A motion will be submitted to local authorities next week to investigate an “alternative form of government”.
James Stockan, chairman of the Orkney council, said the island was not getting fair funding in its current relationship with Britain.
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The independent Stromness and South Isles board member said he would like to look at Crown Dependencies, such as the Channel Islands and overseas territories such as the Falkland Islands.
Stockan also suggested another possible future for Orkney could be in the same vein as the Faroe Islands, a self-governing territory within Denmark.
He told BBC Radio Scotland that there were areas where Orkney had “greatly failed” by the British and Scottish Governments.
“We are really struggling at the moment, we have to replace our entire fleet of older ferries from the CalMac fleet,” said Stockan (image below).
“We reject things that other regions get, such as RET (Road Equivalent Tariff) for ferry fares.
“And the funding we get from the Scottish government is significantly less per head than the Shetland and Western Isles to run the same services – we can’t go on like this.”
The council leader added that an in-depth study of the financial arrangements for the island had not yet been carried out.
“We know that we have contributed over the last 40 years through north sea oil, and the dividends we are getting back are not enough to keep us going,” Stockan added.
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“We have a unique opportunity right at the heart of all our wind projects around our waterways.”
Stockan urged fellow members of local authorities to support his idea and find new ways for the island to have greater financial security and better economic opportunities for the Orcadians.
In 2017, the Orkney Islands Council previously voted to see if the islands could have greater autonomy, but while they wanted to have a “stronger voice”, councilors did not support full independence for Orkney.
The British dependencies of Guernsey (pictured below), Jersey and the Isle of Man were cited in the Stockan movement as potential models to follow.
However, he added that it would require a significant amount of staff resources to investigate options and carry out public consultations.
“The board will decide whether to support this motion and from there we will take our time, because we don’t want to do it emotionally,” he said.
“We want to see all the practical implications and then we will evaluate the results.
“We seek the best position for future generations and our place in the world.
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Stockan also suggested that the council could secure a “Nordic connection” with Demark, Norway or Iceland.
Previously, Orkney was under Norwegian and Danish control until 1472 when it became part of Scotland.
The islands were used as collateral for the future wife of King James III of Scotland, Margaret of Denmark.
“We were part of the Norse empire for much longer than we were part of England.
“On the street in Orkney people would come and say to me when are we going to pay the dowry, when are we going back to Norway,
“There’s a really deep cultural affinity for hugs and connection there. This is a great time to explore what’s possible.”
Orkney Island Council will debate the motion on Tuesday 4 July.
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