Category: Editorial

It remains the most striking insight into how Scotland’s voters might weigh the prospect of independence as they enter the polling booths this September. A survey released earlier this year found that 54 per cent thought they would be swayed not by politics or history, but by whether separation made them £500 better or worse off.

Whether this genuinely reflects the views of the electorate is of course unclear. But as Scotland prepares to decide on whether to leave the UK, the main political parties seem to have taken the survey’s findings at their word.

This week has seen the publication of rival economic assessments: one from Holyrood; the other from the UK Treasury. Both seek to express in blunt monetary terms the merits of their cause.

True, there is clear-eyed political calculation behind these documents. The polls have narrowed slightly in recent weeks, suggesting more voters have made up their minds. However, approximately 15 per cent of the Scottish electorate remain unsure which way to cast their ballot. Just how bullish voters feel about the economic consequences of a split could well influence their choice.

Nor can anyone accuse the unionist and pro-independence camps of being hazy about their promises. The numbers are crisply clear. Alex Salmond, leader of the Scottish National party, claims that separation would benefit individuals by £1,000 a year. But Danny Alexander, a Treasury minister, says it would in fact cost Scots £1,400 annually.

The snag, however, is that these figures are rubbish. Mr Salmond’s arithmetic is perhaps the more egregious. His £1,000 bonus derives from three tax-raising benefits he claims flow from the freedom to set policy independently: higher productivity, lower unemployment and a rising population.

To offer this as some sort of automatic payout is an insult to the intelligence of the land of Adam Smith and David Hume. While a conjunction of these factors may result in the outcome advertised, none necessarily follows from independence.

Mr Salmond has also to explain how it is possible to compute a “bonus” without having a clear grasp of the underlying earnings. Given the extent to which Scotland is integrated into the wider UK economy, its accounts remain a question of guesswork.

Where the Yes camp’s workings are clearer – on oil revenues and public debt – its forecasts look distinctly rose-tinted. Mr Salmond sees rising income from oil; in contrast to the reality of the 40 per cent production decline since 2010. On public debt, the SNP assumes that Scotland would pick up relatively little from Westminster – a position the Treasury would oppose.

To be fair, Mr Alexander’s report is almost as specious. The bulk of the “cost” to Scots the Treasury foresees comes from the fall in public spending it believes would occur because an independent Scotland would be unable to maintain expenditure at current levels. This looks superficially reasonable as per capita spending in Scotland is above the UK average. But without knowing what the full revenue and cost picture would be, it is impossible to be sure.

Confidence in the Treasury’s good faith is not helped by accusations from Patrick Dunleavy, a professor at the London School of Economics, that the UK government manipulated his estimates of the one-off institutional cost of independence by a factor of 10.

These sterile exchanges may fill column inches with accusation and counter accusation. But they must not decide the outcome.

More is at stake this September than hypothetical arguments about pounds, shillings and pence. In the heat of the battle, Britain’s politicians should not forget the deeper ties of history and shared political experience that link us.

– Financial Times

Last September the world’s climate change experts presented the latest scientific evidence of the extent of global warming. They were unequivocal in their judgment: the world has been heating up at a remarkable rate since the 1950s and this has largely been the result of greenhouse gas emissions by industrialised nations.

A substantial amount of harmful emissions, however, result not from industrial activity but the destruction of forests, mainly in the developing world. The burning of trees for fuel directly emits carbon. But more importantly, the destruction of forests removes a vital part of the world’s natural carbon cycle, releasing the carbon stored in their soil. An area the size of Greece is estimated by the UN to be lost each year.

The UN says the world must cut carbon emissions by some 40-70 per cent by 2050. This target cannot be reached if the current rate of deforestation does not dramatically slow. But any action to protect the world’s forests creates a dilemma: how can these vital areas be protected without unfairly holding back the economic growth of developing countries?

An important part of the solution is to enable rich-nation emitters to pay developing countries to maintain their forests. Compared to other carbon-reducing policies – such as investment in renewables – this is a very cheap option.

Schemes such as this are already sponsored by some western states. Last week the Democratic Republic of Congo made a request for such funding to protect its unique ecosystem. Norway has committed a total of $2bn to protect the rainforests in Indonesia and Brazil. But all told, such projects are too limited in number and scope. In addition, they are funded largely by international donors rather than the people who should be paying for them, namely the emitters of carbon.

There are not more of these so-called “avoided deforestation” schemes because of considerable hurdles. At least three steps must be taken by the international community to overcome them.

First, the US, China and the EU should work harder to agree a binding global commitment to reduce carbon with clear national targets. If this could be put in place, carbon emitters should be given access to a market that allows them to offset their emissions by purchasing a credit that will fund protection of a forest. This would benefit both sides.

Second, developing countries need more international support to overcome specific problems with the operation of schemes to save forests. At present there is a constant risk that the protection of one part of a forest merely leads to another part of it being chopped down instead. Even if the government is fully committed to a scheme, its governance systems may not be able to protect an area from illegal destruction. International bodies therefore need to put in place agreed systems to certify that forests have both truly been protected and that the schemes are additional to plans that existed without the extra funding.

Finally, national governments across the rich world should put more funding into forest protection schemes in the poorest countries, especially in Africa. This is all the more important because it will take time for deforestation schemes to become an integral part of carbon trading markets.

The task facing the world to ensure all countries are free to share in the benefits of growth whilst dramatically cutting carbon is enormous. That nature herself presents such a low-cost method to help must be embraced. Developing countries are providing a global service by absorbing the carbon emitted by the industrial nations. Paying them for doing so will not hold them back. On the contrary – it will provide a vital source of income that can be invested in their development.

•It’s high time government addressed the threat posed by shale oil revolution

IF the Federal Government has not begun to re-strategise  in the wake of the shale oil revolution in the United States, the recent dramatic move by the country to consider scaling back regulations that effectively ban the export of crude oil has not only made it urgent but compelling. While the chill in crude exports to the US is ominous enough; the decision to ban the export of crude oil obviously throws a new equation into the global energy supply mix which the Nigerian economy can only ignore at grave risk.

The prognosis is bad enough as it is. From being the largest buyer of Nigeria’s crude as recently as two years ago, the US has slipped to a distant 10th place among the leading buyers of Nigeria’s crude. Whereas Nigeria’s total export to North America in 2012 was 15.111 million barrels, US alone accounted for 14.279 million barrels or 19.15 percent of Nigeria’s crude export.

Thanks to its shale oil, by 2013, the volume fell to 1.438 million barrels. The indication, however, is not just that the trend would continue, but that the US, which traditionally prohibited the export of its crude has, by relaxing the regulations on crude export is at once systematically moving to flood the market with the products from shale oil.

This is where oil-revenue dependent countries like Nigeria have every reason to worry. After a decade and half oil windfall, the signs are of an imminence of a burst.

It isn’t however that the shale oil revolution has not been long anticipated. The gap, as always, is the Federal Government’s pathetic failure to properly anticipate its potential impact, not only on global patterns of demand for hydrocarbon energy but also on its current and future revenues. Not that we are particularly surprised at the apparent failure to evolve a coherent programme or even a proactive strategy to mitigate the impact of the shale oil challenge though; we can only hope that the nation would not have to pay a huge price for that omission in the near future.

Of course, we understand that the shale oil revolution is not necessarily a bad thing. What it does really is to stiffen competition in the two ends of the mix: on the side of investment and on the side of the market, particularly among International Oil Companies (IOCs). For our government, the challenge is to put in place measures to attract investments to the oil and gas sector, while also deepening domestic utilisation of ancillary products both for domestic and industrial uses. It comes with the need to further diversify the economy, to make it far less dependent as currently obtains, on oil revenue.

Of course, Nigerians have been told that all of these are what the much-touted Petroleum Industry Bill (PIB) are meant to address; yet, for inexplicable reasons, both the executive and the legislature continue to stonewall on that important piece of legislation. The need to fast-track its passage cannot be more urgent than now.

The same is no less true of the need to kick-start the process to ensure self-sufficiency in refined products. It bears repeating here that the Organisation of Petroleum Exporting Countries (OPEC’s) sixth largest producer of crude has no business expending annually, trillions of naira to import refined petroleum products for its domestic needs. While it is hard to imagine how the nation would be able to sustain the current regime of fuel importation should oil price take a sustained dip, it remains absolutely incomprehensible that the government would continue to maintain a regime which allows a huge chunk of foreign exchange to be frittered needlessly. We can only hope that the new measures by the US would force a new thinking on the matter.