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from Breakingviews:

Applying corporate finance to nations

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

It is generally accepted on Wall Street that breaking up bloated and unwieldy companies is a good thing. Division makes them easier to manage, more accountable and allows them to deliver greater value to their many constituents. On the eve of Scotland’s historic vote on independence, it’s worth considering whether the same logic might also be applied to nations.

Scotland will vote on Thursday whether to spin itself off from the United Kingdom. Catalonia is planning a similar, but not legally binding referendum on leaving Spain in November. If both go their own way, other European nations could end up splitting into smaller new political units.

There are few precedents, at least in the developed world, for them to emulate. The history of corporate finance may provide some useful insight. Of course, it is hard to imagine any legislator anywhere in the world exhorting voters to stake their futures to a Wall Street construct. But the philosophical underpinnings to breaking up companies and countries share many similarities.

from MacroScope:

Showdown for Hollande

French President Hollande and Finance Minister Sapin take part in the assizes for financing and investment at the Elysee Palace in Paris

The French government faces a confidence vote in the national assembly after President Francois Hollande and his prime minister, Manuel Valls, ousted dissident ministers in a signal perhaps that they are prepared to push ahead with unpopular structural reforms to breathe life into a moribund economy.

Rebel lawmakers in Hollande’s Socialist party say they may abstain. On top of the reshuffle, they are angry at Hollande's policy switch in January to favour tax cuts to business in a bid to revive the economy - a move that has failed to kickstart a flatlining economy.

from MacroScope:

Swedish shift

Opposition leader Stefan Lofven speaks at the election night party of the Social Democrats in Stockholm

Sweden's centre-left Social Democrats topped the poll in Sunday’s election but fell well short of an overall majority to the extent that it will struggle to form a strong coalition.

The Social Democrats and the Greens and hard Left, who would be natural coalition allies, garnered 43.7 percent of the vote. The anti-immigrant far right emerged as the third biggest party to hold the balance of power with nearly 13 percent.

from MacroScope:

All to play for

A "No" campaign poster is seen in a field after being vandalised by a "Yes" supporter on the outskirts of Edinburgh

The latest Scottish opinion poll puts the unionist camp ahead by 52 points to 48 – still way too close to call given the statistical margin for error.

The last two polls have given the “No” campaign clinging to a narrow lead following a dramatic narrowing of the gap and one survey giving the separatists a lead. So has the “Yes” momentum stalled? If you chart the numbers over the past two weeks you might think so but if you did so over the past two months you would say emphatically not.

from MacroScope:

Margin for error

A Union Flag and Scottish Saltire fly over Britain's Cabinet Office in central London

Another day, another Scottish opinion poll and this time a different message, but only slightly.

A Survation survey last night showed 53 percent of Scots would vote to remain in the UK, 47 for independence. Ten percent of the electorate remain undecided. That counters three recent polls which have shown a dead heat or slight lead for the Yes campaign. Given the margin for error – three points either way – they all suggest next Thursday’s vote is too close to call although hitherto, Survation has consistently put support for independence higher than other pollsters.

from John Lloyd:

No gimmicks, just 10 good reasons why Scotland shouldn’t leave the UK

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Readers of a romantic bent, perhaps Scots or descendants of Scots, may think that it would be cool for Scotland to vote for independence from the United Kingdom next Thursday.

If so, here are 10 reasons why they’re wrong. It would mean nationalism  – the call to old loyalties deeper than any civic and cross-national identities – would win. The Scots nationalists are nothing like the proto-fascist groups at large in Europe: indeed, their party is social democratic, liberal in social policy. But the demons unleashed will be stronger than their politics. The countries of Europe have many secessionist movements. Spain has two, in Catalonia and in the Basque country. Belgium is divided between the French Walloons and the Dutch-speaking Flemish. Italy has an old secessionist movement in German-speaking Alto Adige and a new one in the north, claiming a territory called Padania. France has an occasionally violent movement in the island of Corsica. Others will come along. All would be hugely encouraged by Scots independence. It would consume Europe for decades. The UK has been, in the past century, an imperial power, claiming ownership of large parts of the globe, fighting and imprisoning those who sought liberation in Africa, India and elsewhere. U.S. President Barack Obama’s grandfather, Hussein Onyango Obama, was imprisoned and tortured by the British in Kenya because he was suspected, it seems wrongly, of being a member of a militant pro-independence group, the Mau Mau.But in the latter part of the 20th century and in the 21st, Britain ceased to be part of the problem and strove to become part of the solution. The ‘solution’ is to find a way to manage the world out of confrontation and division into a common effort to attack its real problems – ecological damage, poverty, drought, Islamist and other terrorism. The loss of Scotland would diminish it, weaken its presence internationally, weaken what it does and can do for global governance. The UK is a major and founding member of NATO: it’s a nuclear power. Yet all of its submarine-based nuclear armament is based in Scotland, at a base near Glasgow. Moving it – as an independent, anti-nuclear Scottish government would demand – would take years and many billions of pounds to execute. And this at a time when NATO is seeking more commitment, more defense spending from its members to counter the growing threat from Russia. The United States, presently blamed by critics inside and out for being weak in the face of global challenges – from Islamist terror, from Russia, from China – has under Obama’s presidency sought to convince the Europeans that they must take greater responsibility. Scots independence would be an example of a people taking less: it would present the malign example of a region, by claiming independent status, ducking out of taking the hard choices in the world – while seeking protection from those still constrained to make them. The UK has been a large part of ‘the West’ – that group of nations, which include ‘Easterners’ like Japan, South Korea, Australia and New Zealand and others – that privilege democracy, a strong civil society and rule of law. For the UK to lose Scotland would point up to a failure of democracy, at a time when the growth of China and the challenge of Russia is putting it’s primacy in doubt. With the discovery of major oil reserves off Scotland in the early 1970s, most of the UK’s oil has come from the fields off the Scots shore. There are still large reserves – how large, is still being proven. Scotland would demand total control of these reserves – they would be mainly within its territorial waters. It’s another malign example of a region rich in mineral reserves severing links with the larger state of which it was part in order to enjoy the easy income. It’s what the Oxford economist Paul Collier called, in a recent talk, ‘a dirty little resource grab’ – one sure to be copied elsewhere. Scotland has a large financial sector, even after the near-collapse of the Royal Bank of Scotland, still one of the world’s banking giants. The turbulence and uncertainty which independence would cause would prompt several big banks and financial institutions to relocate to England: and foreign-owned businesses would also take precautionary measures. It wouldn’t be disaster: but it would mean that the UK, presently growing more strongly than any other European state but still recovering from recession, would be badly knocked back. Modern terrorism has targeted the UK: it’s seen by radical Islam as both a threat to their plans to create a fundamentalist Caliphate and to make of the Moslem populations round the world – there are nearly 3m Moslems in the UK – adherents to their cause. As UK security chiefs have warned, an independent Scotland with  new and small security services would be hobbled in efforts to combat extremism – and would be seen as a pressure point. Finally, there’s the more indefinable damage: to civility and to common culture. The nationalist campaign has raised tempers on both sides of the divide – within Scotland itself, and between Scotland and the rest of the UK, especially England. Nationalists like to see England as still an imperial hangover, un-modernized, run by ‘posh’ Conservatives for whom most Scots didn’t vote. Independence would make this still worse: many English say they want Scotland to go, because they’re tired of their complaints. It would be a long time before that died down: and something precious, a recognition of difference within unity, would have been lost.
This much is at stake. The world will not benefit, now or in the future, from an independent Scotland. But there’s nothing it can do about it, but wait to see what choice that nation makes.

This much is at stake. The world will not benefit, now or in the future, from an independent Scotland. But there’s nothing it can do about it, but wait to see what choice that nation makes.

from MacroScope:

An almighty gamble

Britain's Prime Minister David Cameron leaves Downing Street in London

Having woken up to the very real possibility of Scotland going it alone, the leaders of Britain’s main parties have scrapped their parliamentary business and headed north to campaign in what amounts to a huge gamble.

The “No” campaign has been criticized for many things – being too negative (though no is negative by definition), being too aloof, failing to address the hole’s in Alex Salmond’s manifesto. The question is whether it is too late to do anything about it. It is risky to deploy Prime Minister David Cameron who, by his own admission, is not catnip to the Scots.

from The Great Debate:

Scotland can expect one heckuva hangover after independence vote – yes or no

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Scotland will soon be suffering from a monumental hangover. There will be a lot of hurt heads, a lot of tears and, without a doubt, an immense amount of anger that will last who knows how long -- weeks, months, maybe even years -- if Alex Salmond’s dream of independence comes true.

The Sept. 18 referendum on independence is quite unlike any other United Kingdom election I have witnessed. It is much more visceral, with so many complicated currents swirling beneath one simple question: Is Scotland in Britain or out of it? There are a lot of people going with their gut instinct, and you sense that if the outcome goes against them, the simmering rage will finally bubble over.

from MacroScope:

Too close to call

Cakes are seen at a tea-party organised by members of the group 'English Scots for YES' near Berwick-upon-Tweed on the border between England and Scotland

A second opinion poll in three days has put the Scottish independence vote as too close to call.

TNS gave the “No” vote 39 percent  support and “Yes” 38. Its last poll in late July gave the “No” campaign a 13-point lead. Taking only those who are certain to vote, the two camps are tied at 41 percent.

from MacroScope:

10 days to define the United Kingdom

The Flag of Scotland, the Saltire, blows in the wind near Berwick-upon-Tweed on the border between England and Scotland

The earthquake may be about to happen. Over the weekend the first opinion poll putting the independence campaign ahead landed with a resounding thump.

That prompted the UK government to rush forward to this week plans to spell out what further devolved powers Edinburgh would get if the Scots vote to stay on Sept. 18.

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