Problems with an independent Scotland joining the EU

This is a slightly edited repost of an article written on Facebook on June 26 2016, three days after the EU Referendum result. I'll be updating this in 2017 with the latest situation, though it has held up well.

So, - as expected - it appears that Nicola Sturgeon and the SNP have fired the starter pistol on a possible 2nd Scottish Independence referendum. Here are some thoughts on Problems with an independent Scotland joining the EU.

The justification for a vote this time (not that the SNP need an excuse to have another “once in a generation vote” every time they lose) is Scotland being “dragged out of the EU against its will” (and this is sort of true: in Scotland 62% voted to Remain, 38% to Leave; around a 660K Remain majority).

Clearly, any potential #IndyRef2 is primarily (but not entirely) a matter of the people who live in Scotland. If Scots want another referendum, and then choose to vote to leave the UK, while those elsewhere in the UK may not be happy about it, as a matter of democratic principle that must be respected and implemented.

That said, there is a big difference between:

1. Becoming independent, with both nations in the EU (#IndyRef1)
2. Becoming independent, because the UK has chosen to leave the EU (#IndyRef2)

Current opinion polls taken immediately post Brexit now show majority support for Scottish independence in three polls (49-42, 52-48 and 59-40), though these are early days - polls only a few weeks ago gave Unionists a large majority (and some polls still show opposition to even holding another referendum, e.g. one has it 45-42). I expect it will be a 50/50 split (perhaps slight SNP advantage) until Scotland sees how the UK Brexit situation develops and if the EU resolves any of its own problems.

Onto the problems. For each, I have provided a "🇬🇧 Union Alternative" as I think one of the problems with IndyRef1 was "Project Fear" and focusing on the potential negatives of independence, rather than the positives of the Union.

Problem 1: Scotland would almost certainly have to re-apply to join the EU from scratch.

• The UK is likely to be outside the EU too quickly for Scotland to both hold & win a referendum and exit the UK before the UK exits the EU (assuming UK EU exit takes 2-3 years)
• Even if Scottish independence could be speeded up, it likely cannot start membership talks with the EU without UK agreement - under EU rules, the rUK (rest of UK without Scotland) could veto Scottish accession talks whilst the UK was still a member (the UK retains almost all membership rights until it actually leaves)
• Scotland cannot inherit the same terms of membership as the UK (e.g. the Thatcher-won membership fee rebate, plus other special opt outs such as not joining the Euro, Schengen, migration and defence policy; these were won by the UK as a whole). This will mean years of EU accession talks that can only start after rUK has left (unless rUK agrees, and why would it if antagonised by Sturgeon acting unilaterally)

🇬🇧 Union Alternative: The UK Union has lasted since 1707 - 309+ years. This would be replaced by years of EU negotiations whilst the EU is undergoing multiple crises. Why leave a real successful fiscal, political, cultural and monetary Union to join a stagnant one?

Problem 2: As part of joining the EU as a new member state, Scotland will be forced to join the €.

Any new member state joining the EU has to commit by formal legal treaty to adopt the EU as their currency. This also means the precursor Exchange Rate Mechanisms, and just these could be bad enough - ERM blew up the UK economy in 1992. Adoption of the Euro would put Scotland firmly within the control of the EU's Eurozone institutions, where it would have a permanent minority vote. Not even the SNP proposed adopting the Euro in #IndyRef1 - it hoped to keep Sterling by piggybacking onto the UK's Euro opt-out - which it won't have if the UK has left the EU.

🇬🇧 Union Alternative: Within the UK, Scotland can continue to use £ Sterling - the worlds oldest currency, stable and used by Scotland for 300+ years. The Euro is only 17 years old and has been unstable & failing for nearly half its life (since the 2008 global financial crisis), with no sign of resolution any time soon.

Problem 3: The Holyrood Parliament would be subservient to EU institutions, much more so than it is to Westminster.

For example, it would have no powers over fishing, agriculture, trade, migration, VAT (or other EU competences). EU law and the European Court of Justice would also be supreme in Scotland. Decisions about Scotland would be made far outside of Scotland, breaking a key aim of Scottish independence set out in the SNP white paper prior to the last independence vote:

(Extract from #IndyRef1 SNP white paper)

🇬🇧 Union Alternative: Scotland has far more power within the devolved UK than it would have within the centralised EU. Any new powers repatriated from the EU to the UK post Brexit could also now be open to new devolution opportunities - e.g. Fishing (2/3s of which is based in Scotland) would be an ideal area to get back from the EU and give straight to Scotland

Problem 4: Scotland would have almost zero influence within the EU, X5 less than it currently does with Westminster.

Scotland would likely have 13 of 691 MEPs in the European Parliament - that’s 1.8% of votes (assuming rUK exit reduces current 751 by 60 MEPs). In the UK Union, Scotland has 59 of 650 MPs*, or 9% of the votes. And of course, the UK Parliament can actually initiate and repeal legislation as its a real Parliament - the EU Parliament can’t do either of these without the unelected EU Commission acting first.

*This would very slightly reduce to 53 of 600 MP's (8.83%) based on proposed Boundary Changes for the 2020 Parliament.

🇬🇧 Union Alternative: Scotland already has X5 more influence over Westminster (a genuine Parliament) than it would have in the best possible case in the EU Parliament. In addition, a possible federal UK in the future may give even more influence to regions like Scotland if an elected 'senate' replaces the unelected House of Lords and England also gets devolution (both floated as potential constitutional changes by members of all major parties).

Problem 5: The Eurozone could have power to veto Scottish budgets, in addition to its existing powers to apply Greek-style austerity and threaten bank closures to force compliance to its demands.

Based on the EU "5 Presidents Report" fiscal union plan, the Eurogroup would have veto power over Eurozone member budgets - which would include Scotland, by 2025. The “Eurogroup” (Eurozone Finance Ministers) has almost zero transparency and no formal rules under the EU treaties, so it can literally do what it likes. The European Central Bank would also not only have power to set interest rates for Scotland (like the Bank of England does now), it could decide for political reasons to withdraw € liquidity to Scottish banks. The ECB has previously refused to supply liquidity (or purchase government bonds) for Eurozone nation states to force compliance with EU demands (as has happened in Spain, Portugal and Ireland), including even toppling elected governments (as has happened in Greece and Italy). The Eurozone and ECB could compel Holyrood to change its policies, or even topple Holyrood governments, with no democratic recourse or appeal. The Bank of England has never even remotely considered doing anything similar in Scotland, nor would it.

(Extract from Eurogroup communique, with Jeroen Dijsselbloem (President of the Eurogroup of Eurozone Finance Ministers) boasting about 'forcing' Greece to capitulate, 10 May 2016)

🇬🇧 Union Alternative: Westminster or the BoE cannot realistically 'veto' a Holyrood budget and can impose far more limited austerity or unwanted policies than the Eurozone would be able to do under its fiscal and political union

Problem 6: North Sea Oil cannot fund Scottish Independence any time soon and Scotland runs a budget deficit that is triple that allowed under EU fiscal rules.

In the Scottish independence white paper in Nov 2013, the SNP assumed oil @ ~$102 dollars per barrel. This is now less than half - $45 (and has been as low as $29 in 2016). That would have been an approx. £3.8 billion hole in Scottish finances (~2-3% of Scottish GDP). Scotland is also estimated to run a much larger budget deficit than the UK, 9.7% for Scotland v 4.9% for the UK. A budget deficit above only 3% would break EU "fiscal pact" rules, putting Scotland under potential bailout control of Eurozone institutions; it can also impose fines to force compliance. Finally, with UK spending in Scotland also eliminated, on current budget figures, Scotland would have to either cut social programs (say, free uni fees, or zero prescription charging) or the budget deficit would widen even further than this. The EU not only could force such cuts, recent experience suggests it will.

🇬🇧 Union Alternative: Under UK Union funding arrangements Scotland secures more funding than every other UK region except Northern Ireland - Scotland received ~£12.1 billion more from rUK than it raised in tax in 2014-2015 (this also includes automatic fiscal transfers and stabilisers for pensions and unemployment); 16% more than the UK average. Westminster cannot realistically 'fine' Holyrood for running a budget deficit or force it to pass laws - the Eurozone could and will

Problem 7: Scotland would lose any benefits negotiated by rUK outside of the EU post Brexit.

Scotland would lose access to any independent trade deals the rUK may negotiate with China, India, Canada, Australia, as well as new controls over fishing and agriculture policy. Scotland would also have no access to WTO / IMF membership - the U.K. will regain its WTO seat after leaving the EU and won't have to give up its IMF seat (which the EU wanted to take).

🇬🇧 Union Alternative: Within the UK, Scotland inherits any benefits from any new trade/or other deals negotiated by the UK

Problem 8: Scotland would be the equivalent of Slovakia to the EU.

Says it all really 😥

🇬🇧 Union Alternative: I believe that Scotland is far more important and special to the UK than it would be to the EU. Scotland and its people invented the telephone, wrote 'Auld Lang Syne', created the theory of economics and Harry Potter, won loads of cycling Golds (and Wimbledon again), saved the entire nation in the Battle of Britain (Radar), and gave us 6 Prime Ministers (though 2 of those - Brown & Blair - you can have back). Why not keep the existing connections of culture and kinship, business and friendship, that we've built up for hundreds of years? If you're going to ditch those, do it for something better than the unelected Jean Claude Juncker and the € at least.