Scotland, if independent, could not assume that rejoining the EU would be easy—or cheapby John Kerr / January 23, 2013 / Leave a comment
Published in February 2013 issue of Prospect Magazine
Scottish first minister Alex Salmond could find his country locked out of the EU after a secessionist success in the 2014 referendum (© Getty Images)
President José Manuel Barroso confirmed at the end of last year that if Scotland won independence from London after a referendum vote for secession, this would mean, ipso facto, that Scotland had left the EU.
This was to the chagrin of Alex Salmond, Scotland’s first minister, who has undertaken to hold a referendum on independence in 2014, and who last year assured members of the Scottish Parliament that “oil-rich, gas-rich, energy-rich Scotland, fishing-rich Scotland, will be welcomed with open arms in the European Union.” The Scottish National Party (SNP) has implied that Scotland would be automatically an EU member, with Brussels simply setting another place at the table. Alas, the process would be much more complex and costly.
Barroso’s news shouldn’t have come as a surprise: the president of the European Commission was merely repeating the position explained by Romano Prodi, his predecessor. In April 2004, Prodi told the European Parliament that: “When a part of the territory of a member state ceases to be part of that state, for instance because the territory becomes an independent state, the treaties will no longer apply to that territory. In other words, a newly independent region would, by the fact of its independence, become a third country with respect to the Union, and the treaties would, from the date of its independence, not apply any more.”
If the new country wished the EU treaties to apply to it again, he added, there would need to be “a negotiation on an agreement between the applicant state and the member states on the conditions of admission and the adjustments to the treaties which such admission entails. This agreement is subject to ratification by all member states and the applicant state.”
So an independent Scotland would need to go through the same accession process as have all but the original six member states, a process which the Croats have just successfully completed, but in which the Turks are bogged down. Readmission would be possible for Scots only when every existing member state had agreed to every detail of the terms. And even then an adverse parliamentary or referendum vote on ratification, in any EU capital, could still sink the ship. No wonder the SNP is in denial.
The prospect is no more appealing seen from Brussels, now preoccupied with the survival of the euro and how best to balance austerity with the encouragement of renewed growth. The last thing anyone there wants is the distraction of a problem without precedent, as this would be. The break-up of Czechoslovakia took place in 1993, well before the Czech Republic and Slovakia, as two separate countries, joined the EU. In 1979, when Greenland achieved home rule from Denmark, which was by then a member of the European Community (the precursor of the EU), the 40,000 Greenlanders voted to leave the EC and did so, with metropolitan Denmark negotiating the terms of their departure. No existing member state has split with both parts wanting to stay. The Scots would be breaking new ground, and for many in Brussels the necessary negotiation would be an unwelcome diversion.
For some it would be much worse than that. Governments facing their own breakaway regional or national movements might be tempted to demonstrate that secession isn’t easy, and has costs. Madrid would have the Catalans, and perhaps the Basques, in mind: that is why Spain, like Cyprus, Greece and Romania, has yet to recognise, or permit the EU to recognise, the 10-year independence of Kosovo, the breakaway ex-province of Serbia. In Athens the concern is their Macedonian province; in Nicosia, Turkish Northern Cyprus; and in Bucharest, it is about “greater Hungary” rhetoric in Budapest and its own Hungarian minority. All four countries might similarly view the question of Scotland through their own domestic prism. For Spain the salience of the issue grows with the mounting demand in Barcelona for an independence referendum. Some might try to draw distinctions between Scots and Catalans: unlike the Catalans, the Scots have always kept their own legal system, and, unlike the SNP, Catalans seeking independence do not wish to keep the monarchy. But the plain fact is that Madrid would not welcome the break-up of the United Kingdom, lest the habit catch on, and would not welcome a Scottish seat in the European Council, lest it encourage demand for a Catalan seat. Some Spanish politicians have already spoken of vetoing a Scottish accession bid.
And who would be making Scotland’s case in the European Council? At least until 2015, David Cameron. The blame in Brussels for UK disintegration would, however unfairly, fall on the government in London, which is already testing EU patience by opposing further integration. In Brussels, the prime minister’s advocacy of “less Europe, not more” seems out of tune with the times. His attempt in 2011 to extract a price for agreeing to the fiscal union, for Eurozone members, which he and his chancellor had insistently demanded, caused bemusement and some resentment. And the current Whitehall “audit” of EU powers, as they apply to the UK, is generally interpreted as presaging a second outing for the same strategy, demanding further UK opt-outs, if and when further moves to shore up the euro require amendment of the core EU treaty.
The idea that the UK alone should be entitled to renege on existing commitments is not widely welcomed in the rest of Europe. An alternative—that all countries should be able to select their own “pick and mix” package of à la carte membership—strikes many as a recipe for unacceptable unravelling of the treaty. It isn’t easy to see how either prescription could achieve the unanimous support necessary for adoption. UK influence in Brussels is shrinking. So, however velvet a Scottish divorce might be, the present government in London is not best placed to help negotiate the EU consequences.
How difficult would the negotiations be? Partly that would be for the Scots to determine. If they recognised that any applicant is ill-placed to argue for changes in the club rules, the wisest course might be to accept, en bloc, all the rules currently applied by the UK.
To seek, from outside the EU, reforms of the Common Agriculture or Fisheries policies would be unwise, however welcome in Scotland such reforms would be. To argue, from outside, that the EU should allocate to Scotland more structural funds—the funds given to help the development of the poorest parts of the EU—would cut little ice. Scotland’s best tactic, in order to jump the queue of other applicants, would be to emphasise, from before the start, that it sought no changes, merely the reinstatement of rights enjoyed and EU obligations accepted when part of the UK. Even those, for example the Spanish, most uneasy about any secession, and so most tempted to cause problems or delay, would find such an approach hard to resist in principle.
Problems could however still arise when the negotiations turned to issues on which the UK, using the power of veto of an existing member state, had secured a special status, as Margaret Thatcher did at Fontainebleau in 1984 on the EU budget, and John Major did at Maastricht in 1991 on monetary union. As an outsider, with no veto, Scotland might not find it easy to secure the necessary unanimity among all insiders that such arrangements should also apply to a separate new member state.
Thus there would have to be a debate if the Scots were to wish to retain the UK’s hard-won VAT anomalies, such as zero VAT on food and children’s clothes. But it looks a winnable fight, because it would not be a zero sum game. Regular cross-border shopping in an independent Scotland by French or Germans would be no more likely than it is now. The actual rates charged in shops in member states bear no relationship to the VAT element in the EU’s central budget income (because the VAT base used for budget purposes is an artificial statistical construct: actual rates vary widely between member states.) For existing member states, if disposed to be kind, there would be no cost. The discussion would however create opportunities for the ill-disposed to cause delays.
Conversely, thanks to David Cameron’s 2011 stance on fiscal union, the 2012 Austerity Pact is separate from the EU Treaty, and so will not come up in an accession negotiation. The Scots would be free to choose whether, like all Eurozone members and most non-members (for instance, the Danes, Swedes, and Poles), they wished to accept common fiscal discipline provisions, or stick with the Czechs and the residual UK in rejecting them.
Similarly, Cameron’s 2012 stance on banking union (accepting the European Central Bank as the EU’s supervisory authority, but not for banks based in Britain) may create future difficulties for the City of London, but solves a problem for the Scots. Edinburgh would be free to stay out too, with the Scottish banks remaining under London supervision as well as London control. If that was what the Scots wanted, there would be nothing to negotiate with other EU member states.
More significantly, the treaties now require countries applying to join the EU to take on a commitment to join the euro when they have passed the economic tests for doing so. Taken at face value, this would demand a currency frontier on the Tweed—between the euro in Scotland, and the pound south of the border. But the Danes and Swedes ignore the requirement to join the euro, retaining their national currencies. In any case, if UK debt were divided pro rata as the Kingdom divided, the share that Scotland inherited would be too big to make the new country, at least initially, eligible to join the euro. Assuming—perhaps rashly—goodwill all round, in Madrid as well, a declaration by Scotland of its intent to give up sterling and switch to the euro at an appropriate moment, undefined, might well be taken as sufficient.
Rather more difficult might be the negotiation between London and Edinburgh over how to ensure, with a common currency (sterling) but separate economic policies, that they did not repeat the problem in the eurozone that has arisen between Greece and Germany. Would London not insist on some form of fiscal pact, constraining Scottish borrowing, and would Edinburgh not demand some say in London’s setting of Scotland’s interest rates?
The negotiators would also have to consider the Schengen Agreement, which does away with border checks on travellers between most other member states, but to which the UK has never signed up. But neither has Ireland, which instead maintains a separate travel area with the UK. If the Scots preferred to follow the Irish precedent, avoiding a physical frontier, with passport checks and border guards at Gretna Green, the common sense geographical arguments for doing so might well suffice—particularly if Edinburgh were prepared to signal an intention to come into line with continental member states, and non-EU Schengen members like Norway and Switzerland, as soon as London and Dublin did so. But this would be another issue on which the ill-intentioned could deploy Fabian tactics to slow down or block Scottish accession to the EU; the Scots would in any case need, on joining, to accept the EU provisions on cross-border crime and policing from which the UK in 2012 announced its intention to opt out.
Finally, there is the question of the EU budget. Here it is harder to see a happy outcome for Scotland. The Thatcher rebate, secured by strong arm tactics, repays two-thirds of the difference between the UK’s contribution and the EU’s reciprocal payments to the UK. Britain has, over time, accepted that the rebate should not apply to that part of the budget which covers expenditure in new, poorer, Central European member states. But the agreement has so far saved the country some £70bn, and means that the UK now contributes some 10 per cent of the total budget. In contrast, the Germans pay 20 per cent, the French and the Italians more than the UK, and the Dutch the most, per person. UK public opinion still thinks that the rebate looks well justified, but everywhere else in Europe it is much resented. Unlike the VAT arrangements, this is a zero sum game: the less Britain pays, the more the rest all must. But what the UK has, it can continue to hold; since the demise of the rebate would require us to vote for its abolition, it survives. It will survive again when the European Council turns again in February to the financing negotiation adjourned in November.
But for an applicant, Scotland, outside and wanting to come in, the requirement for unanimity has the opposite effect. To secure a Thatcher rebate for Scotland, the Scottish government would have to convince the governments of every other member state, and their parliaments and voters, many much less rich in per capita terms than Scotland, that the Scots should not have to pay the normal membership fee. That is a Herculean diplomatic task.
So we should assume that an independent Scotland, like the UK now, would be a substantial net contributor (one of about a dozen) to the EU budget; and that, with no rebate, each Scot would pay considerably more than each Englishman.
To put numbers to these propositions is not currently possible. The sums would depend principally on the size of the EU budget for the next seven year period, the formula for calculating each country’s contribution, and the distribution of expenditure between agriculture, regional development, and other projects over that period.
Standing back from these individual hurdles, my overall assessment is that Scottish negotiations to join the EU need not be particularly complex, and they would cover far less ground than the standard process for the accession of a territory which had not formerly been part of an EU member state. But the procedure would still provide ample scope for trouble-making by those governments concerned about secessionist movements in their own countries. It could therefore prove protracted. If Scotland adopted a practical approach, recognising the weak hand that any applicant has to play, that would maximise its chances of finding a relatively speedy way through. But there would certainly be a budget price to pay.
When would these issues be tackled? For Scotland, there is a further problem of the sequence.
Brussels will not wish to address such questions while they remain hypothetical, so Scotland will not be able to begin negotiations before the referendum. Nor could much be achieved now by discussions with other national governments individually. It would be naïve, for example, for the SNP to seek assurances of full co-operation from those in Spain, who have the greatest interest in the Scottish debate: they have their own fish to fry. Even the London government, whose voice in a Brussels debate on a Scottish accession bid would be significant, might be reluctant to give binding assurances before a referendum.
Post-referendum, pre-secession from the UK
It might well be possible, and would certainly be desirable, to get informal exploratory talks started after a referendum vote for independence but before actual secession took place. If all other member states were prepared to co-operate, much of the groundwork could be done in this way. But formally Scotland would have to be a state before it could accede, and the terms of its disengagement from the UK would have a critical bearing on some aspects of the accession discussions.
The final formalities can take time: Croatia’s accession negotiation was successfully completed in June 2011, but it is not due to join until this July. Timing of national ratifications is entirely a matter for individual member states (the Croatia Bill is now in the House of Lords). The practical problems of an extended hiatus might be mitigated if the Scots were to choose to apply EU laws autonomously, while waiting. Brussels could, if there were enough goodwill in other capitals, offer some reciprocal transitional arrangements: there is no precedent for such a concession, but the situation has never arisen before.
However, the ratification processes, like the prior negotiations, could become protracted were they to coincide with an attempt by the London government to secure a wider revision of the EU treaty, or, after a referendum in the residual UK, to initiate the procedure for withdrawal from the EU. Other countries might wish to consider a request from Alex Salmond together with any from David Cameron.
This analysis suggests that the Scots, as they approach the referendum debate, would do well to bear in mind above all that independence from the UK means leaving the EU, with no automatic return ticket. Negotiating re-entry could take time, with the shadow of Catalonia long over the table. There would be a recurring financial price to pay, in terms of Scotland’s share of the annual EU budget. And finally, if London, in parallel, sought to change the relationship of the remainder of the UK with the EU, that could land the Scots with an extended hiatus.
Scots, especially Alex Salmond, must read the small print closely. They can’t assume it would be easy, or cheap, to re-join the EU.
The fallout from independence: who said what
“What I say to Alex Salmond is he in a way wants to have his cake and eat it. He wants to say, ‘I want to separate from the UK, I want this new future for Scotland’, but on the other hand, he doesn’t want the consequences that flow from that.”
David Cameron, prime minister
“If one part of a country—I am not referring now to any specific one—wants to become an independent state, of course as an independent state it has to apply to the European membership according to the rules—that is obvious.”
José Manuel Barroso, president of the European Union
“We do not agree that an independent Scotland will be in the position of having to reapply for European Union membership, because there is no provision for removing EU treaties from any part of EU territory, or for removing European citizenship from the people of a country which has been in the EU for 40 years.”
Nicola Sturgeon, Scottish deputy first minister
“In the hypothetical case of independence, Scotland would have to join the queue and ask to be admitted, needing the unanimous approval of all member states to obtain the status of a candidate country.”
José Manuel García-Margallo, Spanish foreign minister
“Assuming there is a yes vote as a result of the referendum, Scotland will still be at that stage a part of the UK. What we have always accepted is there has to be a negotiation about the details and the terms of Scotland’s membership of the EU. Crucially, that would take place at a time when we are still part of the UK, and still part of the EU of which we have been members for 40 years.”
John Swinney, SNP finance secretary
“They seem to be saying Scotland can vote to be independent and not be independent—it’s a ridiculous argument. It is time for the SNP to be straightforward about what independence means.”
Danny Alexander, chief secretary to the Treasury