Sunday 7 September 2014

Scottish independence: how would it impact the UK’s relations with the EU?

Steve Peers

With the Scottish referendum on independence now imminent, and a surge in the ‘Yes’ vote now putting the pro-independence side ahead in some opinion polls, it’s a good time to re-examine the impact that Scottish independence would have on the EU – particularly as regards the EU membership of both Scotland and the remainder of the UK (the ‘rUK’).

At the outset, Scottish independence would mean that four important events would happen more or less simultaneously: Scottish/rUK negotiations on their future relationship; Scottish negotiations to (re)join the EU; UK renegotiation of its EU membership; and the UK general election. The first two events are entirely unprecedented, while the third (UK renegotiation of EU membership) has only happened once before (in 1974-5), under rather different circumstances.

The last event (the UK election) is commonplace, but again the circumstances would be profoundly different than usual. In particular the loss of 59 Scottish seats from the House of Commons would likely alter the result of the election, given that Scotland usually votes far more heavily in favour of the Labour Party than the rest of the country. But if the election goes ahead as planned in May 2015, the loss of Scottish seats would not take effect until the following year, if independence goes ahead as planned in spring 2016.

These four events are closely related to each other. For instance, the result of the UK election will determine the rUK’s negotiation position with an independent Scotland. It will also determine whether the UK attempts to renegotiate its EU membership at all. It should be recalled that renegotiation is the position of the Conservative party, but not (as things stand) of the Liberal Democrat or Labour party. So only a Conservative majority would certainly result in a renegotiation.
Further significant developments are possible, too. A ‘Yes’ vote in Scotland might result in David Cameron’s resignation, or attempts by some of his party members to remove him. The UK Independence Party is likely to win its first Commons seat in an October by-election.

So no-one can realistically predict with any certainty how things would develop after a ‘yes’ vote. The key question of whether Scotland could rejoin the EU has already been discussed in a previous blog post (as has the issue of immigration between Scotland and rUK). The focus of this post is therefore on one issue: the impact of a ‘Yes’ vote on the UK’s relations with the EU.

The starting point here is Scotland’s relations with the rUK. Trade with the rest of the UK (as well as the rest of the EU has a whole) is obviously crucial to Scotland. Indeed, a key feature of the ‘Yes’ campaign is the argument that nothing would really change in this regard, whereas the ‘No’ side has argued that relations with the rUK and the EU would likely be jeopardised after independence.

Clearly, the ‘Yes’ side seems to be winning this argument. Apparently they have been able to convince an increasing number of voters that the ‘No’ side argument is a bluff which can be called.
Is this argument a bluff? Dissecting the issue objectively, there is good reason (from its point of view) for the ‘No’ side to refer to the risks of independence up until the referendum date (although politically speaking, making this argument seems now to be backfiring for them).

But in the event of a ‘Yes’ vote, the rUK ought to consider what it in its own best interests. It seems very clear that, given the economic importance of Scotland to the rest of the UK, the rUK ought to seek to maintain as close an economic relationship with the rest of Scotland as it possibly could. That has domestic implications (as regards a currency union), but also implications for Scotland’s relationship with the EU: it will overwhelmingly be in the interests of the rest of the UK to advocate Scotland’s continued membership of the EU on terms equivalent to the UK’s current membership. Indeed, this is the crux of the ‘Yes’ side’s argument on this point: the ‘No’ side is threatening not just Scotland but also itself. That threat just isn’t credible.

It is possible, however, that the rUK will not act in its best interest. Voters in the rest of the UK may be resentful and desire to punish Scotland. Furthermore, those who wish to renegotiate the UK’s EU membership, or withdraw the rest of the UK from the EU, may not have an interest (for tactical reasons) in supporting Scottish EU membership. The first group (the renegotiators) would face a difficult dilemma, because they would have to expend their limited goodwill with the EU not just on one major project (renegotiation) but a second project (Scottish membership) at the same time.
Provided that the renegotiators genuinely want the UK to remain part of the EU, then it nevertheless makes sense for them to push for both at the same time. After all, while the rest of the EU already takes up a large portion of UK’s trade, that portion would be larger still after Scottish independence – if an independent Scotland joined the EU.

Yet this in turn explains why those who wish to withdraw from the EU might seek to block Scottish membership of it, either directly (by refusing rUK consent) or indirectly (by stirring up opposition among countries like Spain, which have their own regional independence movements to contend with). Of course, if the UK does leave the EU, it can no longer block Scottish membership of it. But in that case, Scots would no longer be as keen to join the EU, since joining the EU would then possibly impede its trade with the remaining UK (although this assessment would be depend on the terms of an EU/rUK free trade agreement – if there is one).

Indeed, some English Eurosceptics might well fantasise that Scotland might be the first country to sign a free trade agreement with the newly ‘independent’ rUK. One can only imagine Alex Salmond’s face at that signing ceremony.

Barnard & Peers: chapter 3

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