How Sovereign will Scotland Actually Be?

 POST REFERENDUM UPDATE

So, the Scottish independence referendum wasn't quite the nail-biter than everyone thought it might be. It was exciting for a while, but the "No" side walked away with a resounding victory (55% No, 44% Yes). However, it could turn out to be a a phyric victory for the "No" side if many of the 11th hour Constitutional reforms promised my Westminster are carried out. In effect, the UK would broadly become a much more devolved, federal-like constitutional monarchy. Stay tuned. Some of what is being bandied about could take a long time, possibly giving pause to some Scots in the "No" camps to re-think their decision.

However, one of the most interesting revelations to flow from the Referendum is actually in the minutes of this past summer's deliberations by the Bank of England's Financial Policy Committee. Central banks have become much more transparent in recent years, and this window in to the BOE's preparations for the financial uncertainty that would ensue after a "Yes" vote are particularly interesting. In short, the BOE would have flooded the UK with signifcant liquidity and strongly signalled to everyone that while a political decision had been made, there was no reason to panic since the negotiations to separate Scottish financial institutions from those in the rest of the UK would be years in the making. In other words, Keep Calm, Carry On!

Reports from central banks are usually a good cure for insomnia, but this one is worth a look (Financial Policy Committee Report, September 26, 2014).

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There's a little referendum taking place in Scotland on September 18 with huge implications for the future of Great Britain and the European Union. If you haven't paid attention yet, you should!

As the vote has neared, public opinion polling suggests it will be a white-knuckle affair. For a rundown of the debate over Scottish independence, you can do no better than the September 13 issue of The Economist. But what intrigues me most about this debate are the arguments over the financial arrangements that might be negotiated (or not) between a newly independent Scotland and what remains of the United Kingdom. As part of the debate, Scottish-based financial institutions like the Royal Bank of Scotland, have made it know they will likely pull up stakes and move their headquarters to London; makes sense given London's position in global finance. Yet, even more interesting is the debate over what currency the Scots will use in the event of an independence vote?

Perfect Foreign Policy Storm....

The past few months have not been kind to the Obama Administration. War (or what ever it is) in Ukraine, a dangerous Ebola outbreak that the World Health Organization says could infect 200,000 by the end of the year, and the alarming advance of ISIS through parts of the Middle East, ought to be more than enough to keep the President awake at night.

President Obama has certainly endured his share of criticism about his handling of foreign policy, in my view a lot of it justified. Recent events have ignited a firestorm of commentary, a lot of it more pointed and informed than anything I've pointed out. Last week, President Obama was at pains to emphasize that the campaign against ISIS would NOT involve American boots on the ground. Yet, the very next day, the CIA's assessment of ISIS's capabilities was revised significantly. ISIS is no rag-tag militia force. They are large (now estimated at 20-25K) well-financed, organized, and equipped, thanks in-part to the speed with which the Iraqi Army melted away from their US-supplied equipment. In testimony before the Senate Armed Services Committee today on Capitol Hill, the Chairman of the Joint Chiefs had to conceded that US boots could end up in the middle of some combat, even if only as a result of their advisory role.

The President's speech to the nation (in prime time) gave the impression that ISIS was a significant threat and that the ultimate goal of the US was to destroy ISIS; not just contain or degrade, but destroy. That's a lofty (unrealistic?) objective for military action restricted to the air.

The debate over whether Obama took his eye off the ball in Iraq, didn't intervene when he could have made a difference in Syria, or has had the US in retreat from foreign affairs generally will go on. However, as I think about the situation with ISIS in Iraq and Syria in particular, I keep coming back to an article that appeared in Foreign Affairs in February 2002 by Michael Scott Doran entitled "Someone Else's Civil War." It is a fascinating piece that walks through a centuries long struggle for political Islam's heart and soul. Doran's focus at the time was Osama Bin Laden and Al-Qaeda, but the piece can still be read with relevance today since ISIS is largely an even more radical off-shoot of Al-Qaeda. The gist of Doran's argument is that Bin-Laden attacked the United States on 9/11 in a shift of tactics in a broader effort to unite a larger cross section of the Islamic world against a common enemy; America. However, their real target was the authoritarian regimes dominating the region.

Gruesome and as ISIS's video beheadings of westerners have been, I am struck by the way in which they have shifted public opinion and motivated the Obama Administration to action in a region the President clearly wanted to be done with. Moreover, I have seen no explicit claim by ISIS that it is at war with the west. Indeed, their main fight has been with the Assad regime in Syria and they seem mainly to want a new Caliphate established anchored in and around Iraq.

I'm not saying the US should stand by and watch from afar while a centuries-long civil war grinds on. Moreover, the United States doesn't have a great track record of getting it right in a complex part of the world it seems to understand in the vaguest of terms. However, I am also among those stooges that thinks the US is indispensable in any effort to set things right. My main concern, like Doran's, is that the President isn't being straight with the American public about the level of engagement that actually be required to make a substantive difference. As Niall Ferguson so clearly argued in his 2004 book Colossus, the United States doesn't have the stomach for long-term overseas engagement, and as a result hasn't been very good at it. America got tired of the projects in Iraq and Afghanistan. It will be interesting to see whether America's stomach for engaging ISIS over the long-haul will become queasy too.