If only we could bottle Latvia?s self-belief

EVER wondered what an independent Scotland might look like in 10 years? Bored with Ireland and looking for a cold, Protestant model of autonomy for a change? Well, you could do worse than look east, to the Baltic state of Latvia. That's what I did this week in an attempt to get a fresh perspective on the current national debate.

Less than a decade after it declared independence, Latvia is booming. One of the poorest countries in the EU when it joined, Latvia now has the highest growth rate in Europe ? 10.2% in 2005, according to the Finance Ministry. If you want an advert for independence in Europe, with 15% corporation tax, here it is.

However, if you believe voting Nationalist is a one-way ticket to a social democratic republic, think again. Governed by a conservative coalition, strong on Christianity, low taxes and the free market, this is a very different political culture from post-industrial Scotland. Latvia introduced a universal flat income tax rate of 26% in 1994 and hasn't looked back.

Latvia is one of the reasons some Conservatives, such as the Tory historian Michael Fry, are voting SNP in May. They think that, after independence, Scotland might evolve in a Latvian direction, and away from state controls and social liberalism; that the old Scottish virtues of thrift, hard work and self-discipline might be revived. They could be right ? though I'm not sure many Scots are ready for it.

Independence has unleashed a wave of slightly desperate entrepreneurialism in this formerly socialist state. The central market in Riga ? one of the largest in the world and housed in old Zeppelin hangars ? is testimony to the failure of the Soviets to stamp out the spirit of free enterprise here, though there is still an air of shabby austerity about the place that is very Warsaw Pact.

But, overall, Riga feels like any Nordic city, its pretty, restored streets choked with expensive German cars. I don't know where the money has come from ? Latvia's economy resembles that of the Scottish Borders ? but it comes. The sense of national confidence is as astonishing as the exuberant architecture. I should have known that Riga has one of the largest collection of Jugendstil (art nouveau) buildings in the Europe. Mind you, some of it looks disturbingly Teutonic, almost Third Reich.

Since independence, Latvia has drifted inexorably to the right. The People's Party here is what the Scottish Tories might dream of becoming. The coalition it leads, under Prime Minister Aigars Kalvitis, stands for morality, family and patriotism. Kalvitis has defied attempts by the European Union to impose gay equality legislation in Latvia. You can be imprisoned here for uttering racial or religious abuse, but government ministers call homosexuals "degenerate" with impunity. The Latvian parliament recently elected a notorious homophobic activist, Janis Smits, as head of its human rights committee.

Nor is Latvia exactly progressive about the environment. Scottish Greens would be appalled at its enthusiasm for building the Baltic's first new nuclear power station ? despite having one of the last functioning Chernobyl-type reactors at Ignalina, just over the border in Lithuania. Latvia is determined to have its own energy, if only to avoid becoming dependent on Russia.

The best wee country in the Baltic was under foreign domination almost continuously from the thirteenth century until the end of the twentieth, when it threw off the yoke of communism in 1991. It became a full EU member in May 2004 and will become a full member of the eurozone in 2008 ? when some optimistic nationalists think Scotland might also join it.

Oh, and it also became a full member of Nato last year and hosted last month's security summit just to make sure Russia noticed.

Proximity to a large imperial neighbour has left Latvians preoccupied by self-sufficiency and cultural uniformity.

In 2005, Latvia introduced a citizenship test, an exam in Latvian language and history, which you must pass. Many of the 450,000 Russians living here failed or refused to sit the exam. They remain non-citizens in their own country.

No doubt Home Secretary John Reid will say that's what will happen in Scotland if the Nationalists gain control. Everyone will have to learn Gaelic and the English will be treated as aliens. There will be border guards and everyone will have to swear an oath of allegiance to Alex Salmond.

Nonsense, of course. Latvia's history is very different. In the past century, Latvia has seen wars, coups, pogroms, fascism, Stalinism, impoverishment and mass Russian immigration. We've had peace and prosperity for so long we take it for granted.

And as a full member of the EU, there is free movement in and out of Latvia. Indeed, Latvia is so porous it is worried about losing population. There has been a crisis in the health service because of the number of doctors who have left for lucrative jobs elsewhere in Europe ? including Scotland.

So you have to be very cautious drawing parallels between us and Latvia. A relatively poor country emerging from 40 years of Soviet oppression cannot seriously be compared with a mature, open and educated democracy in one of the richest corners of the world. The average net wage in Latvia is less than 350Ls a month. So, is there anything we can learn from this Baltic tiger?

Well, the one obvious lesson of my brief visit is this. If Latvia can make a success of independence, Scotland certainly could. With our oil, renewable energy reserves, world-class universities, thriving financial services and tourism industries, Scotland has formidable advantages.

However, if Latvia is any guide, an independent Scotland is likely to be a more conservative country than we are used to. Importing Latvian-style economic dynamism might require Scotland to cut personal and business taxes dramatically. If we really want to compete with Baltic low-wage countries on their own terms, it is difficult to see how Scotland could continue with 51% of the economy run by the state.

Are we ready for that? Would we willingly give up our health service and free personal care in order to promote a boom based on foreign direct investment? I don't think so.

Scotland would probably look to a "third way", emulating small rich countries such as Holland and Denmark, where social democratic values remain reasonably solid. Trouble is, that might not be on offer in 10 years. These aggressively entrepreneurial new countries of Europe are looking to break up the European welfare model ? which is why Tony Blair is so fond of them. Whether we like it or not, Scottish workers may find themselves in competition with smart, successful and dirt-cheap Latvians sooner rather than later.

But there's one thing we could use. If you could bottle Latvia's optimism and self-belief and put some of it in Scotland's water supply, then things really might start happening in this somnolent and care-worn country.