Bloomberg News

Independent Scotland Would Have to Reapply to EU, U.K. Says

February 11, 2013

Scotland would have to reapply for European Union membership if it becomes a separate nation, the U.K. government said as it stepped up a campaign to dissuade the country from voting for independence.

The status of an independent Scotland under international law has been a subject of debate since Alex Salmond, head of Scotland’s semi-autonomous government, announced last year he planned to call a referendum on leaving the U.K. If Scotland were to become a separate state, it might face entry criteria for the EU including signing up for the euro, Prime Minister David Cameron’s government said, citing legal advice.

“Unless we understand what we have and how much we contribute to, and benefit from, membership of the U.K., we cannot begin to understand the implications of independence,” Scottish Secretary Michael Moore said in Edinburgh today as he published the U.K. government’s legal opinion. “Independence would end devolution, it is not an extension of it.”

While polls show almost twice as many Scottish voters want to stay in Britain than leave, enough are undecided to create a political battleground over the future of the 306-year-old U.K. ahead of the referendum scheduled for the fall of 2014.

The election watchdog decided on Jan. 30 on the wording of the referendum question -- “Should Scotland be an independent country? Yes/No” -- and said both sides should start setting out the basis of their arguments.

Economic Advisers

Salmond’s nationalists published a report today from a group of economic advisers, including Nobel Prize winner Joseph Stiglitz, setting out recommendations for how an independent Scottish economy might work.

“We encourage the Scottish government, the U.K. government and other interested parties to engage productively on this proposition at the earliest opportunity to provide clarity on some of these key economic issues,” Crawford Beveridge, chairman of the group, said in Edinburgh today. “This will allow the people of Scotland to make an informed decision.”

Cameron’s office released a 57-page legal opinion today from Professor James Crawford of Cambridge University and Professor Alan Boyle of Edinburgh University that looked at Scotland’s EU status. It plans to publish information on other aspects of independence in the coming months.

European Commission President Jose Manuel Barroso said this month that any new country would need to apply with the consent of all member states before any negotiations could start.

Ireland, Soviets

Crawford and Boyle based their argument on the outcome of the majority of 20th century cases of separation, including Ireland’s departure from the U.K. in 1922 and the 1991 break-up of the Soviet Union. A decision on which was the successor state and which was the continuing state usually rested on population and territory, they said.

The creation of the Czech Republic and Slovakia in 1993 was not a suitable precedent as neither government wanted Czechoslovakia to continue, Jim Wallace, the U.K. government’s legal officer for Scotland, said in Edinburgh.

They also said that the U.K.’s role as a nuclear state, a member of NATO and a permanent member of the United Nations Security Council would be thrown into jeopardy. Scotland is currently home to the U.K.’s nuclear arsenal.

The U.K. is signatory to 14,000 international treaties, according to a database held by the Foreign & Commonwealth Office, the report said.

Dividing Oil

In its separate report, the Scottish government’s Fiscal Commission Working Group supported Salmond’s desire to keep the pound while having freedom to vary taxes and spending. It also recommended setting North Sea oil and gas revenue in a stability fund to “enhance future economic resilience.”

Scotland’s 5.3 million people account for 8.4 percent of the U.K. population, while its gross domestic product makes up about 8.2 percent of the total, according to the report. Including a geographical division of North Sea energy money, Scotland accounts for 9.9 percent of British GDP.

An independent Scotland would need a formal agreement with the rest of the U.K. how to run a joint currency.

The Fiscal Commission Working Group suggested Scotland should have a shareholding in the Bank of England so that Scotland and the rest of the U.K. could co-operate on jointly managing the pound and other financial policies.

As well as monetary union, the working group also called for the establishment of a fiscal sustainability agreement to ensure that the two countries’ net debt and borrowing don’t diverge significantly.

The group “will now turn its attention to the opportunities that independence will bring for the Scottish economy,” Scottish Finance Secretary John Swinney said.

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net; Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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