed that Brits and Americans stay out of each other’s domestic politics, for good reasons to do with both old wars of independence and the embarrassment of having to deal with the winners if you have backed the losers.
Back in 2013, the US Ambassador in London, Matthew Barzum, endorsed that convention, telling the BBC:“We don’t get into picking sides.”
Well, diplomats are diplomats and by trade must be flexible with the truth.
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Yesterday, two days before the vote on Scottish independence, President Obama’s spokesman at the White House, Josh Earnest, told the assembled press corps that America has a “deep interest” in the United Kingdom remaining the United Kingdom.
“From the outside,” he said, “the United States has a deep interest in ensuring that one of the closest allies we’ll ever have remains strong, robust, united and an effective partner of the United States.”
This item from a routine White House press conference might have got bigger headlines here if it were not for the fact that the Boss himself had said more or less exactly the same last June, and said it while standing next to David Cameron following the G7 meeting.
"The United Kingdom has been an extraordinary partner to us,” Obama said. “From the outside at least, it looks like things have worked pretty well. And we obviously have a deep interest in making sure that one of the closest allies we will ever have remains a strong, robust, united and effective partner.”
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He added, for form’s sake, that “ultimately these are decisions that are to be made by the folks there."
Have those “folks” been listening to the advice from their cousins across the water?
Obama’s has been far from the only voice. The occasional tweet or posting on Facebook has rooted for an uprising against the English imperial yoke, the call to independence usually illustrated by the poster from Mel Gibson’s absurd 1995 movie Braveheart and displaying an understanding of history roughly on a par with that of the film-makers.
The overwhelming conclusion among the American governing classes, however, is that for Scots to leave the Union would be bonkers.
Hillary Clinton, Obama’s former secretary of state and presumed front runner for the White House in 2016, said during a visit to the University of St Andrews earlier this year that she “hoped it wouldn’t happen”.
“I would think it would be a loss for both sides,” she told the BBC’s Jeremy Paxman. “I would hate to have you lose Scotland.”
Former Republican presidential contender Senator John McCain, a man with his own claim to tartan, raised the defence issue. He is one of those Americans who fret that a Yes vote would only encourage Russia’s President Putin to chop up more of the nation states along his borders.
“‘I don’t see how it [independence] could be helpful,” he said, “not just as far as intelligence ties are concerned but to the unique military relationship as well.”
But the firmest fingers have been wagged at the potential economic consequences of breaking up the UK, and the loudest canon in the propaganda war was fired last week by the Nobel Prize-winning economist Paul Krugman in his column for the New York Times.
“I have a message for the Scots: be afraid, be very afraid,” he wrote. “The risks of going it alone are huge. You may think that Scotland can become another Canada, but it’s all too likely that it would end up becoming Spain without the sunshine.”
Canada had managed to become prosperous while staying well to the left of the big brother down south, wrote Krugman. But “Canada has its own currency, which means that its government can’t run out of money, that it can bail out its own banks if necessary, and more. An independent Scotland wouldn’t. And that makes a huge difference.”
So Spain is its likely fate. Scotland now enjoys a relationship with London much like Florida’s with Washington: when Florida went bust in the housing melt-down, Washington intervened. Spain had no such “federal” relationship with the EU to fall back on, and was left to suffer.
“I find it mind-boggling,” wrote Krugman, “that Scotland would consider going down this path after all that has happened in the last few years. If Scottish voters really believe that it’s safe to become a country without a currency, they have been badly misled.”
In case any Scottish voters missed the message, it was pretty much repeated this week by the former chairman of the Federal Reserve, Alan Greenspan. He accused the Yes campaign of vastly underestimating the economic costs and was scathing about Alex Salmond’s boasts of long-term oil revenues which were “so implausible that they really should be dismissed out of hand”.
His firmest point, however, matched Krugman’s: that if Scotland goes it alone, there will be no Central Bank or Federal Reserve to bail it out if or when it goes broke.
“There’s no conceivable, credible way,” said Greenspan told the Financial Times, “that the Bank of England is going to sit there as a lender of last resort to a new Scotland.”
Now a canny Scot with his savings and his reserves in order might like to point out that Greenspan is the man who presided over America’s credit and housing bubbles, famously described the “irrational exuberance” of the markets, and got out of office just before the crash of 2007. Why listen to him?
Salmond has responded to the American campaign with wit and dignity.
“Rather more than 200 years ago, America had to fight for its independence,” he said after Obama’s intervention. “We are very fortunate in Scotland that we have a democratically agreed, consented process by which we can vote for our independence.”
Indeed. But that does not do much to dilute the message coming over the Atlantic: if you go independent, you go it alone.
Charles Laurence is a US correspondent for The Week.co.uk. He is a former New York bureau chief for The Daily Telegraph. He divides his time between Manhattan and Woodstock, upstate New York.
