After independence day: The road ahead for an independent Scotland

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Dr Michael J. Geary

Scotland is not the first sub-territorial entity to seek independence and will not be the last but this particular independence movement matters, writes Dr Michael J. Geary.

Dr Michael J. Geary is Assistant Professor of Contemporary Europe at Maastricht University.

With less than a week to go before Scotland votes on whether to cut the cord on its 300-year-old relationship with London, opinion polls indicate that the final result is simply too close to call. The ‘Yes’ campaign had narrowed the gap, and last week’s polls have forced London and the British establishment to take evasive action. Some have called on the Queen, on holiday at her Scottish estate, to make a statement in support of maintaining the Union.

Others, fearing that the wind was behind the pro-independence movement, have adopted more Machiavellian tactics with claims that banks would abandon Scotland if the ‘Yes’ side won. The governor of Bank of England has repeated that an independent Scotland cannot use the pound sterling. Most of the claims made by London seem as dodgy as the dossier that made the case for Britain’s involvement in the Iraq war and do not stand up to objective scrutiny. But if ‘Team Independence’ win on 18 September, what are Edinburgh’s immediate objectives and challenges?

Scotland is not the first sub-territorial entity to seek independence and will not be the last. There are almost 60 secessionist movements worldwide with claims to independence. But this particular independence movement matters. A break away from London will bring to an end the ‘United Kingdom’ and increase the perception of the continual decline of British influence and power that began with in the 1920s when the Union (and empire) began to crumble. Ireland left the UK in 1921, and since then more and more powers have flowed from London to Belfast, Edinburgh, and Cardiff.

After a brief civil war over the terms of the independence agreement, the new Irish states adopted a new pound, which was for a number of decades pegged to sterling and monitored by a currency commission. Dublin had no central bank until 1943, and the Bank of Ireland acted as banker to the government until the early 1970s. Having left the Commonwealth, Ireland sought greater interdependence with Britain through full membership of all the main international organizations, including the UN, the Council of Europe, OEEC, IMF, and the European Communities. Today’s Scotland is better equipped than other newly-created countries to overcome the economic hurdles that lie ahead.

For Scotland, the first 18 months after a ‘Yes’ result will be crucial not only for finding a solution to the currency question but also in securing membership of the international community. Edinburgh will, of necessity, have to seek membership of many international organizations including the UN, EU, IMF and the World Bank; Scotland will not automatically inherit membership of any organization where Britain is already a member. At the UN, membership should be a relatively straightforward process. Singapore, Pakistan, Bangladesh, the Czech Republic, Slovakia, Eritrea and others each had to apply to join the UN once their independence dreams were realized. The only potential hazard might be a veto from a member of the Security Council.  

History has shown that membership of the financial institutions, the IMF and the World Bank, for newly independent countries is somewhat similar. Independence did not confer automatic membership for any of the countries mentioned above and Scotland will have to make a fresh application. Membership of an international organization gives rise to rights and obligations of voting, as well as budgetary contributions and the (re)allocation of voting right with each enlargement. Here, again, the quest for membership should be plain sailing.

After independence, and based on past precedent, Scotland will have automatically exited the EU. Algeria, administered as a départment of France, gained independence in 1962 and was therefore, for a short time, part of the EEC. Its independence did not confer on it an automatic right to Community membership, even if it wanted it. The biggest post-independence decision for Edinburgh will be whether to apply for EU membership and with it, access to the Single Market. Through Britain’s membership, Scotland has been implementing the acquis communautaire for the past 40 years. It should, on paper, be the least problematic enlargement in the EU’s history. However, a number of key issues would require negotiation. Should Scotland apply to become a full member, would it agree to become part of Schengen? Most likely, not. Strategically, it would make sense to negotiate an opt-out similar to the one secured by Ireland and Britain. Edinburgh could then negotiate to join the British-Irish Common Travel Area to facilitate the flow of air, sea and road transport without onerous border restrictions.

The currency question has featured prominently during the referendum campaign. Edinburgh has a number of options on its choice of currency after this week’s referendum. Scotland could create its own Scottish pound, or continue to use sterling notes and coins (which Ireland did). London has ruled this out, but that is part of its campaign strategy. It has to say ‘No’ during the campaign; attitudes might change next week. Once the dust has settled, some kind of currency union will inevitably emerge. This is the best option for both sides given the large amount of cross-border trade. Should London still reject that idea of sharing the pound, other options include adopting the Euro or the US dollar. Kosovo and Montenegro both use the single currency but are not members of the European Union. The British Virgin Islands, Ecuador and El Salvador, for example, use the dollar as their main currency. The Euro and the US dollar might seem the least likely options; much will depend on London’s reaction to Scotland’s exit.

However, if Scotland applies for EU membership, it might well have to rethink its currency plans and attachment to the pound. After the Maastricht Treaty was signed in 1992, all new EU member states are bound to adopt the Euro. Britain and Denmark received opt-outs while Sweden decided soon after it joined in 1995 that it would keep its own currency. Presumably, for the first year after a ‘yes’ vote, Scotland would continue to use the pound sterling. Scotland is more pro-EU than England and the Scots might well be inclined to adopt the single currency. If Brussels insists that adoption of the Euro is a prerequisite for EU membership, Scotland could promise to do so but negotiate a long transition period. Much will depend on the negotiating skills of Scottish officials and, more importantly, on the goodwill of the existing member states each of whom could potentially veto Scotland’s accession.

Rather than be cast adrift in the North Atlantic as the ‘No’ campaign has implicitly threatened to do, Scotland’s challenge in the period immediately after a ‘Yes’ vote will be to submit letters of application to the world’s main international organizations, quickly open accession negotiations and, after an absence of 300 years, regain its place within the European family of nation-states.

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