UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 643-iii

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

FOREIGN AFFAIRS COMMITTEE

THE FOREIGN POLICY IMPLICATIONS OF AND FOR A SEPARATE SCOTLAND

DR JULIET KAARBO and CATARINA TULLY

RT HON THE LORD JAY OF EWELME

SIR JAMES CRAIG GCMG and ANTHONY LAYDEN CMG

Evidence heard in Public

Questions 155 - 222

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Oral Evidence

Taken before the Foreign Affairs Committee

on Tuesday 15 January 2013

Members present:

Mike Gapes (Chair)

Mr Bob Ainsworth

Mr John Baron

Sir Menzies Campbell

Mark Hendrick

Andrew Rosindell

Mr Frank Roy

Sir John Stanley

Rory Stewart

In the absence of the Chair, Mike Gapes was called to the Chair.

Examination of Witnesses

Witnesses: Dr Juliet Kaarbo, Senior Lecturer in International Relations, University of Edinburgh, and Catarina Tully, Director, From Over Here, gave evidence.

Q155 Chair: Good afternoon and welcome to the third of our public evidence sessions in our inquiry on the foreign policy implications of and for a separate Scotland. This afternoon we have three panels of witnesses, and I am pleased to welcome the first: Dr Juliet Kaarbo and Catarina Tully. May I ask you briefly to introduce yourselves for the record?

Dr Kaarbo: I am Juliet Kaarbo, a senior lecturer at the University of Edinburgh. My areas of specialty are foreign policy decision making and what explains the foreign policy of big and small states.

Catarina Tully: Good afternoon. My name is Cat Tully. I used to be strategy project director in the Foreign Office strategy unit, and now I am an independent consultant working on national strategy and foreign policy with various different countries around the world.

Q156 Chair: Thank you very much.

May I begin by asking you to assess how the Scottish Government-the SNP-are developing their foreign policy? Would you say that they have yet got a coherent foreign policy for an independent Scotland? How much detail do you think there will be on that before the referendum takes place next year?

Catarina Tully: I think it is relatively well developed for a small-state foreign policy. Something that is important to identify is that they have indicated that they are going to have a clear small-state foreign policy focusing on economic intentions and using soft power. They are quite clear about the allies they are going to focus on: the close partners they have got at the moment within the EU, south Asia, China, India and the US and Canada. Then they are going to focus, perhaps, slightly more on the BRICs, Australia and the Gulf states, they say for economic purposes, and then there is a set of alliances they will focus on around the Nordic region.

In terms of displaying the typical characteristics of a small-state foreign policy, that is quite clearly laid out. Potential challenges could be made against how realistic they are being around three areas. First, there is the EU membership issue, in particular regarding process, Schengen and the euro-the opt-outs. I think that you have gone through that a lot. From what I have discussed with colleagues on the continent, there is good cause to say that automaticity is not the case and it will probably take a period of three to perhaps five years for membership to occur.

The second area where more exploration needs to be done is around the security nexus of Trident, intelligence co-operation, defence and border issues. The third big issue, of course, is around the transition costs, because what the SNP has laid out can be seen as a plausible steady-state foreign policy, but getting there is difficult. I say it is plausible because models that can be compared effectively with Scotland are Finland and Ireland. Both of them have more or less the same GDP and population. A comparison with Austria and Sweden is pushing it a bit because, although they have the same GDP per capita, they have twice the population and scale really matters in foreign policy budgets-there are a lot of economies of scale. Norway and Denmark are not comparators because of their much larger economies.

Dr Kaarbo: I guess I think that the SNP’s foreign policy programme at this point is as coherent as I would expect it to be. It is not a state yet, so it has not had to make some of the hard choices that states have to make. It is also in a political campaign, and political actors often are not specific so that they do not lose votes on specific issues. If the Scottish public pushes the SNP and says, "We need to know more before we vote in the referendum," that will be when the SNP will be more likely to get more specific.

I am also not surprised by the vagueness, in some ways, of the programme, because lots of states’ goals are vague. Almost all states want peace, prosperity and the pursuit of some kinds of principles. When that becomes coherent and specific is when they have to choose and commit resources in pursuit of those.

Q157 Chair: You referred, Ms Tully, to the small-state policy. What constraints does a small state face that a larger state does not when formulating a policy?

Catarina Tully: I divide constraints conceptually into three: external-environmental; to do with assets and resources; and to do with agency and sovereignty. I think that a small state has got its environment set for it a lot of the time. It has to be an environment taker, not an environment shaper. Its resources are very obviously much smaller than a large state, and its room for manoeuvre in terms of its choices-the third category-is shaped a lot more by its alliances. For example, when Scotland takes on the acquis-I am talking about the European foreign policy acquis-it will have a lot less room to manoeuvre against some of those lines than if it was a larger state. However, I guess that the SNP is saying that, certainly within that third category of agency and capability, independence gives it much more manoeuvre than what it has now.

Dr Kaarbo: I agree with all those constraints. Small states, by definition, have a resource disadvantage-they have fewer economic resources, military resources and information resources. There are internal constraints, as the public, Parliament and the bureaucracy provide constraints on small states just as much as big states. There are things that small states do fairly routinely-not all of them to success-to try to punch above their weight, so to speak. I will be happy to talk about that, if you want.

Q158 Chair: Perhaps we can come on to that.

Before I bring my colleagues in, can I ask you a further question? From the rhetorical statements and the official statements, it would appear that the intention is to have a very different type of foreign policy from that of the UK today. What will that entail in reality? Is this just rhetoric? In practice, given that Scotland intends to remain within the European Union, and will be involved in various international organisations, will the policy be very different in reality, or is this just a rhetorical position as part of the positioning now?

Dr Kaarbo: I think rhetoric is important, and I think as long as the SNP would be in control of an independent Scotland, especially in the early times, there would need to be a divergence, for political reasons, from the rest of the UK to justify independence-to justify why they went through this vote. That said, there are a lot of common interests that Scotland and the rest of the UK would share, so there would be some convergence of their foreign policies as well.

From what the SNP has said, I think they are going to remain in NATO, but of course they desire to be a non-nuclear state and possibly a nuclear-free zone-there is a case of divergence if that develops that way. There are implications that if Scotland had been free in 2003, it might not have joined in the coalition of the willing and supported the US in Iraq. That is hindsight-we don’t know-but there might be a difference in terms of engagement and participating in certain interventions. I think it would be a liberal, open-trading state, embracing interdependence, and that would be very similar to UK foreign policy now.

Catarina Tully: I think that there would be two differences compared with the UK: one of style and the vision of itself; and a second in terms of particular policy areas. Scotland would be very different in that it would not be a global policeman-it would not be investing in global goods nor acting as a global keeper of the commons, which is what the UK does. It would have typical small-state diplomacy, which is very narrowly focused on national strategic interests.

Where those national strategic interests may be different on a foreign policy level from those of the UK will possibly be with nuclear, although that one really has to be thought through carefully because of the intel side of things, as well as with migration and education, and potentially some bits on trade. Relationships with the energy markets are going to be entirely different, and then there is fisheries. Those are probably areas where this is going to be different from the UK, but I would say that it is going to face some limiting factors, not just because it is probably going to have to engage in working arrangements with the UK, which might constrain its choices, but also because of the foreign policy EU acquis.

Finally, if it is so heavily focused on economic diplomacy, which it says it is, its potential for pushing an ethical foreign policy is, potentially, going to be significantly compromised. Smaller states find it more difficult than big countries to balance trade against the ethical foreign policy side.

Q159 Sir John Stanley: Could you both highlight for us points in the SNP’s current foreign policy that are in conflict with the European Union’s common foreign and security policy, and the common positions taken up under the CFSP?

Catarina Tully: I am not sighted on this particular issue-nothing springs to mind. I would, again, question issues around the extent to which Scotland is prepared to pay its own way on defence and security issues. That would be the area I would focus on. Is it going to be a free rider, or is it actually going to be a fair contributor to military operations, NATO and so on? I don’t know if there is anything else.

Dr Kaarbo: I don’t have a specific answer on that either-it is beyond my expertise. I guess that the only way I would tackle it would be to say that the SNP talks a lot about following the Nordic model of foreign policy, and by that I think it means a pro-European, pro-common foreign policy-as much as it can-kind of model. I would question all the aspects of applying a Nordic model to Scotland, but if we take them at that word, I would think that there would not be much conflict.

Q160 Mr Ainsworth: I was quite struck by a phrase that Catarina used that I had not heard before: that small states have to be environment takers not shapers. Surely that would apply to all international institutions to a degree, and it would apply to Scotland and the rest of the United Kingdom to a degree. If we take the European Union as an example, we are both going to be diminished in terms of our ability to shape European policy, are we not? The rest of the United Kingdom would struggle to stay at the top table, even if it wanted to, and Scotland certainly would not be there at all.

Catarina Tully: Could you just clarify that point, Mr Ainsworth?

Mr Ainsworth: European policy is shaped overwhelmingly by the large states. Yes, the smaller states have their say, but this is led by Germany and France. Britain could play a far bigger role if she chose to. However, post-separation, the rest of the United Kingdom would struggle to stay in that same relationship, if she chose to, with France and Germany, and Scotland simply would have very little influence at all, would she not?

Catarina Tully: In terms of questions and debates about UK influence, or rump UK influence, in Europe, the name of the game, and of the debate-listening to my colleagues internationally and in other EU member states-is not really independence but the UK’s attitude to the EU. That trumps all concerns about the UK reducing in size by 8% of its population, 30% of its land mass, and between 8% and 10% of its GDP. Remember, depending on how you calculate how much Scotland gets, that would bring the UK down only to around the Italian level-it would be slightly lower in terms of population figures, and more or less the same size in terms of GDP.

Q161 Mr Ainsworth: And what about Scotland’s ability to shape?

Catarina Tully: It would be able to work with partners to be a constructive operator in Europe, but it would be very much expected-this will be part of the whole admission process-to go with the trend of the acquis, whether in foreign or domestic policy areas.

Q162 Mr Roy: Can I take you back, Dr Kaarbo, to something you said earlier in relation to specifics about foreign policy in an independent Scotland? Is it not the case that before I and my constituents in Motherwell and Wishaw cast our votes in the referendum, we will be entitled to know the specifics of an independent Scotland’s foreign policy?

Dr Kaarbo: I think you will be, which was why I said that the SNP will be more likely to respond to calls for specifics from voters and constituents-particularly their own constituents, or the middle-of-the-road undecideds on independence-than from the rest of the UK or someone else in the international community. I was trying to portray it as a natural political process to be vague at first, especially since it has not had to make the decisions. It should, in a democratic process, be responsive to those requests.

Q163 Mr Roy: Would an independent Scotland and her foreign policy be dependent on her larger neighbour-the rest of the UK?

Dr Kaarbo: Absolutely. There are things that sovereignty gives you. There are things that Scotland would be able to do as an independent country that it cannot do now: it could vote in international organisations if it belonged to them-I assume it would-and it could decide which treaties to support and which ones not to. There is a whole range of things it could do, but all those decisions would be made subject to the constraints that we were talking about earlier. One of the big constraints is a next-door neighbour that is bigger and with which you are interdependent economically. Scotland would certainly have to take care and judge how rest of UK-Scotland relationships would affect those choices.

Q164 Mr Roy: Are you saying that the choices would be limited depending on the posture of the rest of the UK?

Dr Kaarbo: Absolutely. It does not mean that those could be determined by the rest of the UK. Small states often try to change those constraints or work around them, or sometimes they ignore them at their own peril, but that would certainly influence those choices.

Q165 Mr Roy: On trade links between Scotland and the rest of the UK, would an independent Scotland’s foreign policy ever be truly independent, given that trading?

Dr Kaarbo: I do not think any state’s foreign policy is truly independent in an interdependent globalised world. Are small states more constrained than big states? Absolutely. But there are lots of small states within the EU that are highly interdependent-not only economically, but in terms of security and institutionally within the EU framework-and you would not deny that they have a foreign policy and that they make choices.

Q166 Mr Roy: And therefore an independent Scotland, in constructing a foreign policy, would need very much to bear in mind that relationship with the rest of the United Kingdom. It means that it is not a truly independent foreign policy, if you have to look at a big shadow beside you.

Dr Kaarbo: That is true but, again, I would say that no foreign policy is truly independent. All states have to consider their interdependent connections when they make decisions.

Q167 Mr Roy: Given that Scotland would, according to the Scottish Government, seek to have a very different type of foreign policy from that of the rest of the United Kingdom, would that pose any problems for the rest of the United Kingdom? In other words, would our foreign policy in Scotland pose a problem for the rest of my colleagues?

Catarina Tully: It depends on the response of the UK. In particular, independence will result in all sorts of questions being asked by our allies. Will the rest of the UK turn inwardly, rather than showing the global role and leadership that it has? In particular, how will defence, especially in relation to conventional and nuclear posture, be affected in the region? Those are the two major preoccupations of the United States in how independence may affect the UK. Thirdly, how will independence affect the dynamics of the EU?

Q168 Mark Hendrick: When it comes to representation in international organisations, how can a potentially small state such as Scotland make its voice heard and have any influence on allies in the EU or NATO, for example, to achieve its goals? If Scotland has goals, what would they be?

Dr Kaarbo: Let me put aside what those goals would be, because I think we touched on that earlier. I am happy to come back to that, but let me focus on how small states try to realise their goals. Again, they are more constrained, because they are at a resource disadvantage, but they can sometimes have disproportionate influence in international relations. There are several ways that they can do that. Being part of international organisations is key for small states because it gives them information networks, a place to co-ordinate collective action and a diplomatic space. That is key.

More and more small states are partnering non-governmental organisations to help them to gather information and intelligence, and to advocate policies. Small states, if they are lucky enough to establish an economic niche, can use that to their advantage. Even though they are a small economy, if they are high technology, that gives them more influence.

Small states also usually practise niche diplomacy, so they specialise and do not try to cover the range of global issues that large states do-they concentrate their fewer resources on specific areas. They can also do things that are innovative in terms of leadership and institutions. At one time, the Netherlands had a Foreign Ministry and a separate Ministry for Developmental Affairs, and someone asked the Prime Minister, "Why does a small state like the Netherlands essentially have two Foreign Ministries?" The Prime Minister answered, "Because we are so small and the world is so big; we have to do extra to cover all of it."

Soft power is one way that small states punch above their weight within or outside international organisations. The way small states use soft power is often different from the way large states use it. They try to capitalise on their weakness and their fewer resources. They will use the fact that they are not a threat or that they are seen as not having as many hidden agendas as big states. They often play the role of mediators to raise the profile of their state. Norway in the Arab-Israeli conflict, and Costa Rica in the Central American conflicts of the ’80s, did that. They go for big leadership positions in international organisations: Ghana and South Korea in the UN have been recent leadership positions. Because they are seen as more credible or legitimate, they can house international organisations. The Hague, Brussels or Geneva can house these international organisations because their states are not seen as big.

Then there are their moral appeals when they try to frame issues in terms of fundamental values. Big states do that, too, but they are often not believed when they do so. Small states have a little more effectiveness when they use moral appeals in their application of soft power.

Q169 Mark Hendrick: So are you saying that small states are more effective than larger states when it comes to international organisations.

Dr Kaarbo: No; they can be. They have tools, and some of the tools work for them better than for large states. Ask any small state and it will tell you that large states still tend to rule the day in international relations.

Catarina Tully: In terms of soft power and helping a country punch above its weight, this is really the case in economic diplomacy and foreign policy. When it comes to international organisations, there are certainly ways in which smaller states can play it. Playing the role of honest broker is one of them, although let us remember that this is becoming a crowded field. On balance, in perspective, they basically choose one or two issues on which they show this global leadership, and everywhere else they have to go with the consensus of the international organisation.

As you said, Juliet, Costa Rica is a great example with the arms trade treaty. Costa Rica, Finland and Ireland are the three comparators that we should be looking at for Scotland. On the whole, it does not make up for your loss of hard power. Apart from taking over the presidency of some international organisations, which can also be a benefit, I would not overplay this one too much.

Q170 Mark Hendrick: Is not that reliance on soft power an acceptance that Scotland would have lost a lot of power by leaving the UK?

Dr Kaarbo: It would have lost-it depends on how you think of it-the objective material powers that it had as part of the UK. It would be a small resource-dependent, resource-small country. In terms of soft power, it depends on how it plays that-that is yet to be seen. As Cat mentioned, it is a crowded field out there, so it has to get in the queue to be leader of the UN. It would take a long time and it would have to build up that credibility, but a clever small state can sometimes get there.

Q171 Mark Hendrick: In terms of soft power projection, we think about the UK’s projection through the BBC, for example, or the British Council. Are we going to see a Scottish Council or a separate Scotland BBC? I know there is a region at the moment, but will it genuinely be a Scottish BBC?

Dr Kaarbo: I cannot answer the BBC question, but I think there would be a soft power element, because in some ways that is a cheaper way to project your soft power.

Q172 Mark Hendrick: But how would it differ from the remainder of the UK?

Dr Kaarbo: It depends on what it chooses to focus on. It might focus on moral, compassionate development assistance. Scotland’s role in promoting development assistance seems to be something that the SNP is saying. I don’t know what it would be.

Q173 Mark Hendrick: If you look at the British Council, it does a lot on English language teaching and teaches a lot about English culture. What is there to differentiate it internationally from what is on offer from the British Council?

Catarina Tully: From what I can understand, the four soft power arms that the SNP discusses, which are around culture, history, education and something else that I cannot remember-I don’t think it is sports-are very much driven by and focused on economic outcomes. I would expect the messages to be different. They would be very much about, "Come and invest in and visit Scotland. This is what Scotland’s about."

I asked a couple of brand experts a week ago what they would suggest Scotland could do in terms of a strategic soft power approach, and that was pretty much what it is doing at the moment: investing all its money in institutions such as SDI to get out, "This is what Scotland’s about. This is our history; this is our culture." The other thing is choosing one or two global issues where you show that you are a good global citizen, and it seems to have done climate justice fairly successfully. My colleague said to me that climate change is also a crowded field, so perhaps it should have gone for something else, but it seems to have done quite well on that so far.

Q174 Mark Hendrick: Do you think that Scotland’s independence would detract from the UK’s soft powers?

Dr Kaarbo: No, I do not think so. I think that the soft power of the UK has a long historical base and record. It depends on how the UK plays it, I think. If the process of separation is co-operative, and if Scotland and the UK take care of that business and the world sees that they are doing that and moving on, I do not see a zero-sum game in terms of Scotland and the rest of the UK on soft power.

Q175 Mr Roy: May I take you back to comparisons on soft power? Costa Rica is one of the models, but is it not the case that Costa Rica does not have an army? By definition, if we use that as a model for an independent Scotland, we should get rid of the Scottish army so that we have a direct comparison with Costa Rica.

Dr Kaarbo: The lack of an army for Costa Rica is a classic example of turning a weakness into an advantage-it is seen as safer-but the decision to ban the army in Costa Rica was more about internal politics and preventing coups at the time. It has marketed it later internationally as soft power, but I do not see the comparison.

Catarina Tully: For the record, I did not suggest that Scotland should follow that model in the security and defence area. I meant more in the area of soft power. Apologies for not making that clear.

Q176 Mr Baron: I, for one, subscribe to the view that winning the story is going to be as important as winning the conflict. I believe that soft power is going to become increasingly important.

Looking at Scotland’s influence as a hard power issue, it could be that it is very much forced into the soft power arrangement. Let’s take the EU, for example. Traditionally, voting within the EU has probably favoured the smaller states, but changes in legislation in 2014 will mean that decisions will be passed once the countries voting can manage to collect two thirds of the population, which is going to shift things quite significantly towards larger states. Do you have a strong view on that? Has the SNP referred to that change in the voting structure within the EU in a couple of years’ time? It will coincide with the referendum itself. Certainly the FCO thinks it is reasonably significant.

Catarina Tully: I would say that all matters to do with EU membership are significant: issues to do with the length of the negotiation and membership processes, and the timeline. I do believe-again hearing from colleagues from the EU-that the euro and opt-outs will not be possible. What will the timelines be to go into Schengen or adopt the euro? Those issues are probably even more existential and the SNP needs to address them more than issues around representation, although those are also extremely important.

Q177 Mr Baron: Can I come back to you on that? It is important that this is taken on board by the SNP and that there is a full and frank debate, because it is quite a significant change. Suddenly, to get a decision passed, you need two thirds of the population as well as 55% of the member states. That is a significant change. For example, the Scotch Whisky Association has argued that "Effective and influential representation on the EU Trade Policy Committee and Market Access Advisory Committee, for example, is key to progressing market access problems confronting Scotch Whisky." Is it not going to become more difficult if it is outside the UK, assuming it gains membership of the EU, of course, when punching for its cause as a much smaller state?

Dr Kaarbo: I am not an expert in EU voting matters. The work that I do know on small states in the EU shows that influence is not necessarily in the exact vote; it is the chairing of the Committees and the leadership positions that small states can take. It is the negotiation and the networking. As the rules change, that might influence the ability of a small state such as Scotland to pursue its goals in the EU. However, some in Scotland may see that their goals are more met within that larger EU anyway, not within the UK. They would have a voice and representation there, rather than through the UK, and that is the choice.

Q178 Mr Baron: I might be wrong, but I am certainly picking up from the Scotch Whisky Association-no doubt it will write to me if I am wrong-that it is happy with the representation within the UK at the moment. It is almost saying that we are achieving our goals at the moment. The inference from its written submissions is that it is somewhat concerned that if Scotland goes its separate way, it might lose a powerful voice at the top table. Is that an unfair interpretation?

Dr Kaarbo: That is the association’s interpretation, so it is fair, and I am sure that it has looked at the issues.

Q179 Mr Baron: But do you agree with it?

Dr Kaarbo: There may be winners and losers in Scotland. Some may be represented better in an independent Scotland, and some may lose out.

Q180 Mr Baron: Okay. If I may, I want to ask a quick final question. I am trying to draw you out, but I am not getting much. I would like your opinion on the evidence before us, and I am trying to put that evidence to you. Let me put it another way. Can you think of a small country within the EU that has a particular specialism, or that draws particular prosperity from an industry, and that punches above its weight in promoting that industry’s interests to the benefit of that small country?

Dr Kaarbo: I do not know its conclusions, but I know there is a piece of research that looks at the vodka industry in Poland. That may be a comparison with whisky-

Chair: That is not a small country, though

Mr Baron: That is slightly different; I would not classify Poland as a small country.

Dr Kaarbo: It used that case to show-

Q181 Mr Baron: Do you see the point I am trying to make? I have tried to draw you out, but perhaps we should move on. I will leave it there.

Catarina Tully: May I come in on that? This is an interesting conversation, because it is not just about Scotland and the UK; it is about global trends in the wider world. Our concept of the single sovereign state is being deconstructed, power is going up and down, and identity is becoming more important for citizens with multiple identities, and they are becoming more frustrated with the ineffectiveness of nation states in addressing some of the problems facing them. This is a broad context, so when we are looking at what is happening here, it is not just about the UK and Scotland; it is also about what is happening in Spain and Germany. Perhaps we need to re-evaluate what being an independent state and having state craft in an interdependent 21st century is all about. Perhaps we need to ask what is the role of the nation state and, instead of keeping foreign policy at that national level, ask what it means to devolve that to other non-state actors at a community and regional level. We can look at examples such as Switzerland and other countries, the German Länder, and Quebec and its cultural diplomacy, to see how that can be done. In terms of addressing your issues of how smaller countries get representation at Brussels, the Länder-for example, Bavaria and Baden Wurttenberg in Germany-have quite large representations in Brussels, with 20, 30 or 40 people. It is interesting, and I see some solution sets there.

Mr Baron: Yes, I take your point about Bavaria and BMW and all the rest of it, but they are part of Germany. The German political machine bangs the table and we know that the Germans are listened to regarding the car industry, just as the French are regarding agriculture, and we hope that the Brits are regarding our industries, including the financial services sector. That does not take away the fact that small countries seem to struggle in pushing the industries that they are strong in within the bureaucracy of the EU, and the Scotch Whisky Association seems to confirm that. I was just interested in your views.

Q182 Chair: I know that this is not the main focus of this discussion, but we have inevitably got on to it. Ms Tully, you referred to Schengen in one of your answers, and I would like to explore your views-we have heard about this from other witnesses. The assumption from what both of you have said is that, after a certain period, Scotland within the EU would have to join Schengen and the euro, because they are the applicable aspects of the acquis now and the previous opt-out arrangements that the UK and Denmark have, and the Irish Republic has with regard to Schengen, would not be applicable. Clearly, if Scotland joins Schengen, it has enormous implications in relation to the rest of the UK-people travelling to London via Glasgow, for example-and all kinds of implications for the Irish Republic as well. Is there any real consideration of what those implications are? Has anybody thought through what that means?

Dr Kaarbo: I do not have an answer on the last part. I think there would be considerable implications and they should be thought through. Scotland’s position with Schengen would be in a bundle of different things that need to be negotiated. Although I have heard some of the same things coming from Europe about there being no opt-outs or special conditions for Scotland, it is all up to the local negotiation that would go forward. I don’t think we know at this point if Scotland would be in Schengen. That would be part of a big bundle that will be negotiated between the rest of the UK, Scotland and the EU, if there is an independent Scotland.

Q183 Chair: Are you saying that it would be possible-I find it quite remarkable-that an independent Scotland would be in a common travel area with the Irish Republic and the rest of the United Kingdom, but not with the rest of the European Union?

Dr Kaarbo: I don’t know the chances of one or the other. I can’t help you on that.

Q184 Chair: That is interesting. Ms Tully, do you have anything to add?

Catarina Tully: Your previous witnesses, David Omand and Richard Mottram, given their experience, explored this issue far better than I ever can. From the signals that we are getting, I would say that unless the UK exports a domestic problem internationally, EU member states will neither veto nor stop Scotland, and nor will they give Scotland preferential treatment because of their own domestic issues. That is a very important issue. I cannot see how having a timeline-no matter how far that timeline may go into the future-for joining the euro or Schengen will not be an absolutely core part of membership.

Chair: Thank you to you both for coming. It has been a very valuable session. We will take a three-minute break before we hear from our next witness.

Examination of Witness

Witness: Rt Hon the Lord Jay of Ewelme, former Permanent Under Secretary, Foreign and Commonwealth Office, gave evidence.

Q185 Chair: May I welcome Lord Jay? You have been before our Committee many times in the past. I can remember very well when I was the Chairman of the Committee and you were the permanent secretary. It is good to see you back before the Foreign Affairs Committee again.

Lord Jay of Ewelme: Thank you, Chair. I remember it well, too.

Q186 Chair: You heard the end of the previous session; I think we will go straight into this next session.

May I focus on the implications of Scottish separatism for the Foreign and Commonwealth Office? As you are well aware, we have had a series of quite difficult budget settlements for the FCO over recent years, both under the previous Government and under this Government. We know that in the previous Parliament, we were, in the words of the Select Committee, down to the bones-we did not have much flesh left. If there was Scottish independence and that led to cuts in the total budget available to the Foreign and Commonwealth Office, what kind of impact would you expect that to have? Where would it be most acutely felt?

Lord Jay of Ewelme: The first thing is to go back one step. I assume that between now and the referendum, and in the couple of years or so after a referendum-during the transition period to full independence-the burden on the Foreign Office will increase rather than decrease. There will be a lot of discussion in London, Edinburgh and Brussels, in NATO and in the EU and in other countries, about the implications of independence. I think that that would show an increase rather than a decrease. We are probably talking about 2016 onwards.

In the spending round in the middle of the next Parliament, I can see the Treasury saying, "The GDP has gone down by 8% and the number of people whom you represent overseas has gone down by 7%, so we should have a further 7% or 8% cut in the budget." That, of course, would have to be set off against whatever else was going on in the world, so it would not just be that issue before the Treasury and the Foreign Office.

Further significant cuts in the FCO’s budget would make it difficult for the Foreign Office to continue to carry out the sorts of services that it carries out with the range of posts that it now has across the world. That seems to be the most difficult issue. How do you maintain with a smaller budget a spread of posts with the quality and the number of people that you need to do the job that needs to be done, with the security that you need to have in order to be able to do that? I think that that would be very difficult.

Q187 Mr Baron: May I pursue the line of questioning that I was using with our previous guests? It is what I call the Scottish whisky question. We talk about hard power in the EU. The Scottish whisky industry is obviously very important, with something like £4 billion-worth of exports-80% of Scotland’s food and drinks exports. We are not talking about a small business here; it is terribly important to Scotland.

The Scotch Whisky Association seems to be satisfied with FCO support, but voting changes on the continent, in the EU, will give greater emphasis to the larger countries. From 2014, votes will be passed provided that you have countries representing 65% of the population; 55% of the member states but two-thirds of the population. I sense concern from the Scotch Whisky Association over that, but what is your take? Is this an issue that needs to be addressed openly and frankly as part of the debate as we head into a referendum?

Lord Jay of Ewelme: Any purely Scottish question, such as the future of the Scotch Whisky Association or issues that arise over Scotch whisky, is, at the moment, represented by the United Kingdom with its votes in the European Union. That is a more effective way of representing those interests of Scotland than would be the case if it were done by an independent Scotland with an inevitably much smaller proportion of votes. That seems to be the case.

If I were the owner of Bushmills, I would be quite keen on the prospect of Scottish independence, because it would mean that a large number of British embassies around the world would switch their tipple from Scotch whisky to Bushmills. Ever since I can remember, having been a commercial counsellor in the 1980s, the promotion of British goods in the widest sense has been a hugely important part of diplomatic life and of an embassy’s life, and that benefits all parts of the United Kingdom.

Q188 Mr Baron: Can I drill down a bit further? Where there is a very prosperous industry or business in a smaller state-perhaps disproportionate to its economy, but certainly disproportionately large compared with larger member states-can you think of any other example of a small state within the EU punching above its weight with regard to the particular industry that is very important to it? The best that our two previous guests could come up with was vodka and Poland, but Poland is not a small country.

Lord Jay of Ewelme: The Portuguese were pretty vociferous in their defence of port during the entry negotiations and since then. I do not know whether you would call that a smaller state-it is smaller than Poland-but I think that I would regard that as one. That is one that comes immediately to mind.

Q189 Mr Baron: What is your assessment of the Scotch Whisky Association’s perhaps inferred concern about Scotland going independent? Is it a valid concern as far as you are concerned?

Lord Jay of Ewelme: What I cannot say, obviously, is how an independent Scotland would promote and defend the Scotch whisky industry-I imagine that it would be a hugely important part of its job-but I think that the Scotch Whisky Association gets a real impetus behind what British diplomacy in Brussels and around the world does on its behalf. If I were it, I would be a bit worried about losing all of that, to be honest.

Q190 Sir Menzies Campbell: To go rather more domestically, what sort of diplomatic presence, if any, would the Government of the rest of the United Kingdom feel necessary to have in Edinburgh if Scotland were to be independent?

Lord Jay of Ewelme: I imagine that there would need to be British representation in Edinburgh. Again, in the transitional period, I imagine that there would be some sort of British representative office. I would have thought that after independence there would be a high commission there-assuming that Scotland joins the Commonwealth-that would be able to deal day to day with the sort of things that need to be dealt with day to day and can be dealt with more easily than over the telephone.

I would not have thought that you needed the sort of full-blown embassy that you need elsewhere, because communications by telephone and in other ways are so strong, but I imagine that there would be a British high commission in Edinburgh and a Scottish high commission in London.

Q191 Sir Menzies Campbell: Would there be consular services in Edinburgh for those who wanted to go to London if, for example, Scotland was part of Schengen and they required additional authority, as it were, to cross the border?

Lord Jay of Ewelme: I personally find it very difficult to see circumstances in which the EU would so operate that a Schengen border was erected between Scotland and England. I just think that that seems so complicated and difficult that some sort of arrangement would be found to prevent that from happening, but I do not know exactly what that would be.

Q192 Sir Menzies Campbell: Maybe I can put it this way, Lord Jay-it is a matter of some doubt as to precisely what that arrangement might be.

Lord Jay of Ewelme: Yes, it is. I do not know whether there would need to be a British consular presence in parts of Scotland. The presumption would be that if a British citizen got into trouble in the northern islands, he would need to go to-it seems slightly far fetched somehow.

Q193 Sir Menzies Campbell: He would go to the RUK high commission and ask for assistance. Maybe that is one of the most powerful arguments against separation that we have heard.

What about the number of posts, for example, that an independent Scotland would, first, need, and then, want to have? One can see, for example, that in countries with a substantial Scottish diaspora-such as the United States, Canada and perhaps Hong Kong-Scotland would want to have representation at a particular level. If we go to Austria, or, off the top of my head, Costa Rica, which we have been discussing, obviously different considerations would apply.

Lord Jay of Ewelme: Yes, they would. As I understand it, Scotland now has 20 or so SDI offices and some of those could be upgraded, although they are not all in places where you might want to do things other than promote trade.

One immediate question would be whether Scotland would feel that it needed to have an office in every EU country. I would think probably not, at least not to start with, although it would clearly need to have them in the major ones. It would need to have offices in the United States, where there is a diaspora and where there are Scottish interests. It already has, of course, an office in Brussels; there is a Scottish office in the old UKRep building.

Scotland has not got any representation to NATO. It would need to have representation to NATO; it would need to have representation in Geneva; it would need to have representation to the UN organisations in Vienna; and it would need to have representation in New York for the United Nations. You are quite soon building up a reasonably sized diplomatic service just to do what would need to be done if Scotland is a member of the Commonwealth, the United Nations and the European Union.

There are other ways in which Scotland could be represented. It could make use of the European External Action Service as that gets going. It could join up with others, as Britain and Germany do in Iceland, so you could have Scotland plus one or two other member states together. I would have thought that Scotland would want to think about "How should we be represented in the places we need to be represented?" rather than thinking "We need to replicate embassies all around the world." Even so, it is going to amount to a reasonable network of Scottish posts overseas, which are going to be expensive and are going to raise other sorts of issues such as security issues.

Q194 Sir Menzies Campbell: And quality of staffing and experience of staff.

Lord Jay of Ewelme: Yes. If you were starting from scratch, you would need staff who were trained and you would need staff who were linguists. You have got at the moment, of course, quite a lot of staff who are good at the commercial work, and you would need to expand that a bit.

I am assuming that it would be open to Scottish members of the diplomatic service to join a Scottish diplomatic service, and I assume that some probably would and some probably would not. So you would probably get some expertise coming from the diplomatic service to help set up a Scottish diplomatic service, but I would not have thought that would be enough for the purposes that would be required.

Q195 Sir Menzies Campbell: Could you see any circumstances in which there would be a kind of barter about some embassies or some high commissions? Or would your view be that RUK-the rest of the United Kingdom-would simply say, "We want to hold on to all the posts that we have"?

Lord Jay of Ewelme: I start from the position that Scotland voluntarily leaves the United Kingdom and the rest of the United Kingdom becomes the successor state, so the embassies will remain the property of the rest of the United Kingdom.

I cannot actually see an easy negotiation in which the United Kingdom says, "We will let you have this number of embassies in this number of countries." What I think is possible is that there might be a negotiation over Scotland continuing to sit in some embassies where there is space. There would be a negotiation over, "How much would that cost? How much would Scotland pay?" There would no doubt be some difficult discussions about whose flag was flown where and when, and so on, but I can see that happening. Then it is a question for Scotland as to whether it wants to be part of a United Kingdom mission or not.

Q196 Sir Menzies Campbell: Let me ask you this question. You mentioned security, and we know that there is a particularly intimate relationship in relation to intelligence among what is called "the five eyes"-the United Kingdom, the United States, Australia, Canada and New Zealand. That is a relationship that, essentially, involves the three national agencies in this country. Is that a relationship, do you think, that could easily be transferred, or even diverted in part, to an independent Scotland?

Lord Jay of Ewelme: I do not think that it would happen automatically. Each of the other countries is offering something to be part of an intelligence-sharing operation, as I understand it. The question would be, therefore, will Scotland then have its own intelligence operation and be sharing intelligence, or would it in effect be asking the rest of the United Kingdom whether it could continue to have the same sort of privileged access as we have had in the past? I would have thought that the answer to that will probably be no. Some special arrangements would need to be reached-I do not think that it would be automatic.

Q197 Mr Roy: I have just two points. First, I am definitely with you in relation to the expectations of the Scottish people on having an embassy or whatever in a European Union country. My constituents, in an independent Scotland, would expect embassy facilities in all those countries. I am absolutely certain that they would expect a consulate service in places where hundreds of thousands of them go on holiday.

Sir Menzies Campbell: Like Benidorm.

Mr Roy: Like the Benidorms, the Majorcas or the Cypruses-whether we like it or not, they are extremely busy with holidaymakers and their problems, so I can tell you that my constituents would absolutely not settle for not having the representation that they have now.

Secondly, you mentioned Schengen and border posts earlier, and I am in absolutely no doubt that, if Scotland were in Schengen, the rest of the United Kingdom would rightly ask for some sort of border restrictions, because I do not think for one second that the people of England and Wales would want a free movement of people coming from Europe to Scotland and then through without any border posts. If there were border posts, my question to you would be, as there would need to be border posts because Scotland was in Schengen, whose responsibility would it be to erect and pay for those border posts?

Lord Jay of Ewelme: I have not thought of that question before. I do not know the answer to that, but it might well be the rest of the United Kingdom that would have to put them up. I would have thought that there would be an obligation on both sides to make certain that there was a border that was not as porous as it otherwise might have been.

On the first question, of course Benidorm and so on-I was not thinking about the larger countries-but whether Scotland, immediately upon independence, would want to have separate embassies in the Baltic states and so on seems to me to be less important than having them where there are real and immediate Scottish consular or other interests, such as in Spain, France or countries where there are large numbers of Scottish tourists.

Q198 Chair: May I take you back to the answer you gave to Menzies Campbell about UK embassies? What you are saying is that this is not like the break-up of Yugoslavia, whereby, for example, Bosnia and Herzegovina got the embassy in London, which is far too large for them, because that was the former Yugoslav embassy, while all the other states, such as Slovenia and the rest, then had to find other premises.

Occasionally, they do joint events at Christmas-I have been at one-and they come together in the former Yugoslav embassy, doing things together. We would not be in a position, say, given your Paris experience, that Scotland would put in a bid to get Paris, Stockholm or maybe Washington, and we then basically do a deal with them that 8% of the embassies around the world are apportioned out, so then the rest of the UK has to find an alternative embassy-perhaps even in Paris, but who knows?

Lord Jay of Ewelme: I would not see it happening quite like that. I do not think that this kind of secession is the same as, say, Czechoslovakia breaking up voluntarily into two parts, or Yugoslavia breaking up. What I would not rule out would be the rest of the United Kingdom, perhaps under pressure from Parliament, deciding that it needed to give up one or two embassies somewhere and therefore having a building which is free which the Scots could take over.

What I don’t see is a discussion in which we say 8% of our embassies will be available for Scotland and then have a discussion about which those would be. But I do think there is a genuine question about whether there are some embassies, or possibly some consulates, where it would be sensible for both sides to have an agreement to allow Scotland to take part in that.

Q199 Rory Stewart: Lord Jay, as you are aware, the current core budget of the Foreign Office, excluding the World Service and the British Council is about £1 billion. So Scotland would presumably at the moment be spending about £80 million a year on its Foreign Office. But the Scottish Government and the SNP’s "Scotland Forward" document say: "Scotland’s taxpayers contribute more money to fund UK embassies than many smaller independent nations fund their embassies with." So the implication is clear that the Scottish Government intend to spend less than £80 million a year on its diplomatic network.

Two questions come out of that. First, is that enough to fund the running costs of the serious diplomatic network, bearing in mind that Scotland and the SNP have already committed to having very strong relationships with Nordic and Baltic countries? In a sense, one of your points, which is a reasonable point from a pure size point of view, is that they would be unlikely to keep those representations going. In fact, a lot of our foreign policy seems to be directed precisely towards those foreign countries.

The second point, perhaps more fundamental, is about the start-up costs. It is all very well having in place £70 million a year to run your embassies once you have them, but what are the start-up costs of securing the buildings in the first place, setting up in the modern world a complete communications and IT system, given that we appear to be able to spend on the NHS alone £7 billion just to set up an IT system? How do you do confidential communications? All that becomes very relevant if they want to have any participation whatever in any intelligence and security co-operation with the United States.

Lord Jay of Ewelme: First of all, I can understand the Scots’ argument that they are paying a higher proportion than they would ideally like to pay because they are paying for a proportion of very high security costs, for example, which would probably be less necessary if Scotland was independent. So I can understand that part of the argument. But I don’t think you can then transfer that part of the argument to saying that that means that for £80 million we can have the sort of diplomatic service that we would like to have. Start-up costs would be very considerable.

Take Paris, Berlin or the sort of place where Scotland would clearly need to be represented, finding the sort of premises that it would need would be extremely expensive. Training people to work in those places would be extremely expensive. Setting up the necessary communications systems would be extremely expensive. I have not costed any of that, but the figure of £80 million seems an extremely small figure for the sort of expenses that you would need to set up a diplomatic service in the kind of countries where I imagine Scotland would want to.

It really would be necessary for an independent Scottish Government to think very imaginatively about how you get yourself represented these days when you are starting from scratch. Do you need to think in terms of very expensive buildings around the place? Are there other ways of doing that? Can you do more directly from Edinburgh than we would do with our histories and our traditions? I think they would have to do that because otherwise the costs would become very expensive indeed.

Q200 Rory Stewart: Just to clarify, you seem to be saying that the message to a Scottish taxpayer is that if you expect to be able to set up a serious diplomatic network from scratch on a traditional model you will find yourself paying much more than you currently pay a year. Those start-up costs will be considerably more than the current projected annual running costs of £80 million getting off the ground. If Scotland voted for independence, they would have to anticipate that if they were going to set it up on a traditional model, they would face very significant costs in the first few years for funding and setting up the network.

Secondly, if they do not want to do that, they would have to fall back on something which would fall very far short of the traditional diplomatic footprint or presence that Scotland has been used to in the past. They would have to imagine something very different.

Lord Jay of Ewelme: Yes, I think they would. I would not disagree with any of that. I do not think it is impossible to come up with a different model for representing yourself overseas than the one that has developed over the last couple of hundred years; in some ways, it would be rather an exciting exercise to be involved in. But I think if the aim is in any way to replicate what is now regarded as a traditional diplomatic presence overseas, it is going to cost a great deal more than that.

Q201 Rory Stewart: In its document, the SNP said: "Too much of UK overseas representation is based on status and power and that’s not what Scotland needs." Can you give us a sense-credibly, if you will-of what a Scottish version of that means: having a diplomatic presence that is not interested in status and power?

Lord Jay of Ewelme: Well, you don’t want status and power for its own sake. You want status and power because that enables you to exert the influence you need to exert to bring about the policies you want to have executed. They do not stand on their own. You can call it what you like, but what you want is to have the impact in a country which enables you to go and talk to the people who really count and say, "This is what we need," and get a receptive response. You do not necessarily need to have a traditional embassy structure to do that, but it very often helps.

Q202 Rory Stewart: Finally, would a smaller Scottish embassies network-similar to that in Norway, Finland or Denmark, for example-be able to achieve more for Scotland than the current system, in which Scotland has its own representatives but with FCO back-up?

Lord Jay of Ewelme: It partly depends on what it is that Scotland wants to achieve. If Scotland has certain aspects of foreign policy, say, or commercial, economic, European or defence policy, which are different from that of the United Kingdom, then clearly it will be able to achieve those objectives better than as part of the United Kingdom. It rather depends on what its policies are.

Q203 Rory Stewart: Taking that as read, to clarify that question, we currently have a situation where Scotland has some overseas offices, but it is also able to participate in being a permanent member of the Security Council. It has serious weight at NATO through its membership of the United Kingdom. In other words, it is able to benefit from this broader £1 billion-a-year infrastructure based on 400 years’ worth of British embassies’ policy. What do you see as the gains and losses of departing from that overall infrastructure?

Lord Jay of Ewelme: Before Mr Baron went, we talked a little bit about commercial diplomacy. I think that as presently constituted, the British diplomatic presence is extremely effective for promoting Scottish products, as it is for Welsh or Northern Irish or those from the regions from England. That has always been part of any ambassador’s job.

If the policies of the Scottish Government are different from those of the British Government, it would have to have its own means of promoting those policies, it seems to me. In those circumstances, it would need its own diplomatic network, or its own ability to influence other Governments, NATO, the United Nations, the European Union and the countries that matter to it. If that is the position that Scotland finds itself in, it will have to have a separate diplomatic presence somehow.

Q204Chair: A final question on that section, and then I will bring in my colleagues. Some people would argue that a smaller country could be diplomatically more effective and nimble than a larger country. What is your view on that?

Lord Jay of Ewelme: It depends on the people you have got doing the job. You can get some very effective representatives of a small country who know everybody, speak the language well, have been there quite a long time and are well plugged into their own countries as well, and they can have a big impact.

You can also have some large countries that are lumbering presences that do not have the sort of impact their presence should bring. I am sure that I, Anthony Layden and James Craig will be able to give you examples of both. So yes, you certainly could, and there is no reason at all why you should not have an independent Scotland with a small diplomatic service that operated very effectively.

Q205 Mr Ainsworth: Let us think ahead and say that Scotland has gone its own way. It has managed to get over all these problems that you have been kicking around with Rory and has set up its diplomatic service and all the organisations that it wishes to in the world. The rest of the UK has managed to get continuity of statehood, and has sought to carry on. Yes, of course, our desires and policies change over time, but there has been continuity.

Lord Jay of Ewelme: Continuity of policy?

Mr Ainsworth: Yes. How would you see things in a few years’ time, in terms of the standing of the rest of the United Kingdom and its ability to shape and influence organisations such as the UN and NATO? How will that have been impacted on? After all these transitional issues have been dealt with, will our standing have been diminished? Will our influence and ability to protect our interests in organisations such as the United Nations have been impacted on? Even with good diplomats, what possible standing and influence will the new independent Scotland have?

Lord Jay of Ewelme: On the first point regarding the rest of the United Kingdom, I do not think there need necessarily be a falling off in the influence that we would be able to exert. Assuming that we maintained our position in the UN Security Council-I think we would-and that we maintained a strong foreign policy and armed forces that enabled us to work with others, as with the French in Libya and now in Mali, I think that that is how we would be judged. What are we doing with others to project our power and influence abroad? I do not think that that need necessarily change; I would have thought that it could well be much the same.

It would not be completely the same, because, for example, in the European Union there would be a shift in the voting weights and a shift in the number of Members of the European Parliament. On some of those sorts of indicators, we would come down in comparison with our major partners.

I do not know whether in the IMF and World Bank our quotas would be changed so that we would have less impact on economic diplomacy than is the case now-I would need to look into that. There would be an effect in some aspects, particularly of international diplomacy, but our ability to project our influence abroad would depend as much on the extent to which we were prepared to put our effort and money behind effective military activity and effective foreign policy as it would on having lost Scotland.

That is what I would say to the first part of the question. Honestly, I find the second part of the question difficult to answer, because it depends on what an independent Scotland is trying to achieve. I cannot believe that you would have an independent Scotland following a foreign policy identical to that of the United Kingdom. How effective would it be in executing its own foreign policy? It could do so very effectively as a small state, as small states do and as small states can, but it would not be the same as though Scottish interests were being promoted by the United Kingdom as part of the United Kingdom’s foreign policy.

Q206 Mr Ainsworth: I have one follow-up to that. You have kind of indicated, as have others done in some evidence that we have received, that the rest of the United Kingdom would not be dramatically impacted on, but you have suggested some things that we would have to do in order to maintain that influence-the armed forces and the like.

However, our ability to continue to hold a UN Security Council position in the long term would be impacted, particularly if we did not have the nuclear deterrent. Scotland is saying, "Get rid of it." Get rid of it to where? That could have a dramatic impact on our standing and the influence of the rest of the United Kingdom.

Lord Jay of Ewelme: If we were to cease to be a nuclear power, that would have an impact on our ability to maintain our seat in the UN Security Council whenever, if ever, those negotiations become real. I have no doubt that some people or some member states would try to use an independent Scotland to argue in this way or that that we are smaller and less impressive than we were and therefore use that against us. However, if we remain a nuclear power, I would have thought that there would be arguments to be used against Britain maintaining its independent seat. To be honest, if there is a really serious renegotiation of the structure of the UN Security Council, this is not going to be the only thing that is taken into account. Will Britain and France, even with both as nuclear powers, remain? Who is going to be added in? What is the UN Security Council going to look like? There will be issues other than an independent Scotland that would influence that debate.

Q207 Sir John Stanley: As we know, entry into the EU is by unanimity and a number of EU member states have an aversion to granting recognition to what they regard as separatist states. Spain is one example. Could you give us your assessment as to the degree of risk that Scotland seeking EU membership might find that she is unable to achieve unanimity of support for her membership of the EU?

Lord Jay of Ewelme: My guess would be that, after negotiations that are slightly more difficult than Scotland now thinks, it would become a member of the European Union. However, it would be in the interests of other countries that fear the same thing happening to part of their country, such as Spain with Catalonia, to make life pretty difficult for Scotland in order to make it clear to their own citizens that it is not an absolute shoo-in if they were to become independent.

Q208 Sir John Stanley: In what specific ways do you think that Spain might, in your words, make life more difficult for Scotland as far as her EU membership application is concerned?

Lord Jay of Ewelme: There would be different aspects of the accession negotiations over budgetary or fisheries matters, for example, over which member states, if they wanted to, could cause difficulties or at least spin things out. I think Scotland would join the European Union and others would agree to it, but there would have to be some sort of concessions and I think there would be a more difficult-it would not be automatic-negotiation than perhaps some are suggesting at the moment. That would be my guess.

Q209 Sir John Stanley: NATO moves by consensus, which is a type of unanimity. Do you consider that the SNP’s posture on nuclear weapons may make it impossible for an independent Scotland to achieve NATO membership if she so wished to do?

Lord Jay of Ewelme: I do not think that it would make it impossible, but, again, I think that there would be some very tough negotiations. A lot would depend on what happens about Scotland’s nuclear posture and what happens in negotiations with Britain over the nuclear submarines at Faslane and so on. I would have thought that it probably would be able to join, but those negotiations could be quite tricky. Whether or not these negotiations can be concluded between the date of a referendum and the end of a transition period, I am not sure. And whether that would then call into question the date of full independence, I do not know. There could be some quite difficult issues there.

Q210 Sir John Stanley: With your very long experience in defence and security matters, would you like to comment on what you think the implications might be if Scotland gains independence and, therefore, creates a substantial area of non-NATO airspace, maritime space and, indeed, land space outside of the NATO area until such time as she eventually becomes a NATO member if that is achieved?

Lord Jay of Ewelme: I haven’t got an immediate answer to that question. If there is a vacuum there, it would have to be filled, and that would be part of the negotiations. I imagine that there will be tripartite negotiations. In the case of the EU, England has got the rest of the UK, Scotland and the EU; in the case of NATO, probably the US, Scotland and the EU. I think that these are going to be quite difficult negotiations.

Chair: Lord Jay, thank you very much for coming along and for giving your answers. We are very grateful to you.

Examination of Witnesses

Witnesses: Sir James Craig GCMG and Anthony Layden CMG, former ambassadors, gave evidence.

Q211 Chair: We now start our third session of the afternoon and the witnesses are Sir James Craig and Anthony Layden. Both are former ambassadors. You listened to Lord Jay, so you will have a flavour of where we were then. You both have extensive expertise, including of the Middle East. Therefore, we may touch on that expertise in the questions.

May I begin by asking about the impact of the separatism of Scotland and the break-up of the UK on the international standing of the rest of the UK? Given that one of the conventional views is that the stability of the UK and its long history-at least for several centuries-of not having civil wars and revolutions is part of the image of our country, would the departure of Scotland significantly change that international reputation?

Sir James Craig: No, I don’t think it would. There would be a slight feeling of-someone else used the word in earlier evidence-schadenfreude: "At last Britain is having some difficulty, which we have all had in the past." But on the whole, the Arab countries regard London and England as the place that they have to deal with. Given my own Scottish background, it wasn’t something I liked, but they always talked about the "Ingliss"-the English. And I wanted to say, "Don’t forget the Scottish," but there was no point.

They never raised the question of Scottish independence-Scottish secession-with me, so I don’t think that they would take much notice of anything that was going on, unless there were to be some big row over one point or another. And I can’t really believe that there is going to be any big row.

Anthony Layden: Like Sir James, I used to get pretty annoyed when everyone called us "the English embassy" in the Arab world. It was not only there, but in Rome, where I served for nearly five years in the ’70s. Every Italian called us the "ambasciata inglese", however often we tried to correct them. One just had to get used to it.

When I was appointed as ambassador to Morocco, I presented my credentials in February 1999 to the late King Hassan and the invitation to court said that I could wear court dress or national dress. So, of course, I got dressed up in my kilt and plaid, and everything. As it happened, the two members of staff accompanying me were Colonel Mike Argue of the Parachute Regiment, who had formerly commanded the Scottish Territorial Battalion, or 15 Para, which I myself had been an officer in, and my consul, a very nice lady called Liz Dow, who had served in Jerusalem. She is from Strachur in Argyll. So, all three of us addressed the King in Arabic with a strong Scottish accent. This was such a striking event that it was relayed several times on that evening’s television, so wherever I went thereafter in Morocco people would say, "Ah, you’re the British ambassador who wears a kilt and speaks Arabic." So, both the UK and Scotland got a lot of free publicity out of that.

Arabs would look slightly sideways at the UK if we got involved in a division, because they set great store by a ruler being able to keep his own house in order. That is why they get so cross when we have dissidents in the UK who badmouth them; even if the dissidents are not doing any practical harm, they feel very cross about it.

On the other hand, we have survived the end of empire; we have survived many years of serious trouble in Northern Ireland; and Britain, or the rest of the UK, would survive this also.

Q212 Mr Ainsworth: The new independent Scotland would have to set its priorities very carefully-it would not have the resources of Great Britain-and one of its priorities, we are told, is going to be the Gulf states, for economic purposes in any case. What clout and ability would the new independent Scotland have to protect its interests and project them in the Arab world, having said that that is one of its priorities? Do you really think that, when trade in that part of the world is Government to Government, as well as company to company, and the two tie up, there would be no impact on the rest of the United Kingdom?

Sir James Craig: First of all, I am assuming that there would not be a Scottish embassy in every Arab country. There are 26 or 25 Arab countries in the Arab League, and it would cost a lot of money, more than Scotland could afford, to have somebody in every one. I suppose that Scotland would carry little weight unless in some particular place they had someone with a nice personality who speaks excellent Arabic, and so on.

On the whole, I do not think Scotland is going to pull much weight as an independent country, any more than Ireland does. Ireland had an embassy in Saudi Arabia with only half a dozen people. They used to send invitations to official embassy functions bilingually in Arabic and French-in French because they were not going to descend to use the imperialist language of English-but the Saudis did not understand French, so it did not matter very much. Scotland could not use Gaelic, because only a very small percentage of people in Scotland can speak or understand it, so it would have to be English.

I do not think the independence of Scotland will have much impact on the Arab world. You probably saw what the former Saudi ambassador said to me: "My personal view is that, where we in the GCC"-the organisation than unites the Arab countries of the Gulf-"are seeking to come closer, Europeans are breaking apart. Witness the Czechs and the Slovaks, the Catalans and the Spanish, the Flemings and the Walloons, not to mentions the break-up of Yugoslavia. Maybe the Scots want to rule Scotland, but why that is preferable to ruling England as well, I do not know."

Well, the Arabs are not growing closer together; they are not even getting closer to democracy. They are edging away, in some cases running away, from union, democracy and so on. They have plenty of problems of their own to worry about, and they won’t have much attention left for our comparatively small problems.

Anthony Layden: My last post as an ambassador was in Libya from 2002 until 2006, and it happened that while I was there we had a new and productive relationship with the Libyans-they listened to what we had to say. From 1998, when we began talking to the Libyans about the terms on which we might resume relations after the Yvonne Fletcher case, until after I left in 2006, we persuaded the Libyans to do a whole lot of things that Colonel Gaddafi found politically very difficult, but all of which he agreed to and which he scrupulously carried out.

We did not have an Irish embassy, a Norwegian embassy, a Danish embassy or a Finnish embassy; we had an Austrian, a Czech and a Polish. Most of the countries that were there were there because they had people working in the oil industry. It was very noticeable that the representatives of small countries could achieve almost nothing in Libya. I remember my Swiss colleague telling me that it had taken him all year to get an appointment with the head of the European department at the Foreign Ministry whom I was seeing twice or three times a week, as well as the Foreign Minister and the head of intelligence and so on.

Just expanding that argument slightly to that of the ability of a small country to look after its citizens overseas or, indeed, look after its own interests when trouble occurs, in the nearly four years that I was in Libya, the dreadful sons of Colonel Gaddafi went around the world causing dreadful problems.

Hannibal, Mutassim, Khamis and Saadi were a bunch of serial rapists and murderers who just went around causing mayhem. Denmark, Austria and Switzerland all had problems lasting many months because they had done something about the behaviour of these awful young men in their countries. Visas were cut off, contracts were cancelled. A huge amount of mayhem was caused in those countries.

It has never become public, but Mutassim Gaddafi got into a similar problem in London in 2004. He arrived on the Eurostar from Brussels with a bunch of disreputable people, many of whom were under the influence of drugs. A small amount of drugs were found on their party, and they were stopped and interviewed by the police at Waterloo. The first I heard of that was a summons to see the head of the European department, Ramadan Barak, who said that the British were making some trouble for a son of the leader in London and bad things would happen to Britain unless I put an immediate stop to it. I went back to the embassy and found an e-mail from the police who told me what had happened.

Simultaneously, I got a telephone call from the British Airways manager who said that his daily flight had just arrived in Tripoli and all the passengers were being detained for questioning. I put in two telephone calls, one to the Foreign Minister, Abdel Rahman Shalgam, and the other to the head of intelligence, Musa Kusa. I said, "I want you to pass a message to your leader-if he thinks this is a good time to be making difficulties for British citizens at Tripoli international airport, he is making a mistake."

I got two calls back from these gentlemen 15 minutes later, saying that the problem at Tripoli airport had stopped and "You should not assume that our leader knew anything about this". I later found out that one of Mutassim’s disreputable entourage had phoned immigration at Tripoli and told them, "You will be doing a favour for Mutassim Gaddafi if you make trouble for any Brits arriving for the next few days." That was solved in about 15 minutes, whereas the other countries had to work away for months.

There was a dreadful case going on when I arrived in Libya involving some Bulgarian nurses, who had been accused of the most ridiculous plot to deliberately massacre Libyan children, following an HIV outbreak in a children’s hospital in Benghazi.

I went to the trial of these poor people who had been tortured into admitting that there was a plot involving Mossad, MI6 and the CIA. I reported to the Foreign Office that this trial was a cruel and sickening farce. They were duly condemned and sentenced to death. I made strenuous efforts through my contacts around the leader to get a solution to this problem and, indeed, after about a year and a half of serious negotiation, the nurses were all released.

The Bulgarians had been working on this for eight years, throwing everything they could at the problem. They had appointed as ambassador to Tripoli a Minister who had had very good relations with Colonel Gaddafi in the past. They had got absolutely nowhere, and they would have failed however long they had taken simply because they did not have the clout. The outlook for British citizens in the wilder and woollier part of the world, if Scotland became independent, would be singularly bleak. Sorry to bang on.

Chair: Thank you. That is really fascinating and very valuable. It gives us an insight, which may help us in some other inquiries that we look at. Can I now go to Frank Roy?

Q213 Mr Roy: It has come across that obviously the Arab world would not react in any strong way to an independent Scotland one way or the other. Can I ask about the commonality of oil and gas? Would that help in relations at all, or is it just not there?

Sir James Craig: I am not sure what you mean. You mean if the Arabs created problems for Scotland?

Q214 Mr Roy: Scotland has been a producer of North Sea oil and gas, and some of the Arab states are obviously far, far larger. Is there a commonality there that would help an independent Scotland?

Sir James Craig: I don’t think so. The Arabs have their own OPEC, which consists of Arab countries only. Scotland is not a member and I really cannot imagine that they would find much in common with each other. It is possible, but so far there has been no contact between Scottish interests and Arab interests in the field of oil.

Anthony Layden: I have nothing to add.

Q215 Rory Stewart: Sir James, you believe that the international reputation of the rest of the UK-England, Wales and Northern Ireland-would not be affected in the Middle East, but let’s turn this round and look at it from Scotland’s point of view. Would it be good for Scotland? Would you recommend to a Scottish voter or citizen that they would be better off going independent? Would their diplomats or foreign policy do better if they were independent than if they remained part of the United Kingdom?

Sir James Craig: I consider myself a Scotsman and I would like Scotland to be independent, but when I consider the implications, the cost and the trouble, it seems to me to be a washout. I have read some of the evidence from former sessions of this Committee, and I am quite dismayed at the costs of joining the EU and NATO and of setting up a diplomatic effort. All of that is terrible, so I cannot imagine that it would do Scotland good in the long run.

Q216 Rory Stewart: Mr Layden, what would be your advice to a Scottish citizen? Would being independent be better in terms of their foreign policy?

Anthony Layden: It has always been clear to me that both Scotland and the rest of the UK can look after their interests in the world far better together than they could separately.

Q217 Mark Hendrick: Can I ask, both in your experience and from your instincts, how you feel that the break-up of the UK might be perceived in some of the big capitals around the world? Would they see a weaker Britain diminished, or would they say, "It does not make a lot of difference"?

Sir James Craig: Not a lot different. I would very much regret the diminution of our reputation through the loss of any part of the United Kingdom, but I do not think that it would in true fact make very much difference.

I have not served in countries outside the Middle East, apart from one year in Malaysia. I have visited but have never served in the United States and I have never served in Europe, so I am not familiar with the answer there, but I do not feel that it will make any substantial difference in the parts that I do know.

Anthony Layden: There would be a feeling for a while, as there was when there was an imminent possibility of Quebec seceding from Canada, that the country concerned would have its attention too much on internal affairs and could not devote its attention properly to things outside, but that would be a temporary phenomenon. Like Sir James, I think that, in the longer term, the rest of the UK’s position vis-à-vis the rest of the world would not be badly affected. Scotland, on the other hand, would go from being part of a very influential country to being negligible, sadly.

Q218 Mark Hendrick: Countries such as China, Russia and India take a very strong view on secession. Given the role that they are playing in the world in the 21st century, do you not feel that they would look upon us rather differently from maybe some of the international institutions such as the EU or the IMF?

Sir James Craig: I am not really understanding your question. You are saying that what has happened to Russia is more or less the same as what would happen to us, and that its position has not been affected. I would say that its position has been affected. No one now takes Russia quite as seriously as we used to before 1989-90. What happens if Scotland becomes independent is a great deal smaller and less important than what happened with the break-up of the whole Soviet Federation.

Anthony Layden: I have not served in any of those countries and I cannot think that it would seem a particularly important matter. Certainly, under the present regime, the Russian Government are against secession. They rather wish they were still in their former glory. They might be glad that the UK has become slightly less powerful and influential, but I do not think it would be a very important perception.

Q219 Mark Hendrick: From what you are saying, the remainder of the UK would not have any particular reputational problems, having lost Scotland, but if there is a reputation problem, where in the world do you think it might be, if anywhere?

Anthony Layden: The United States would certainly regret it. They have come to regard us as their most reliable friend and ally, and anything that diminished British influence-in the world generally and in Europe-would be a matter of regret to them. Beyond that, I cannot think of anyone to whom it would be hugely important.

Q220 Chair: Apart from the implications to which you have just referred, would there be any new challenges that the rest of the UK’s diplomats would face as a result of the existence of an independent Scotland? Would it mean that we would have to spend our time dealing with explaining that Scotland has a different position and, in a sense, neutralising that in terms of debates in the European Union, the Commonwealth or the UN, or even in NATO? Would it actually be a distraction and a diversion of the energies of the rest of the UK if, rather than dealing with the substantive issues, we had to spend time explaining, justifying and-if you like-countering what has been said by the former part of the UK that is trying to assert itself as an independent state against us?

Sir James Craig: The only thing that occurs to me, as a slightly frivolous consideration, is that British embassies are well known as centres of enthusiastic Scottish dancing. When I first worked for the diplomatic service, I was not a member, but I became the principal instructor in the Foreign Office’s school of Arabic in a Lebanese mountain village. The head of the school-the director, who was a former British ambassador-insisted that, once a week, we had to have a session of Scottish dancing on stone floors. I was the number two, and if I did not turn up, I was interrogated the next day, so I learned that I had to have a good excuse. Some people were very keen, particularly when you were in a big capital, and it made a night out to go to the embassy, where you got some drink-particularly in Saudi Arabia. But most people were not as enthusiastic as the ambassadors were, and all excuse for Scottish dancing would be evaporated.

Anthony Layden: I can think of one country where there might be some confusion and that is the Sultanate of Oman, where I served as deputy head of mission in the late 1980s and early 1990s. The Sultan was an officer in the Cameronians for a number of years after he finished his education in the UK. He took a fancy to things Scottish and he has four pipes and drums bands in his armed forces-I think it’s the air force, army, navy, police, and royal guard, so there are five. I was chieftain of the Caledonian Society of Oman while I was there, and the Sultan used to lend us a pipes and drums band for St Andrew’s night and Burn’s night. He would be pretty confused if it was a different country that had this role in Oman from now on.

Sir James Craig: Similarly, the Saudi air force had a pipe band, and I can remember when one of the Conservative Government’s Ministers of Defence-I think there were four Ministers of Defence in the just under five years that I served there-was leaving, and the Saudi Minister of Defence had ordained that he should be given a good send off by the Saudi air force pipe band. I think I was the only person in hearing who knew what it was playing. It was "Kate Dalrymple had a pimple" and all kinds of rude words followed on from that.

The traditions of Scotland, in so far as they are prevalent in the Arab world, are mostly cultural or semi-cultural ones-the whisky, the music and the dancing.

Q221 Rory Stewart: Scotland has talked a lot about having a very different policy, particularly towards the North Sea. There has been talk of opening up new routes through for China and Russia, negotiations with Iceland and future movements of oil to do with the melting of the ice caps. There is a whole vision of a possible Scottish future where they would be creating new connections, and some prominent people in Edinburgh are saying, "We don’t really need England anymore because we can be friends with China and Russia, and we’re going to be part of this much bigger thing." Could you give your view on that strategy and whether you think it makes sense for Scotland?

Sir James Craig: No, I am completely ignorant about what arrangements have been reached between England and Wales and Scotland about the ownership of North Sea oil. Has a line been drawn and we can say north of this is Scottish oil and south of it is English oil? None of it is Welsh oil. Has that been achieved?

Q222 Rory Stewart: Just to clarify a little bit more, this would be a policy about saying that Scotland’s biggest alliances will, in future, be Scandinavian countries, and countries like China and Russia. Scotland will move into a world where a lot of its strategy will be directed north-east towards things happening around the polar ice cap. Do you think this is a sensible vision on which to build a country?

Sir James Craig: Whether Scotland can build this alliance depends on the allocation of the ownership of the North Sea oil. I imagine that would lead to a great deal of argument in the negotiations. Do you know anything more about this, Anthony?

Anthony Layden: I do know that we do not have a continental shelf boundary, as of present, between Scotland and England. I was involved in negotiating the continental shelf boundary with the Faroe Islands for many years, where it would have helped if we had been a smaller country, because the Danes very cunningly devolved to the Faroese Administration responsibility for continental shelf matters. We found ourselves going to the Løgting in Tórshavn, which is wooden hut with a grass roof about half the size of this room, which was their Parliament. The Faroese simply would not negotiate with the British. They said, "It’s got to be a median line, it’s got be a median line." We negotiated very badly and we finished up, after about seven years of talks, agreeing to a median line.

On the question of a new trade route to the north, it is a very attractive idea and there are undoubtedly possibilities for expansion in that direction. Having been involved with container ports in various parts of the world, I know that the key issue is how much throughput a container port is going to have. We would be in strong competition with Rotterdam, among other places with established lines of communication from below. I would also observe that, after all these years of independence, the Republic of Ireland’s largest trading partner is still, by far, the UK.

Chair: Thank you very much, gentlemen. It has been very useful and quite an entertaining session, which I appreciated very much. Thank you for coming.

Prepared 22nd January 2013