1866 saw a treaty between England and Scotland to sell off the colony of Western Australia to Scotland for the sum of £3,000,000. The capital was established in the city of Durham, the only city of any significance that had been established in the region in the south-western portion of the continent, and was organized as the Dominion of Western Australia. This name was rather ponderous, though, and various other names were suggested, including Swan River and Westralia. No replacement name would be determined for several decades, but the colony would slowly grow regardless. With a vast landscape of mostly dry grasslands with a corner of green landscapes in the southwesternmost corner, the landscape proved good for grazing, and sheep quickly became Western Australia's largest economic activity.
Around this time, a new cultural shift in Scotland had come about. During the time of the Union from 1707 - 1814, the British had attempted to stamp down the Gaelic identity of the Highlanders and make the Scots "British". At one point, the national anthem of the United Kingdom had a verse referencing "Rebellious Scots to crush". However, with Scotland independent for some 50 years now, these efforts had come to an end some time ago. In Scotland, writers like James S. Angus, George Gilfillan, Theodore Martin, and Janet M. Rae began to produce works of literature in Scots and Scots Gaelic that became popular not just in Scotland, but in all of Europe, showing that the languages were capable of great beauty and poise, much like the Canterbury Tales had done for the English language, and that they weren't necessarily rough or brutish. Not only this, but tartan had become vogue at the time, with the kilt being popularized for men all across Europe to the point where many criticized the widespread wearing of "skirts". It soon became common for the richest men in Europe to travel to Scotland to have their own personal tartan designs created for their families. Study of Gaelic culture and pagan rituals became popular among the higher colleges of Scotland, and study of Scots Gaelic soon began to supplant even the study of Latin in Scotland. The whole cultural phenomenon soon came to be regarded as the rebirth of Scottish identity, which up until that point had largely based around the idea of "British, but not English", the start of the "Gaelic Revival" that ran parallel to the rebirth of Irish culture right next door.
By 1869, the Scottish Empire had evolved into a secondary power on the world stage, especially with the prestige of its culture and colonial development. Tensions were, of course, inevitable. A renewed revolt against Scottish rule in Kalat soon drew the attention of Edinburgh away from any nascent conflicts in Europe. The Khanate cum Colony of Kalat had never been entirely quiet, and inspired by the slave revolt that had created New Afrika had begun pushing back against Scottish presence even harder. Finally, the new Conservative government that had been elected in 1870 declared that they would stamp out Balochi resistance once and for all. In one of the most controversial decisions of Scottish Imperialism, General Walter Darling was given the order to stamp out insurrection by any means necessary. All across Balochistan, entire villages were razed. Women were often the victim of rape by the Scottish soldiers, and people were executed en masse. When Edinburgh got wind of the devastation their generals were inflicting on the Balochi, they only put up a paltry protest and did nothing but tell Darling to return to Gwadar on the coast. The Balochi people would never fully trust the Scots again.
In 1871, the Franco-Prussian war ended in an utter rout of the French forces, and lead directly to the formation of the German Empire, which in one bound became what seemed to be the strongest nation in Europe, stronger even than England. In one fell swoop, the balance of power was upended. Scotland immediately came in to try and help France recover, reaffirming the alliance that France, so confident in its chances of victory, hadn't called upon during the course of the war. Ireland also turned to help France, but England wavered. On the one hand, this strong new German nation was immensely powerful, and threatened to upset the balance of power in Europe. On the other hand, the Royal Family was German in its heritage, ever since George I of Hanover had become monarch in 1714, and Victoria herself was still of the House of Hanover. The English continued to debate the question of where to put its loyalties for some time until 1874, when a very good point was brought to the fore: Germany, for all its land strength, had a negligible navy and thus couldn't provide support in the event that France, Scotland, and Ireland all attacked it at once. As such, England decided that it would be best to simply remain neutral for the time being, and thus attempted to focus its attention outside of Europe.
Scotland's internal development had come a long way. The Highlands served as a source for raw materials in the many mines that dotted its mountainous landscape, while the Lowlands processed those materials into products that could then be used by people the world over, including the Highlands. As such, Scotland had gone from having a vicious economic divide to having a well-developed economic dependence built up between its two regions that benefited both their development. But it wasn't rosy. Factories had spoiled many landscapes with pollution, and the mines often tore open mountains with little regard for the environment. As Scotland was fairly small, its factories were much more densely packed, and their collective pollution was much more apparent. Glasgow had turned almost entirely into a factory city, and the smoke from so many factories often rendered the sky completely brown or black. The River Clyde hadn't flowed in anything other than various shades of brownish-black for a decade. It eventually got to the point where Queen Mary IV herself complained vocally about how Holyrood Palace was slowly turning black from so much coal soot. A parliamentary investigation that was backed by both the Liberals and the Conservatives carried out inspections, and determined the obvious: the copious amounts of coal burned in the factories were the cause. Immediately, regulations went into effect to force businesses to limit the amount of pollutants they poured out of their chimneys. This was notable for being one of the first known major instances of socialist-inspired legislation in Scotland, largely driven by the breakdown of the Scottish Worker's Party and the subsequent merging of many of its members into the Liberal Party, fundamentally changing its base platform to include more socialist-inspired goals, such as pollution controls, wage laws, and regulations on hours worked. The future seemed bright.