When we talk about Lisbon we should not forget Scotland and Scottish independence, writes Deaglán de Bréadún
THE DEBATE about Lisbon and the future of Europe has obscured another issue that is potentially more far-reaching. That is, the future of another multinational entity to which we once belonged: the United Kingdom.
Such is our fixation with Brussels that we have allowed ourselves to be distracted from events in a much closer capital: Edinburgh, capital of Scotland, a part of the UK.
There is a real possibility that Scotland will vote itself out of the UK in the not-too-distant future. The Scottish National Party, which currently forms a minority devolved government under first minister Alex Salmond, has pledged to hold a referendum on independence by 2010.
The implications would be dramatic. What would the UK be without the Scots? Would it be a viable entity at all?
Without seeking to equate today's UK in moral or political terms with the former Soviet Union, would we not be looking at a regional equivalent of the dismantling of the Berlin Wall and the collapse of the USSR?
Checking my favourite betting website, I see odds being offered on the election prospects of Barack Obama and John McCain but nothing so far on Scotland deciding to sever a relationship that dates back to 1707.
That doesn't mean it's not going to happen. We should be prepared because there are significant implications for this island if the Scots decide to say Yes to independence.
Scottish independence would not necessarily loosen the ties between Northern Ireland and what was left of the UK.
But it would have fiscal implications of a very serious nature. Like Northern Ireland, Scotland receives an annual subvention from the British exchequer. The Scots are getting between £9 billion and £10 billion per annum; Northern Ireland gets in excess of £7 billion and Wales just over £3 billion.
This is based on the Barnett Formula, devised by Labour peer Lord Barnett.
If independence means what it says on the tin then surely the Scots will no longer have a claim on the British exchequer. The subvention will be withdrawn. In that eventuality Northern Ireland's grant would inevitably come in for official review.
The subvention is a mixed blessing for Northern Ireland. It funds public services but economists say it inhibits the development of a market economy.
Even without Scottish independence critical eyes are looking at the North's subvention. The idea is being quietly floated in British Conservative circles that Northern Ireland could be allocated the same corporate tax rate of 12.5 per cent as the Republic but an equivalent slice could be taken from the subvention or "block grant".
The South's low corporate tax rate has been perhaps the key factor in our recent economic success, and there is no obvious reason it would not work for the North. If the security situation remains stable, more investors would be happy to move there.
We haven't benefited from the Barnett Formula in the South but we used to have a system called protectionism. The death-knell of protectionism was sounded by Seán Lemass and TK Whitaker back in 1958, and now we are one of the most globalised economies in the world.
It worked in our favour while the international economy was flourishing. These are more challenging times but there's no going back.
Another issue that arises in relation to the block grant is what the Republic would do if London cast "Ulster" adrift as Harold Wilson apparently wanted to do in the mid-1970s after the collapse of the Sunningdale Agreement. Like the West Germans after the collapse of the wall, we would be faced with the option of amalgamation with the North in the same way the two parts of Germany were reunited.
That would cost a pretty penny. Given the current fiscal situation in the North, the South would be faced with the prospect of substantial tax increases to sustain the "fourth green field".
It's a daunting scenario, and nationalist ardour would be severely tested by the revenue implications. Yet it is hard to see the populace deciding to leave the "Wee Six" shivering in the cold.
These are interesting times, and when we talk about Lisbon we shouldn't forget Loch Lomond.
• Noel Whelan is on leave