Nationalism has discovered the global economy and fallen in love with it

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'WHY do they call us separatists?' Liane asked me. 'We don't want to stop the world and get off. We want to join the world]'

Liane is an Abkhazian. Her minute country demanded federal status within Georgia, found itself at war and was slightly amazed to emerge victorious. Now Abkhazia is 'sovereign' but in ruins, unrecognised and broke. The ambition of its leaders is to keep the sovereignty but get into the great global free-market economy.

I remembered Liane last week when the Parti Quebecois won the elections in Quebec - with a majority of parliamentary seats but only a narrow margin of the popular vote. Jacques Parizeau, the PQ leader, intends to hold a referendum on independence when he thinks the moment ripe. 'Separatism]' roared the world, and delivered a torrent of warnings about how petty, divisive nationalism would pitch Quebec into poverty and isolation as business packed its coffers and fled.

Has nobody noticed that the world has changed? George Robertson, Labour's shadow Secretary of State for Scotland, used Quebec last week as a bogey: 'The separatists are winning, but with enormous economic damage as a consequence (which) will remind the Scots of the expensive risks in secession.' Robertson, a man with a lot of sound international experience, should have known better. In the past few years, moderate nationalism (not the blood and soil type) has turned itself inside-out.

Parizeau said the other day: 'The fundamental discovery of our time is that a small country can prosper so far as it exists within larger markets.' What has happened is that nationalism has discovered the global economy and fallen in love with it. And this love is requited.

There was a time when nationalist movements were truly separatist. An independent nation-state would be established, barriers set on the movement of capital, local industries protected or even nationalised, land purchase restricted to 'natives', new taxes and a new currency introduced with exchange rates controlled by government. I remember how, at a business conference at Aviemore 20 years ago, Peter Jay electrified the audience by saying that the biggest argument for Scottish independence was that a Scottish pound could be devalued.

All that is dead now, or dying. As a shrewd article in the Wall Street Journal observed, 'now even tiny groups of people can contemplate breaking away from the central state and plugging into the world economy on their own . . . In the past, separatist movements were inward-looking and chauvinistic. But the new ones see themselves as internationalists and free- traders'. The examples of small countries like Ireland, Luxemburg or Switzerland have impressed newcomers like the Czech Republic or Estonia, which associate protectionism not with independence but with backwardness and dependence. Even the Scottish National Party now stands for 'independence in Europe' - within the single European market.

In his book, Blood and Belonging, Michael Ignatieff made this discovery for himself. He went to see Claude Beland, president of the huge Caisse Desjardins bank in Montreal, and was fascinated to find that he was a nationalist. 'As men like Beland join the global economy as players, they become more, not less, interested in national sovereignty for a little corner of the globe called Quebec . . . The coming of continental free trade and globalisation of capital markets strengthened, rather than weakened, the case for a sovereign Quebec.'

Separatism is passing away. What remains is the idea of a community which takes charge of its own culture and resources for three reasons: to empower itself politically, to protect its identity, and to participate directly - rather than indirectly - in the global scramble for prosperity. But does a community - or a 'nationality' - need a fully-fledged nation- state to achieve those three things?

The answer seems to be: sometimes, but less often than in the past. The power and glamour is gradually ebbing out of nation- states. Regions, by contrast, are growing stronger, and this is part of the reason why multinational business is attracted to them. Government intervention in the economy is waning all over the world, but what remains of it is increasingly regional. A German company interested in siting a new factory near Cardiff would not approach London to discuss planning permission but would send its people to the Welsh Office or the Welsh Development Agency. An American chemicals firm with its eye on German skilled labour would start talking to the Land governments at Dresden or Stuttgart, not to the federal government in Bonn.

The next question is whether free-market nationalists are less inclined to expel or murder their ethnic minorities than old-fashioned nationalists. Talk about single currencies is not impressive in those lands where the Terminator and Rambo - whistling a folk- song and carrying grenades stuffed into their ethnically embroidered waistbands - saunter across the hills looking for people with the wrong headdress. For people like the Kurds or the Crimean Tatars, the struggle to win a state of their own or to regain the land seized from their fathers is about life or death. The nationalism of the 'haves' who want to have more can afford tolerance and an open door. Those who have nothing, who feel they are clinging to a ledge above extinction, will take anything they can grab but dare not give an inch.

Quebec has a choice ahead. One argument is that Quebec can gain the effective sovereignty it needs without secession; in many ways it already functions as a full member of the North American Free Trade Area. The other is that anything with less clarity than formal statehood would send the wrong message to other Canadians - that they still had some residual rights over Quebec's future.

But the danger is that the people will be cheated out of that choice. Jacques Parizeau and the PQ have an interest in fouling up negotiations with Ottawa over a new status. That could persuade the Quebecois that there is no halfway house between the status quo and independence - and corner them into taking independence as the lesser evil. Something similar happened to the Slovaks last year. In the world of free-market nationalism, statehood for Slovakia or Quebec is no disaster. It may well turn out a success, ending generations of wrangling and laying ethnic paranoia to rest. But even when nation-states have lost their old splendour, when independence means joining the world rather than leaping off it, these remain solemn decisions.

If Quebec is a nation, then the Quebecois are entitled to make up their own minds on what to do about it. Nationalists talk of the ''right to self-determination'. If it exists, then it should start at home.

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