Bailout's Toll Is Higher in Scotland
Case for Autonomy From U.K. Is Weakened by Need for Cash Infusion From London

By Kevin Sullivan
Washington Post Foreign Service
Thursday, October 16, 2008

LONDON, Oct. 15 -- Scottish independence has been dealt a blow by the global financial crisis.

The massive bailout of banks has been widely received as welcome and necessary across the United Kingdom. But it has not been lost on Scots that the largest shareholder in Scotland's two largest banks is now the British government.

And that government, maddeningly for those who believe Scotland's 5 million people would be better off on their own, is based in London, in the heart of Scotland's rival sibling, England.

"They now look pretty silly," Brian Wilson, a Scot and former Labor Party member of Parliament, said of independence campaigners. "In the long term, when a mature judgment has to be made about independence, this episode will be remembered."

Independence from the United Kingdom is the driving force behind the political party currently in power in Scotland, the Scottish National Party, or SNP. Polls show that perhaps 25 to 30 percent of Scots support the idea.

Prime Minister Gordon Brown, a native Scot but an outspoken advocate of keeping Scotland in the U.K. fold, seemed to go out of his way Tuesday to tweak advocates of independence, especially the SNP.

Brown said the $65 billion bailout of the Royal Bank of Scotland and the bank formed by the merger of Lloyds TSB and the Halifax Bank of Scotland (HBOS) proved that the United Kingdom was "stronger together."

"We were able to act decisively with 37 billion pounds; that would not have been possible for a Scottish administration," said Brown, whose own political fortunes have been boosted by his handling of the crisis.

Others have pointed out that the bailout for eight major British banks -- including capital for banks and government loan guarantees -- is worth a total of almost $700 billion, which is about five times Scotland's annual gross domestic product.

Brown particularly seemed to taunt Alex Salmond, the SNP chief and head of the Scottish government, who has said he wants an independent Scotland to be part of an "arc of prosperity" stretching from Iceland to Ireland to Norway.

The SNP Web site speaks admiringly of Iceland as "the sixth most prosperous country in the world," words that were written before last week's massive banking and economic crash, which nearly bankrupted the country.

"We've seen the problems in Iceland; we've seen the problems in Ireland. We were able to put the whole strength of the United Kingdom's resources behind these two banks" in Scotland, Brown said, provoking an irritated response from Salmond.

"It is very unfortunate that the prime minister, who has had a lot of cross-party support over the past couple of weeks for his stabilization plan, in the national interest, should resort at the first opportunity to an attack on Scottish independence," he told the BBC.

Salmond did not mention Iceland, but he noted that Ireland was entering its recession "40 percent more prosperous than the U.K." and that Norway is a "sea of stability" compared to Britain in the current crisis.

"Which is presumably why Gordon Brown did not want to mention Norway in his thesis that only small countries get into trouble," Salmond said. "The country where this started is the United States of America -- the largest economy in the world."

Once a fringe party, the SNP has been in control of the Scottish government since last year, when it defeated Brown's Labor Party in local elections.

Paul Cairney, who teaches politics at the University of Aberdeen, said the SNP was propelled into power not by a clamor for independence as much as a protest against Labor, which supports the highly unpopular Iraq war. Now, he said, the tables are turned, because Brown's handling of the financial crisis is winning praise. "When Labor in the U.K. has a boost, it has the opposite effect on the SNP," Cairney said.

With Salmond as first minister, the Scottish government's top job, the SNP has pressed the case for independence, with the support of a passionate minority of Scots, including actor Sean Connery.

The SNP has argued that Scotland's economy, led by a robust financial sector and revenue from oil rigs in the North Sea, would make it a vigorous small nation should it leave England, Wales and Northern Ireland behind in the United Kingdom. An independent Scotland would become part of the European Union and could turn to Brussels rather than London for help in tough times, the party contends.

British newspaper editorials on Wednesday tore into the idea of Scottish independence. "One lesson of the financial crisis is already starkly clear: A Scotland independent of the Union would today be an economic basket case," the Daily Mail said.

The Times argued: "The case for independence was never strong. Its flaws have been cruelly exposed by the financial crisis."

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