Aberdeen’s oil curse

ABERDEEN, Scotland — The Aberdeen Food Bank Partnership is housed in a former fish-filleting warehouse a stone’s throw from the docks, its shelves lined with boxes of tea and porridge oats, packets of pasta and fresh fruit. In a city once known as “Europe’s oil capital,” former oil workers are now queuing for food parcels.

“One man came in with a Porsche recently. He had lost his job, his house,” says Dave Simmers, chief executive of Community Food Initiatives North East, the food bank’s parent body.

“Oil companies used to be our biggest social enterprise customers and the profit from that supported our charity work. That’s completely changed,” Simmers adds.

Aberdeen, a city of around 200,000 in north-east Scotland, has long been dividedbetween the haves and have nots. Extravagant mansions are often within walking distance of high-rise housing projects. But a sharp downturn in the multi-billion-euro North Sea oil industry has sent the local economy into a tailspin.

“I think there is a lot more pain to come” — Jake Molloy, a regional union organizer and former offshore worker

Plunging oil prices — the cost of a barrel is barely a third of its June 2014 high of $114 — have changed the face of the “Granite City.” Streets in the city center, hewn from hard, gray rock, are pockmarked with empty retail units and “To Let” signs. Amid widespread job losses, many are struggling to make ends meet.

AT SEA - FEBRUARY 24: A general view of the BP ETAP (Eastern Trough Area Project) oil platform in the North Sea on February 24, 2014, around 100 miles east of Aberdeen, Scotland. The British cabinet will meet in Scotland for only the third time in history to announce plans for the country's oil industry, which it warns will decline if Scots vote for independence. The fate of North Sea oil revenues will be a key issue ahead of the September 18 referendum to decide whether Scotland will end its 300-year-old union with England, and is expected to be the focus of Prime Minister David Cameron's cabinet meeting.  (Photo by Andy Buchanan - WPA Pool/Getty Images)
AT SEA – FEBRUARY 24: A general view of the BP ETAP (Eastern Trough Area Project) oil platform in the North Sea on February 24, 2014, around 100 miles east of Aberdeen, Scotland. The British cabinet will meet in Scotland for only the third time in history to announce plans for the country’s oil industry, which it warns will decline if Scots vote for independence. The fate of North Sea oil revenues will be a key issue ahead of the September 18 referendum to decide whether Scotland will end its 300-year-old union with England, and is expected to be the focus of Prime Minister David Cameron’s cabinet meeting. (Photo by Andy Buchanan – WPA Pool/Getty Images)

“If it wasn’t for this I wouldn’t be able to survive,” says Hazel Burgess as she carefully lays a loaf of white bread on top of her wheelie bag on her weekly visit to the food bank. The mother-of-two has been receiving food parcels for three months, since money became tight when her son, who suffers from autism, had his benefits reduced.

Simmers estimates the food bank will have given out 500 tons of food by December, up from 280 tons last year.

* * *

Since late 2014, nearly 100,000 people have lost their jobs in the oil industry and its supply chain. Another 360,000 have taken pay cuts of, on average, 15 to 20 percent. Workers are giving away cars they can no longer afford to run. Changes to shift patterns mean workers often spend less time on land, which exerts a heavy toll on their families.

Jake Molloy, a regional organizer for the Rail, Maritime and Transport Union, and a former offshore worker, blames the government for “failing” an industry that has contributed some £300 billion to the British exchequer since oil was discovered in the area in the 1970s.

When it comes to oil, successive U.K. administrations have followed a simple policy: Tax heavily in the good times, loosen purse strings in the bad. Now with exploration at lows not seen since the 1960s, Westminster “doesn’t seem to have a strategy” for reinvigorating the industry, says Molloy.

“I think there is a lot more pain to come.”

* * *

For years, particularly as oil hovered around $100 a barrel after the 2008 financial crisis, prices in Aberdeen only went in one direction: up. Now gravity has re-exerted itself. House prices, which rose by 17 percent in 2013, have fallen sharply in the last year, according to a report from the Aberdeen Solicitors’ Property Centre.

Aberdeen’s population has declined by about 15 percent since the oil market crash, and a majority of students and young professionals are considering leaving the city in the next few years, according to a recent PwC report. The market crash has largely been attributed to a price war waged by Saudi Arabia against the U.S. shale industry.

Hotel rooms were once so hard to come by that offshore workers were put up in Edinburgh, more than 100 miles away. Now, vacancies are the new normal.

“What we are experiencing now is here to stay,” says Stewart Spence, owner of the five-star Marcliffe Hotel. “When we had $100 oil, we had 100 percent occupancy. Now we have $40-$50 dollar [oil], we have 40-50 percent occupancy. That’s what we have to live with for the future.”

The Scottish share of tax receipts from the North Sea shrank from £9.6 billion in 2011-2012 to £1.8 billion in 2014-2015.

Most North Sea staff are employed not by Big Oil, but by smaller, local contractors. The downturn has taken a heavy toll on these local businesses across the board. Even the city’s few success stories are illustrative of a deeper malaise.

Michelle Clark spent a decade working in recruitment and training for an Aberdeen-based firm before being made redundant in 2014. Fifteen months later she lost her job again. After unsuccessfully interviewing for 60 posts she decided to try something different — and opened her own business.

“I always wanted to do this,” Clark says from behind the counter of Melt, a small take-out restaurant in Aberdeen’s leafy west end. The premises, formerly a check cashing outlet, has a self-consciously 1970s feel: laminated floors, retro floral wallpaper, vintage tea sets. A chalk board advertises special Nutella and cheese toasties.

Since opening in March, business has been brisk. “It’s an affordable luxury at a time when everyone is struggling,” explains Clark. Her husband recently lost his job at a specialist musical instrument store.

“I probably speak about oil and gas more in here than I did when I worked in oil and gas,” she says. “It seems to affect everyone who comes in and they want to speak about it.”

Across town, native New Yorker Stephen Dillon closed his steakhouse, Prime Cuts, after a decade in business. Midweek sales had fallen by almost 70 percent. “The corporate business just disappeared.”

Dillon and his French wife, Pascaline, opened a new BBQ restaurant but have little hope for the future.

“Even if the oil industry does come back to a reasonable level, for us it won’t be enough,” he says. The stress has taken its toll on the salt-and-pepper haired American: He has recently suffered from depression. “You try to be optimistic but it’s tough.”

* * *

Beyond its boom effect on the local economy, oil has also been inextricably linked to Scottish independence in the national imagination. In the 1970s, the Scottish National Party (SNP) ran on the acerbic slogan: “It’s Scotland’s Oil.” In those days, Texans in Stetsons sauntered down Aberdeen streets and the nationalists were a minor concern.

Now, the SNP is the dominant power in Scottish politics, and oil remains a key part of their platform. The 2014 prospectus for leaving the three-centuries-old union with England proposed setting up an oil fund in the Norwegian mold.

Mark McDonald, an SNP member of the Scottish parliament for Aberdeen, says an independent Scotland would be best placed to guide the North Sea through turbulent waters: “We have left other people to deal with our economic situation for quite some time and there are plenty of people who haven’t got a good deal out of that.”

The oil industry’s recent travails, however, have not helped the independence cause. The Scottish share of tax receipts from the North Sea shrank from £9.6 billion in 2011-2012 to £1.8 billion in 2014-2015, and is likely to fall to zero in the coming months — undermining the argument that the Scottish economy can stand on its own.

“The EU referendum added to the uncertainty that we already had with the oil industry” — Lynn Bennie, reader in politics at Aberdeen University

In spite of the downturn, Aberdeen’s skyline is littered with cranes. Construction for new shopping centers and hotels planned in the boom years is still going ahead. A recently signed “City Deal” is expected to fund a new harbor development. At Marischal Square, workmen lower girders into place on a £50 million development built under a controversial, complex private finance deal that could leave the local council with a significant black hole in its budget. The development was dogged by protesters, many of whom argued that the city could not afford — and did not need — another glass-and-steel retail complex.

Across the street, in Aberdeen’s council offices, local representative Barney Crockett says the city has been forced to be “creative” to support new projects. “We are the lowest funded local authority and the lowest funded health board in Scotland,” the Labour councilor says.

Crockett, who is “old enough to remember Aberdeen before oil,” says the city will bounce back. But he admits to being “worried” about the recent Brexit vote.

Aberdeen has often relied heavily on links with Europe, and particularly nearby Norway.

“We often feel we don’t get a fair look from Scottish or British governments so Europe has been really important,” Crockett says, pointing to the city’s hydrogen-powered bus fleet, partly funded by the EU.

A section of the BP ETAP (Eastern Trough Area Project) oil platform in the North Sea, around 100 miles east of Aberdeen, Scotland | AFP photo / Pool / Andy Buchanan

Brexit could heap more woes on the already-stressed oil and gas industry. The North Sea’s mainly mature fields have far higher production costs than places such as Saudi Arabia or Equatorial Guinea. Last month, analysts at S&P Global Plattswarned that for the North Sea, fears over Britain’s EU exit “could be the straw that breaks the camel’s back.”

Most Aberdonians, however, seem more concerned with fluctuations in oil prices than the political machinations in Brussels or Edinburgh.

Influential Aberdeen oil magnate Ian Wood has been a vocal critic of calls for a second independence referendum — a vote Scotland’s First Minister Nicola Sturgeon has called “highly likely” in the wake of Brexit.

Aberdeen also voted ‘No’ to independence in 2014 and there is little sign of a shift in mood, even though the SNP holds all the Westminster seats in the region. Recent opinion polling suggests that despite voting overwhelmingly to remain in the European Union, most Scots still favor being part of the U.K.

“The EU referendum added to the uncertainty that we already had with the oil industry,” says Lynn Bennie, reader in politics at Aberdeen University. “Most people just want that uncertainty to end.”

***

Back at the Aberdeen Food Bank Partnership, volunteer Ingrid Pringle is concerned about the city’s future. The retired social worker recalls moving to Aberdeen from south-east England in 1981.

Four decades ago, oil transformed Aberdeen from a rough fishing town into a key player on the global market. But the city has little to show today for the billions that passed through it, says Pringle.

“Back then it was a city on the up. It doesn’t feel like that now,” she says as she fills plastic bags with fruit and vegetables during her weekly six-hour shift.

“I assumed that the oil industries would invest in Aberdeen, but aside from sponsoring the odd roundabout they haven’t really done anything.”

This piece originally appeared in Politico Europe.

Brexit and Northern Ireland

BELFAST — Each year, at midnight on July 11, the Belfast skyline lights up with dozens of bonfires. Scattered across the Northern Irish capital, they are a reminder of a deep-rooted conflict that has in recent years lain largely dormant but which some fear could reignite in the wake of the United Kingdom’s vote to leave the European Union.

This year, the pyres, erected to commemorate the arrival of the protestant King William of Orange in 1690, had a novel touch. Alongside the green, white and gold of the Irish tricolor and effigies of the Pope were signs saying “Brexit.” On one blaze, a European flag was burning brightly.

There may be no other place in the U.K. where the decision to leave the EU has more dangerous implications than in Northern Ireland. The vote has deepened divisions and raised the specter that the militarized border that once cut through the island could one day be erected again.

Most Irish nationalists and liberal pro-U.K. unionists supported continuing EU membership. But there is little love for Europe among more hardline protestants.

“Brexit all of a sudden puts you in a box,” said Jonny Byrne, lecturer in politics at the University of Ulster. “It identifies you very much as one or the other. That is damaging, especially in a society in 2016 that is trying to embrace diversity and difference. It is like taking a step back to the 1940s.”

Marching season

On July 12, the high point of the protestant marching season, thousands ofOrangemen in mandarin-colored sashes, bowler hats and umbrellas gathered to parade through Belfast.

In past years, the “Glorious Twelfth” has often been accompanied by violence, especially near Belfast’s corrugated iron “peacewalls” that separate nationalists and unionists. In 2013, several days of rioting took place after the Northern Irish Parades Commission ruled that local Orange lodges could not march past a row of shops in the Catholic Ardoyne neighborhood in north Belfast.

Since then a small protest camp has held a permanent vigil in nearby Twaddell Avenue, which is predominantly protestant. Twaddell has frequently been a flash point for unrest, particularly around the marching season. “This area lives in a siege mentality,” said Alfie McCrory, vice-chair of the Twaddell residents’ association.

As the marchers prepared to set out, dozens of protesters lined the route of the Orange parade. Some republicans opposed to the peace process gesticulated at the rows of heavily armed police. Others demonstrated silently as the Orange band passed by, playing a single drum beat as stipulated by the police.

Among the demonstrators was Sinn Féin’s Gerry Kelly. The former Irish Republican Army prisoner was confident a solution could eventually be reached to end the Twaddell impasse — but less hopeful for the prospects of a compromise on Brexit.

Kelly’s party has called for a “border poll” on Irish unification in the wake of Brexit. “The vote has been taken, but the democratic decision was taken in the north to remain,” he said.

Signs of hope

The Democratic Unionist party, once Sinn Féin’s sworn enemy, is now its coalition partner in the devolved Assembly, and it is strongly in favor of Brexit. First Minister Arlene Foster has said Northern Ireland must follow the rest of the U.K. in leaving the EU.

But Foster’s is an unpopular position among many inside and outside the Assembly. Some two-thirds of its members advocated a remain vote, and concerns are growing rapidly about political — and economic — ramifications of leaving the EU.

More than a fifth of Northern Ireland’s exports go south, to the Irish Republic, but this could drop quickly if there are changes to the current porous border arrangements. Such is Northern Ireland’s dependence on EU trade that economists predict its GDP will fall by 3 percent as a result of withdrawal.

Any decline in living standards is likely to be keenest felt in places like north Belfast, one of the country’s most deprived areas. Unemployment remains stubbornly above the national average. Even the landscape is still scarred by the Troubles. In this patchwork of terraced streets, the painted curbstones often change from loyalist blue to republican green in a matter of meters.

There are signs of hope, however. A £20 million community hub recently opened on the site of a former army barracks — with funding from the EU. “It is one of the rare spaces in north Belfast where people of all denominations can come together,” said Nicola Mallon, an Assembly representative for the nationalist Social Democratic and Labour Party.

As we spoke, the Orange parade silently disappeared into the distance, on its way to join thousands of marchers and bandsmen in Belfast city center.

“For British and Irish citizens here, the fact that you are part of a wider European society helps to shape a wider sense of citizenship,” said Winston Irvine, a member of the Progressive Unionist Party, which is linked to the paramilitary Ulster Volunteer Force. Even though he is a loyalist, he voted to remain. “Now that you have removed the EU, it starts to bring domestic differences into sharper focus, which can’t be good for a society coming out of conflict.”

The 1998 Good Friday Agreement explicitly includes a role, albeit minor, for the European Union. The EU also provided human rights legislation and a supranational underpinning that has allowed Northern Ireland slowly to begin to move beyond the Manichean division between Catholic/nationalist and Protestant/unionist. Now that is under threat.

Brexit worries

Northern Ireland’s fate lies in the hands of politicians hundreds of miles away with limited knowledge of, or interest in, the region’s affairs. The region is low on the list of priorities for Theresa May. During the Brexit campaign the recently anointed prime minister said it was “inconceivable” that the Irish border could remain untouched. Her new secretary of state for Northern Ireland, James Brokenshire, has dampened expectations of a bespoke deal for the region.

Across Northern Ireland, this year’s marching season has been the most peaceful in living memory.

“The reality of Brexit is people in London making decisions about us who have no real understanding of the issues in Northern Ireland and the uniqueness of the border and the issues around sovereignty,” said Jonny Byrne, the Ulster academic. “That is the antithesis of devolution.”

In Belfast city center, the Twelfth of July parade passed without incident. That evening, more republican protesters gathered outside the Ardoyne shops. A larger police presence separated them from a group of loyalists near the entrance to Twaddell Avenue. But for the first time in years, there was no violence as the marchers attempted to return. Instead, a single Orangeman handed a letter of complaint to the police.

Talks to resolve the Twaddell standoff are expected to restart soon, and hopes for a breakthrough are high. Across Northern Ireland, this year’s marching season has been the most peaceful in living memory. And yet, behind the newfound calm, there are growing fears that events far beyond Belfast’s streets could have serious repercussions for Northern Ireland’s still fragile peace.

This piece originally appeared on Politico Europe. 

Scotland bangs the drum for Europe

GLASGOW — As hundreds of people gathered outside the Scottish Parliament in Edinburgh last week, there were flags of every European Union state, in a sea of Scottish Saltires. “Scotland loves Europe,” declared one placard. “Don’t EU want me baby,” read another.

“We want to find a way to respect the democratic mandate for the people of Scotland to stay in the EU,” said Sarah Beattie-Smith, a Scottish Greens activist. “We want to explore every possible option for how to stay in the European Union. Of course, that includes independence.”

And as a piper played at the “Keep Scotland in Europe” rally, Scotland’s First Minister Nicola Sturgeon was hundreds of miles away in Brussels, trying to make the case for Scotland to remain in the European Union.

There was sympathy for the Scottish National party (SNP) leader in Europe’s political capital after Scots voted by a large margin to stay in the EU — but little concrete support for her desire to see Scotland retain EU membership even as the U.K. heads for the exit door.

Both French and Spanish prime ministers made clear their opposition to Scotland retaining EU membership.

Ahead of their meeting Wednesday, European Commission President Jean-Claude Juncker said that while Sturgeon had “won the right to be heard in Brussels,” he did not intend “to interfere in an inner British process.”

European Parliament President Martin Schulz said he had “listened carefully and learned a lot” from his conference with the Scottish first minister. But European Council President Donald Tusk turned down Sturgeon’s request for a meeting.

The reception from EU heads of state was equally mixed. Irish premier Enda Kenny made an unexpected intervention at the European Council “on behalf” of the Scottish first minister.

Both French and Spanish prime ministers made clear their opposition to Scotland retaining EU membership.

The options available to the Scottish nationalist government are uncertain. The parliament in Edinburgh, contrary to reports, cannot veto Brexit.

“If the United Kingdom leaves … Scotland leaves,” said Spanish acting Prime Minister Mariano Rajoy, who has separatist forces of his own to contend with in Catalonia.

In an interview published Saturday, German Vice Chancellor Sigmar Gabriel toldGerman newspaper Neue Osnabruecker Zeitung that the EU would certainly accept Scotland as a member in its own right if it were to leave the U.K. and move to join the Union.

Despite the flurry of diplomatic activity — and the standing ovation SNP’s Alyn Smith won in the European Parliament when he begged his fellow MEPs to not “let Scotland down” — the course Sturgeon is pursuing is far from clear, and largely without precedent.

Sturgeon has formed a council of prominent experts to advise the Scottish government “on how best to achieve our EU objectives.” The group is far from a nationalist sock puppet. Members include former judge at the European Court of Justice Sir David Edward, economist John Kay, and Labour MEP David Martin.

But what options are actually available to the Scottish nationalist government are uncertain. The parliament in Edinburgh, contrary to reports, cannot veto Brexit. Westminster remains sovereign and can sign the exit triggering Article 50 on behalf of the U.K.

The main possibility discussed in Scottish circles would be for the U.K. to stay in the EU, but stipulate that European legislation apply only in Scotland (and possibly Northern Ireland, which also voted to remain). The option was floated as a “reverse Greenland,” a nod to the large Arctic territory that chose to sit outside the European Union but still remains part of Denmark, an EU member.

But such a settlement could prove practically and politically impossible. Scotland represents barely an eighth of the U.K.’s population. It is hard to imagine Westminster politicians, fresh out of a divisive Brexit campaign, choosing to remain in the EU to placate Scottish nationalist demands.

Experts warn that a bespoke Scottish settlement is unlikely. “I don’t see how Scotland could get a significantly different deal from the rest of the U.K.,” said James Mitchell, professor of politics at Edinburgh University. “The big question for all of us will be around free movement. While Scotland wants free movement, elsewhere in the U.K. this is clearly not wanted.”

* * *

If Scotland is not able to secure a deal to remain in the EU, the issue of independence is destined to return. The terrain has changed since Scots voted by 10 points to stay in the United Kingdom in 2014.

The SNP campaigned to remain in the EU — and few doubt Sturgeon wants Scotland in Europe — but Brexit has damaged her opposition. The alliance between Scottish Labour and the Conservatives that emerged victorious last time out has frayed, probably beyond repair.

During an at times bad-tempered emergency debate in the Edinburgh parliament last week, Scottish Tory leader Ruth Davidson accused the SNP of using the Brexit vote to push for independence. But her opposite number, Scottish Labour’s Kezia Dugdale, agreed with a nationalist motion to explore “all options” to keep Scotland in the EU and condemned the Conservatives for holding the referendum “to resolve an ego contest in the Tory party.”

Davidson was rightly lauded for reviving the seemingly moribund Scottish Toriesand leading the party to second place in the May elections. But she has appeared ill at ease since last week’s vote, unsure of whether or not to argue for a separate deal for Scotland that could help to secure its place in the United Kingdom.

Labour, long the dominant force in Scottish politics, is in turmoil. The party is cash-strapped and weary. Sources privately admit the party would take a much softer line on leaving the U.K. in any future vote. On Sunday, former Labour first minister Henry McLeish said Scottish independence was “something I could now vote for.”

Scottish nationalists, however, would not be guaranteed to win a second referendum, at least not at present.

Support for ending the three-centuries-old union with England has risen in opinion polls taken since the Brexit vote. But the energy unleashed by the referendum could trail off, especially if the U.K. negotiates a deal that looks more like Norway’s agreement than a full-blooded clamp down on free movement.

Economic issues that dogged the Yes campaign in 2014 have not been resolved (although JP Morgan has given its imprimatur to a new post-independence Scottish currency.) Much of the Scottish electorate is fatigued after four national votes in less than two years.

Despite her forceful role since the Brexit vote, Nicola Sturgeon is by nature a cautious politician. The nationalist leader will only go to the polls when she feels confident of victory.

“If the SNP go for a second independence referendum then they have to win it,” said Alistair Clark, senior lecturer in politics at Newcastle University.

While Brexit is being negotiated, Sturgeon will have to maneuver her way through a political storm that is beyond her control.

The European Union would weigh on voters in a different way in a new referendum on Scottish reference. In 2014, Scots were warned that if they left the U.K. their place in the EU could be under threat. That looks far less likely now.

“The EU historically always has been remarkably flexible,” said James Mitchell. During the last independence referendum, EU member countries were fearful of interfering in British internal politics.

“Now the thinking in places like Berlin, Brussels and Paris is the U.K. is no longer a member so what is the problem if Scotland wants to become independent,” says Mitchell.

Talk of another referendum could yet prove premature. What Brexit will look like in practice remains to be seen. Meanwhile, Sturgeon will have to maneuver her way through a political storm that is beyond her control.

“She is going to have to be very fleet of foot and nimble, and at the end of the day circumstances might work against her,” said Mitchell. “[But] what’s she is doing is building relationships that could be useful in the future.”

This piece originally appeared on Politico Europe.