What would an independent Scotland look like?

I want to imagine that independence could be a success - but grubby, difficult questions about money, jobs and services are not going away.

I want to imagine a world where Scottish Independence is not the disaster some think it will be. I want to imagine a world where it is a success.

Imagine that Scotland enters a phase of unprecedented economic growth, spurred on by the oil revenues that have been diverted from it for all these years. Coupled with the lowest corporation taxes in Europe, the Scottish economy is thrumming along with luxurious healthcare, free education up to and beyond graduate level, a supportive welfare state and pensions that are the envy of the world. Tax revenues from oil and corporation tax help the budget deficit stay in check. Even though there is a heavy dependency on the oil price, the markets give Scotland the benefit of the doubt – the sovereign credit rating of Scottish government debt is higher than the UK and their government bond yields trade well below that of the UK gilt market.

Meanwhile, in England and the rest of the United Kingdom, the government badly miscalculated the benefits Scotland brought to the Union. Bereft of trade and oil revenues the provision of local and national services has gone into a rapid generational decline. Taxes are high for individuals and businesses in a vain attempt to balance the budget, which is continuing to rise to record levels, while the cuts to government spending only serve to exaggerate the decline.

People and businesses have been voting with their feet for some time now. Migration from the once prosperous South of England is increasing at an alarming rate; both businesses and the most talented people are leaving in their droves, sending English property prices, which peaked just before the referendum in 2014 into a long-term secular decline. Meanwhile, Scottish property prices continue to make new highs each month. This is causing problems not least of which is the increase in inequality of wealth distribution in Scotland as house building can’t keep pace with the growing population.

The Scottish government is struggling to control the effects of house price appreciation because it has retained the pound and tied itself to UK interest rates. Much as Hong Kong experienced when tied to the US dollar and it had US interest rates and Chinese growth rates, Scotland now has a high growth rate and generationally low interest rates. Inflation differentials are rising between Scotland and the UK; inflationary Scotland habitually has a cost of living much higher than the deflationary UK. Broad money supply is growing at an uncontrollable rate. There are concerns over Scotland’s financial institutions. There are dark mutterings about the “Darian Scheme” – the financial disaster that drove Scotland into the arms of the English in 1707.

At the same time South of England immigration is having a profound impact on the political landscape; the history of Scottish voting patterns since the Second World War shows that Scotland hasn’t always been a centre-left country as some assume. There was a time when it was split 50/50 between Labour and the Conservatives (see graph). The latent conservatism of Scotland has now been unleashed mainly because it is dissociated from English conservatism but also because the new immigrants have a tendency not to vote for Labour or Scottish Nationalists. Scotland has become Conservative while the UK, because of its problems, now habitually votes Labour, a reversal of the pre-referendum status quo.

Scotland had been exporting some 30,000 people annually until the late 1980s. However, this tailed off and as the referendum approached Scotland had already become a net importer of people. Official estimates of population growth had already expected the Scottish population to rise above 6m in the years following the referendum. But global recognition that “Scotland has done something right” has led to an influx of Scottish talent that left the country in the thirty years prior to the referendum. First and second generation Scots have returned and converted their nationality from Australian, Canadian, New Zealand and US back into Scottish passport holders, further pressurising housing shortages and claims on the state. Scotland population swells from 5.3m in to nearly 8m in just fifteen years...

It’s quite good fun to do this; to go into a world of utopian Scotland and a dystopian UK, and one could go on for some considerable time. We haven’t even imagined a Scottish financial system (would it cheapen the argument to be the first to call for the Scottish stock market index to be called the SNP500 or their government bonds Scottish Guilts?) But what does emerge is that if you think independence can be seen merely as an exercise in democratic extension, that it isn’t about grubby things like money and jobs and services, then you should think again. A fully independent Scotland will have profound effects on the very nature of Scotland for generations to come, not all of which were obvious at first sight or, ultimately, a price worth paying.

The headquarters of the Yes campaign in Glasgow. Photograph: Getty Images.

Head of Fixed Income and Macro, Old Mutual Global Investors

ANDREY BORODULIN/AFP/GETTY IMAGES
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Letter from Donetsk: ice cream, bustling bars and missiles in eastern Ukraine

In Donetsk, which has been under the control of Russian backed rebels since April 2014, the propaganda has a hermetic, relentless feel to it.

Eighty-eight year-old Nadya Moroz stares through the taped-up window of her flat in Donetsk, blown in by persistent bombing. She wonders why she abandoned her peaceful village for a “better life” in Donetsk with her daughter, just months before war erupted in spring 2014.

Nadya is no stranger to upheaval. She was captured by the Nazis when she was 15 and sent to shovel coal in a mine in Alsace, in eastern France. When the region was liberated by the Americans, she narrowly missed a plane taking refugees to the US, and so returned empty-handed to Ukraine. She never thought that she would see fighting again.

Now she and her daughter Irina shuffle around their dilapidated flat in the front-line district of Tekstilshchik. Both physically impaired, they seldom venture out.

The highlight of the women’s day is the television series Posledniy Yanychar (“The Last Janissary”), about an Ottoman slave soldier and his dangerous love for a free Cossack girl.

They leave the dog-walking to Irina’s daughter, Galya, who comes back just in time. We turn on the TV a few minutes before two o’clock to watch a news report on Channel One, the Russian state broadcaster. It shows a montage of unnerving images: Nato tanks racing in formation across a plain, goose-stepping troops of Pravy Sektor (a right-wing Ukrainian militia) and several implicit warnings that a Western invasion is nigh. I wonder how my hosts can remain so impassive in the face of such blatant propaganda.

In Donetsk, which has been under the control of Russian-backed rebels since April 2014, the propaganda has a hermetic, relentless feel to it. If the TV doesn’t get you, the print media, radio and street hoardings will. Take a walk in the empty central district of the city and you have the creeping sense of being transported back to what it must have been like in the 1940s. Posters of Stalin, with his martial gaze and pomaded moustache, were taboo for decades even under the Soviets but now they grace the near-empty boulevards. Images of veterans of the 1941-45 war are ubiquitous, breast pockets ablaze with medals. Even the checkpoints bear the graffiti: “To Berlin!” It’s all inching closer to a theme-park re-enactment of the Soviet glory years, a weird meeting of propaganda and nostalgia.

So completely is the Donetsk People’s Republic (DPR) in thrall to Russia that even its parliament has passed over its new flag for the tricolour of the Russian Federation, which flutters atop the building. “At least now that the municipal departments have become ministries, everyone has been promoted,” says Galya, wryly. “We’ve got to have something to be pleased about.”

The war in the Donbas – the eastern region of Ukraine that includes Donetsk and Luhansk – can be traced to the street demonstrations of 2013-14. The former president Viktor Yanukovych, a close ally of Vladimir Putin, had refused to sign an agreement that would have heralded closer integration with the EU. In late 2013, protests against his corrupt rule began in Maidan Nezalezhnosti (“Independence Square”) in Kyiv, as well as other cities. In early 2014 Yanukovych’s security forces fired on the crowds in the capital, causing dozens of fatalities, before he fled.

Putin acted swiftly, annexing Crimea and engineering a series of “anti-Maidans” across the east and south of Ukraine, bussing in “volunteers” and thugs to help shore up resistance to the new authority in Kyiv. The Russian-backed rebels consolidated their power base in Donetsk and Luhansk, where they established two “independent” republics, the DPR and its co-statelet, the Luhansk People’s Republic (LPR). Kyiv moved to recover the lost territories, sparking a full-scale war that raged in late 2014 and early 2015.

Despite the so-called “peace” that arrived in autumn 2015 and the beguiling feeling that a certain normality has returned – the prams, the ice creams in the park, the bustling bars – missiles still fly and small-arms fire frequently breaks out. You can’t forget the conflict for long.

One reminder is the large number of dogs roaming the streets, set free when their owners left. Even those with homes have suffered. A Yorkshire terrier in the flat next door to mine started collecting food from its bowl when the war began and storing it in hiding places around the flat. Now, whenever the shelling starts, he goes to his caches and binge-eats in a sort of atavistic canine survival ritual.

Pet shops are another indicator of the state of a society. Master Zoo in the city centre has an overabundance of tropical fish tanks (too clunky to evacuate) and no dogs. In their absence, the kennels have been filled with life-size plastic hounds under a sign strictly forbidding photography, for reasons unknown. I had to share my rented room with a pet chinchilla called Shunya. These furry Andean rodents, fragile to transport but conveniently low-maintenance, had become increasingly fashionable before the war. The city must still be full of them.

The bombing generally began “after the weekends, before holidays, Ukraine’s national days and before major agreements”, Galya had said. A new round of peace talks was about to start, and I should have my emergency bag at the ready. I shuddered back up to the ninth floor of my pitch-dark Tekstilshchik tower block. Shunya was sitting quiet and unruffled in his cage, never betraying any signs of stress. Free from Russian television, we girded ourselves for the night ahead.

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war