07/08/2014 Scotland 2014

Alex Salmond won't admit he's got one but we won't let that

Tonight we examine what Plan B might look like.

The pound in your pocket is assuming a central role in the referendum.

As Alex Salmond insists would still be a pound in your pocket

And no campaigners won't stop asking him for his Plan B

if the UK refuses to share sterling in a currency union.

Confused? Well, you are not alone.

Don't worry. Tonight we will explain all the options.

The US congress probably don't care what currency we would use but

they did pass a motion today stating a Untied Kingdom is important to

And why are Glasgow City Council's plans to fly the Palestinian flag

over the city chambers tomorrow upsetting so many people?

Alex Salmond was quizzed again today over his Plan B for the Scottish

The Unionist parties think they are onto a winner every time he

But are voters really passionately concerned

Or are we all getting a bit baffled by the different options?

Tonight we have got the experts who have promised to explain in words of

few syllables exactly what it all means to each and every one of us.

First, here is our economics correspondent Colletta Smith.

Today, the talk about currency from politicians on both sides of the

chamber was much of what we have heard before. With the Labour leader

asking a familiar question of the First Minister. He haze a range of

other option, please share with us, what is Plan B? It is on page 110 of

the White Paper. These are for the euro which we don't support, affixed

exchange-rate policy, perfectly viable but not as good as keeping

sterling. It also point out that we cannot be stopped from keeping the

pound. The best way to regulate the UK's

financial market is to have them within its financial boundary, but

now I respect that they would move their locations. This is serious

trouble has led to pressure within the yes campaign for Mr Salmond to

drop the talk of sterling ideation and start looking at another option

on the list, the idea of their own currency. We have a viable

alternative, a Scottish currency with our own central bank. Which we

will have one-to-one with sterling, so there is no difference. Any Plan

B option that an independent Scotland might need would have

economic downsides which means the yes Scotland campaign art keen to

formally stick to the pound. And in

our Edinburgh studio is one of the authors of that report you saw just

now in the film, Dr Angus Armstrong from the National Institute

of Economic Social research. Alex Salmond is very keen to keep

pointing out that even if plan a does not work out that we cannot be

stopped from using the pound because it is an international traded

currency. Would be the issues if Scotland were to try to use sterling

without a formal currency union? Scotland could indeed use of

sterling or any other currency internationally traded, for that

matter, that it wishes to. The issue is that if it is using the currency

of what would be another country, that is the rest of the UK, then it

would not have a central bank. So Scotland would be operating a

financial system without a central bank. Which means that you do not

have a lender of last resort, a phrase which none of us had not

heard before 2008, I am sure economists had! We needed one then

but that is a once in a 100 year event to have a financial crisis

like that event to have a financial crisis

like so how important is it to have one? Lender of last resort covers a

whole menu of operations, so you have a day-to-day one which

international banks transact with, so the Bank of England, they are

frequent operations. Every now and again, financial markets become

nervous and worried and that is when we think about having emergency

liquidity assistance as it is called, which is really when you are

not quite sure, 100%, that the bank is going to be a K. That decision is

made by the Chancellor is going to be a K. That decision is

made by the -- Chancellor of fixed deck. It has become clear that if we

do not share sterling, we would not share the UK's debts. That could

pretty quickly add up to a large savings accounts that could amount

to a lender of last resort, doesn't it? You have a couple of issues

here. The amount of stockpiles that smaller countries in global terms

have large banking sectors have very large reserves. The most obvious

examples are countries like Hong Kong, they have $300 billion of

foreign exchanges that, one third of its GDP in fiscal reserves, enormous

reserves, so it would take many years to build up that sort of

stockpile. Then you have got the issue of an independent Scotland did

not take what people generally thought to be a fair share of debt,

how would international investors and perhaps even euro members

consider that in terms of a responsible approach? Most of the

times when people do not pay off their fair share of debt, it has

eight negative consequence. I am not sure that is the option to get you

out of this. The report issued the -- mentioned the issue for financial

institutions headquartered in Scotland, that they might not be

able to do business where they could not have access to a lender of last

resort. But bankers are not very popular, some people might say good

riddance if they want to move to the UK. You are quite right, they are

not popular for good reason. Banking and financial services however is

Scotland's biggest export sector. It is nearly 10% of total output in

Scotland. So it continues to have a financial effect, having a strong

sector is importing. If Scotland started importing those services,

that would lead to more money going out of Scotland and lower incomes.

So it important to maintain that an encouraged other export sectors for

a more prosperous Scotland. There is another option which many on the yes

camp are keen on, launching a separate Scottish currency, which

would be possible, wouldn't it? It would, and Scotland a separate

currency, it would then have eight separate bank. That would open

option options. If you look across the world, Asian and Scandinavian

countries, similar countries who are successful with the same wealth

level, they all have their own currencies. It will take difficulty

in transition but it is something that could be managed and it is a

viable option, if Scotland decides that it wants to be an independent

Scotland. Having your own currency is a pretty normal step. People have

talked about picking it exactly to the pound so that cross-border trade

would be easy, one Scottish pound would be one English pound, can you

do that without vast reserves of currency? The most important thing

is that foreign investors and Scots have confidence that the government

can maintain the value of the currency. Having your own central

bank and currency is step one. The second step is credible economic

policy that residents and foreign investors believe in, and then you

can support pegged exchange rates, but it is all about making sure you

have this credible economic policy. Thank you very much for explaining

all of that to us. Listening to that are two economic

commentators and authors. They are George Kerevan and

Peter Jones. Peter Jones, how much of the problem

is Plan B for Alex Salmond now? It is a problem because he has opened

the door for it, essentially. He was trying to stick very hard to the

line that it was in both Scotland and the rest of the UK's interest to

have a currency union and that the statements that it would not happen

by George Osborne except were just a bluff. He has kind of blown a hole

through that by saying that the sterling option you have just been

talking about is quite attractive. And referring to it again during

First Minister's questions today. That creates a much more uncertain

question than there was before this particular row blew up. And voters

want certainty, they don't want uncertainty. Voters wants to know

what Plan B is, because they can't be guaranteed that there is king to

be a stunning union so we need to know what the options are. We will

try and make this simple, you have got the old lags talking about this!

You are the exception! I think the SNP have been surprised with the

vehemence by which the main parties at Westminster have rejected what is

a fairly straightforward notion of a currency union. After all, Scotland

a fairly straightforward notion of a currency union. After all, and

England satisfy the criteria of any such arrangement because their

economies are very similarly linked. Much of the opposition has come from

the Labour side, from Ed Balls. I want people out in television -- I

want to warn people in television land, I think Ed Boyd -- Ed Balls

wants to avoid the kind of rules coming out of currency union would

have to limit borrowing, which is not what he wants to do. If he wants

to do what he did last time he was advising Chancellor, we would see

interest shoot up. But it only matters that it cannot have a

stunning union and it creates a -- sterling union and it greater

political problem for the yes campaign. Where Alex Salmond came

from originally was, they thought and I think they were correct, that

we needed to keep the pound matched to the pound in our UK, so that

trade was easier and people when they got their pension or wages knew

what it was worth. You can keep that and still do that, without actually

having the former currency union. -- formal. You begin by setting up a

central bank and pegging the two currencies. Is it politically more

attractive to Page -- take the option and saying a Scottish

currency will be worth the same as the British pound? It is

economically more attractive because the big problem is that you do not

have the ability to print money in the event of a crisis or particular

problem that you need to deal with. It is quite politically attractive,

an independent country having its own currency. The problem is, the

moment Alex Salmond wants to move off plan A, and now it is, the

opponents will leap on and say, can we believe this man, tomorrow it

might be planned sea or plenty. -- plan C or plan B. If he can be

believed on this, what about everything else he says is a dead

set like EU membership? He blows the entire campaign out of the water. He

is in a hard place. We be talking about Plan B a lot for the six

weeks. Alex Salmond has been forced into a corner because the

Westminster parties are getting a perfectly centred -- are rejecting a

perfectly sensible idea. What would happen if Scotland had a separate

currency and the interest rates were higher than in England? The money

would move out of English banks. The costs for English, Welsh and Irish

banks are there as well. It is not is a surprise that Alex Salmond is

so bright. -- is surprised. Now, you might think they had enough

to worry about in the US congress as they consider foreign affairs

crisises from Gaza to Iraq. But they found time today

to pass a motion today expressing their support for a secure,

prosperous and UNITED Kingdom - echoing similar sentiments

from the US President. Back in June, Barack Obama threw in

his 2 cents on the Scottish referendum. He intimated he was in

favour of a no vote. We have a deep interest in making sure that one of

the closest allies that we will ever have remains strong, robust, United

and effective. Now the issue of independence has reached the US

Congress. Brad Sherman has tabled a motion saying that...

Signed by 27 Republicans and Democrats, it seems that President

Obama is not the only one in favour of the United Kingdom stayed

together. -- staying together. Live in Washington,

we can now to talk to the Senator who put forward the motion to

the House, Brad Sherman. And in our Edinburgh Studio

is Professor Joe Goldblatt. Originally from Texas,

he has dual citizenship and is a member

of Academics for Yes. Let me come to you first,

congressmen. Why did you feel motivated to put this before the

house? I thought it was important to echo President Obama's statements.

They are broadly reflective of the thinking here in Washington and that

is why I was able to put forward a resolution, supported by the

Republican chairman and the Democratic ranking member of the

Foreign Affairs Committee. And also a wide swathe of American opinion. I

know the BBC has to keep things balanced. To have balance, you would

need to have a member of Congress who was opposed and I do not think

you found one. But we do have a member in favour of independence in

our studio. Are you surprised that the American Congress is taking so

much interest? First of all, the good evening representative

Sherman. You will be welcome here. I was surprised. I thought it was

ironic and oxymoronic because in the same breath, this resolution states

that it is Scotland's decision and yet that they seek that we be part

of a united kingdom. In fact, we would be more united post

independence because of our opportunity to help not only this

continent grow but the European Parliament grow as well. The

environmental side is a specific interest of this representative. You

said that national security would be undermined if the United Kingdom did

not stay together. Why is that? The United Kingdom has been our

strongest ally. It is, militarily and in terms of intelligence and

cyber security, the strongest ally the US has. I was particularly

distressed by the White Paper on defence that talked about how, while

there are many important defence assets located in Scotland, these do

not operate in isolation in order to fulfil their roles effectively, they

require close integration. I spent some time thinking, what would

happen if the facet's native Texas became independent and we had to

separate the bureaucracies we had here. I do not know how deep

bureaucracies would work in Great Britain and Northern Ireland but I

know that if you have to separate out any bureaucracy, either the Army

or navy or any federal agency, the bureaucrats would spend virtually

all of their time focusing on how to disintegrate their organisations and

they would not have the time to focus on threats, and other issues

will stop I shudder to think what would happen if you took any single

federal agency and decided to break it apart, do disintegrate it. I

think they would be many years where they

such a train of abuses and... I do not know David Cameron well but he

does not sound like a despot. Thank you very much for joining us

tonight. we see the scale

of human suffering in Gaza. we hear the sirens as civilians

seek shelter from rockets. to show its support

for the people of Gaza by flying the Palestinian flag

from the City Chambers tomorrow but this has alarmed

the Jewish community. Our reporter, Andrew Kerr,

has been hearing the arguments on both sides as different groups

react to the strong symbolism Inspiration. Trepidation. Nation. A

simple piece of fabric, it says so much with so little. Symbols come in

all shapes, colours and sizes. This one could represent unity. The one

flying above the city Chambers today, mission heard. The one flying

above the city Chambers tomorrow, a lot more controversial. It will be

the Palestinian flag fluttering there, much in evidence at a protest

today. They are showing their solidarity with the people of Gaza.

They have been asking us to show solidarity with the Victim Support

conflict. -- with the victims of the conflict. There has been a long

tradition of Scottish local authorities supporting the

Palestinian cause. This was Dundee in the 70s. The plan to fly the flag

tomorrow has angered the Jewish community. They met council leaders

this afternoon to talk about their concerns. The Trinity is upset about

it and it is not only very upset butt it is concerned about it -- but

it is concerned about it. We are disappointed by it. It is a

community that does not often raise its head above the parapet. They say

the hurt is deeply felt and there is a growing sense of unease about

duelling anti-Semitism. Treat flags of caution is the message from

experts who study them. I don't be good is appropriate for any other

country 's macro flag other than Scotland and the UK's flag to fly

above a British City Hall. You think it is a simple square of fabric but

the meaning built into them can be very deep for many people. Flying

flags on buildings can have a huge significance and you need to bear

that in mind when you're planning to do so. Look around George where any

time and you will see flags on the buildings, all sending a message.

Look around tomorrow and there will be a new one, loaded with meaning.

Joining us this evening is Dr John MacDonald,

who is a director of the Scottish Global Forum.

And Raymond Mann from the Scottish Friends Of Israel group.

Thank you for coming in. Why does the Jewish community feel hurt and

upset by this plan? It is not an attack on the Jewish community or in

Israel. It is a gesture of solidarity with the people in Gaza.

The problem with the Middle East and the conflict is nothing to do with

the flag being flown over Glasgow. It is a pathological ideology. A

delusional perception of what the Middle East conflict is about. It is

a distortion, where lies become truth, victims become attackers.

Hamas and the PLO treat the media and the intelligentsia of the West

as propagandists who were not truly aware or fully cognisant of what the

cause is and that is the destruction of Israel. You cannot deny the

destruction taking place in Gaza right now. Why do you think that

showing solidarity with the people there is an attack on Israel? They

should be flying two flags. The Palestinian flag and the Israeli

flag. Doctor McDonald, what difference will it make to the

people of Gaza if a flag is flown in Glasgow? It will make racial

difference. The people of Gaza may feel forgotten. The politics are

complicated but this is about human Terry and is. It is a humanitarian

crisis. Gaza, let us not forget, is being slowly raised to the ground.

-- is being slowly levelled. This will at least make them feel a

modicum of the sense that they are not forgotten. Does it not show that

the actions of the Israeli government are doing a great deal of

harm to Israel at the moment? It is the way the media have portrayed it.

The people in the media, and day after day, night after night,

showing the children in hospitals and you are focused on that, as you

have done in no other conduct in the past few decades. You cannot deny

that hundreds of people have been killed. Fewer than dozen have been

-- fewer than dozens have been killed in Israel to. Why do they

leave them up above when they hide like rats in the tunnels below?

I'll be back again at the same time on Monday.