I just wanted to clarify the Scottish government's position on entering the European Union. The Scottish government's 2009 white paper on independence makes clear that an independent Scotland would expect to remain a full member of the EU and increase its representation but makes no mention of the euro. It confirms that the details of entry would be subject to negotiation:
Settling the details of European Union membership would take place in parallel to independence negotiations with the United Kingdom Government, and would cover areas such as number of MEPs and weight in the Council of Ministers.
The former Labour chancellor and Scottish MP Alistair Darling argued on the Today programme this morning against independence for Scotland making an appeal for the Scottish National Party (SNP) to give the details of their plans for independence. He asked (audio) what currency an independence Scotland would have, how much of the UK's national debt it would incur and about its plans for defence, saying:
These are the big arguments that we need to engage in.
Professor Robert Hazell, director of the Constitution Unit at University College London, wrote this week:
If the Scots vote "yes", negotiations would begin on issues great and small, such as how to divide the national debt and North Sea oil revenues, nuclear bases on the Clyde and the sharing of defence capabilities, and Scotland's membership of the EU. (Most international lawyers say that Scotland would have to reapply.) The division of Czechoslovakia in 1992 required 30 treaties and 12,000 legal agreements.
Elsewhere it has been reported (£) that an emerging cross-party "no" campaign could make the accusation that an independent Scotland would be forced to join the euro central to its argument against ending the union. But is it true?
The question
Would an independent Scotland be forced to join the euro?
I'm going to talk to the legal experts. Do you know of any evidence that could help decide the question? Get in touch below the line, email me at polly.curtis@guardian.co.uk or tweet @pollycurtis
Analysis
The SNP insists that if it won an independence referendum Scotland would retain its membership of the European Union that it has as part of the UK and hold a referendum on joining the euro. A spokesman for the Scottish finance secretary John Swinney told the Sun:
An independent Scotland will remain in the EU.
But earlier this week constitutional and EU experts warned that Scotland would have to reapply for membership of the European Union as a new state and that, as a new member state, it would be expected to join the euro forcing them into the currency when it is facing the most serious crisis in its history.
Jo Murkens, a researcher at London School of Economics who has written extensively on the potential consequences of Scotland ending the union, said that there was "no automatic right" for a new Scottish nation to be a member of the EU, and that it would require the unanimous backing of existing members.
Continued membership would only be possible with the approval of all 27-plus member states. An independent Scotland would have to join the EU as a new accession state, a process which could take many years.
Murkens reiterated the most widely held interpretation of the requirements for joining the European Union: that new accession states must also enter the eurozone. The House of Commons Library published a research note on the implications for European Union membership of Scotland becoming an independent state in which in made that conclusion:
EU Member States, with the exception of Denmark and the UK, are expected to join the single currency if and when they meet the criteria. Five of the twelve states joining the EU since 2004 have gone on to join the euro. Whether Scotland joined the euro would have implications for its post-independence monetary policy, and the size of its liability for loans provided to countries facing sovereign debt problems.
However, that view is contested. In this blog, Stephen Noon, a long-standing policy official at the SNP and qualified EU lawyer, argues that in fact the treaties of the EU state that Scotland may not have to join the euro. He writes (in a personal capacity):
The most recent accession treaty (for countries such as the Czech Republic, Hungary, Slovenia and Poland) contains the following provision: "Each of the new Member States shall participate in Economic and Monetary Union from the date of accession as a Member State with a derogation within the meaning of Article 122 of the EC Treaty"
Article 122 of the EC Treaty has now been replaced by Articles 139 and 140 of the Treaty on the Functioning of the European Union (TFEU). If you stop at this point, the argument seems won - all new members "shall participate" in the single currency. However, there is another step. We need, also, to look at what Articles 139 and 140 TFEU actually say.
These articles apply to all Member States without a euro opt out, whether old or new, whether accession or not. Article 139 TFEU sets out that "Member States with a derogation" do not participate in the single currency or monetary union. Article 140 TFEU then makes clear that euro membership is not automatic. In order to join the euro, a Member State has to satisfy certain criteria, including currency convergence as part of the European Exchange Rate Mechanism (ERM II).
So what are the rules for participation in ERM II? These are set out in the 16 June 1997 Resolution of the European Council establishing the Exchange Rate Mechanism and the 16th March 2006 agreement between the European Central Bank and the national central banks of the Member States outside the euro area. These make clear "participation in ERM II is voluntary for the non-euro area Member States".
Noon's interpretation appears to rely on Scotland retaining the derogation Britain has in Europe on the euro. On this Jo Murkens wrote on his blog:
The loss of membership status following separation means that Scotland would no longer benefit from the UK's derogation from the single currency. An independent Scotland would not inherit the opt-out the UK negotiated for the Treaty of Maastricht.
So whether an independent Scotland is forced to join the euro or not comes down to whether it is given special dispensation to remain a part of the European Union with Britain's conditions, or whether it joins as a new accession state.
The House of Commons library research paper mentioned above reaches a sensible conclusion on this – that there is no legal precedent and that the outcome it therefore likely to come down to political negotation between Scotland and the EU. It says:
There is no precedent for a devolved part of an EU Member State becoming independent and having to determine its membership of the EU as a separate entity, and the question has given rise to widely different views. There are at least three different possibilities under international law for a newly-independent Scotland: continuation and secession (the rest of the UK would retain its treaty obligations and membership of international organisations, but Scotland would not); separation (both entities would retain them); and dissolution (both would lose them).
Whatever the position under general international law, a decision on Scotland's status within the European Union is likely to be a political one. If all the EU Member States agreed, then Scotland could continue automatically as a Member State (pending negotiations with the other member states on details of membership, including the number of MEPs to represent Scotland). On the other hand, Member States with their own domestic concerns about separatist movements might argue that Scotland should lose its membership on independence, and hold up or even veto its accession.
I asked Murkens about Scotland's chances in negotiating to keep Britain's exemption from the euro under the Maastricht Treaty. He said:
I don't see why it would be soft on Scotland and say you can have what you want. If individual states decided to go it alone it undermines the integrity of the EU project.
Verdict
There is no precedent to Scotland's position vis-a-vis the EU. By law if it is considered a new state it would have negotiate entry to the EU from scratch, although it would readily satisfy its tests having been a member already. Any new member state has to join the euro. Whether it is considered a new state or whether it would retain any of the UK's exemptions, would have to be negotiated with the 27 member states of the EU – including the remainder of the UK.
One follower of this blog, @taylorig, made an interesting interpretation of this question on Twitter: "If Scotland is independent, why should the UK let them use the £? Go make your own currency if you don't like the club!" It chimed with what one government official I spoke with for this blog told me when he referred in passing to Scotland's membership of the "sterling zone".
Comments
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11 January 2012 11:17AM
There was this on another thread.
http://untreaty.un.org/ilc/texts/instruments/english/conventions/3_2_1978.pdf
11 January 2012 11:20AM
Are they really going to turn away part of an existing state and an oil rich nation?
11 January 2012 11:23AM
Noon's article absolutely does NOT "rely on the UK's derogation". It examines the EU's rules for NEW members, and details precisely why membership of the Euro is NOT compulsory for them, despite constant media assertions to the contrary from people who haven't actually bothered to read the relevant Treaty.
11 January 2012 11:25AM
Little complications not explained by Salmond to the Scots. Have another drink or free perscription "it will be all richt on the night" Scottish independence is like the Witches Cutty Sark in Tam O Shanter, best avoided at all costs.
11 January 2012 11:27AM
More sabre rattling from Westminster, though why Scotland would want to be pegged to a sterling without oil revenues beats me! There are many currencies "pegged" to Sterling and nothing to stop that from happening again if we took our own currency.
Historically Scotland had its own currency the Scots Pund until the very late 1700s and long after the Union.
Why consider just Sterling or the Euro though?
11 January 2012 11:31AM
The notion that Scotland can have fiscal independence and somehow retain that £ sterling is just quite simply bonkers. It wouls expose the rest of the UK to a Euro style crisis. And yes at some distant future date it MIGHT happen. Greece Portugal Spain Ireland Italy anyone?
No its either the Euro or a Scottish Pound.
(Sorry Scotch Poond)
11 January 2012 11:33AM
This must be the start of the Guardian's campaign against Scottish Independence by adding to the mis information so loved by Unionists to scare us poor wee Scots into submission.
You dont want to be in that nasty "euro" who knows what you might catch.
Logically we will start with Sterling and ignore the idiot who says we cant, plenty countries use other currencies they are not involved in for example Montenegro uses the Euro but is not a Eurozone member. Whether using Sterling long term is in Scotland's interest is something that will be decided by the Scottish government I would have thought in consultation with the Scottish people.
Look forward to the Guardian article on how we are all subsidy junkies and will be bankrupt without the nice people from the south bailing us out.
11 January 2012 11:34AM
Some of us have already done our homework but others need to ask questions.
That is why this period is essential for both consultation and debate, after the facts are divulged by EU and Westminster including the hidden revenue data.
11 January 2012 11:36AM
Little complications not explained by Salmond to the Scots. Have another drink or free perscription "it will be all richt on the night" Scottish independence is like the Witches Cutty Sark in Tam O Shanter, best avoided at all costs. The way to really kill it is for Westminister to lgistlate for two referendums, one to negotiate and another to approve the terms with independent assesments regarding budgets, taxation, national debt, EU, NATO - i.e the cost of externalities. The answer is allready know to this Scotland will lose a lot from not being in the UK and teh Scots will vote with their pocket books, pension books or Social Security Cheque.
11 January 2012 11:40AM
By the way in a vain attempt to stop this type of article by giving you a few of the answers to these scary questions please look at Alex Salmond on the One Show.
http://moridura.blogspot.com/2012/01/alex-salmond-on-one-showyoutube.html
11 January 2012 11:40AM
So you want independence, but not really? Not enough to have your own currency?
This is why it's never gonna happen, my friend.
11 January 2012 11:42AM
Unfortunately what you suggest is illegal under the terms of the UN Covenant on Civil and Political Rights. Outside interference and coersion is forbidden. The nation leaving determines its own future without interference.
11 January 2012 11:42AM
Please try not to make such an idiot of yourself. Independence is a complex situation, and not everything can happen overnight. Using Sterling as a stopgap is both entirely technically feasible and a perfectly normal policy which has been adopted all over the world.
11 January 2012 11:49AM
It's obvious that the reason Salmond wanted independence from the UK was so that Scotland could then be a "small country" and he could then get his hands on shedloads of cash from the EU without paying much back into the EU pot.
It also obvious why he now wants to drag his feet over the independence he was once so keen on, now that the EU has gone down the toilet. The goose with the golden eggs that he lusted after may have died.
11 January 2012 11:53AM
Only if we wanted to join the European Union.
Maybe we won't.
This may have to be the subject of a referendum of the Scottish people once we become an independent nation.
11 January 2012 11:56AM
I suggest you buy a tin foil hat.
Salmond doesn't decide, we the sovereign electorate of Scotland decide.
11 January 2012 11:56AM
But a currency is one thing that needs to. Or else you'll find people carrying suitcases of money from one country to the other. You may have noticed there's quite a lot in the news about this sort of thing at the moment. You can keep sterling (assuming you're allowed to) if you have two economies that have the same effective interest rate, similar levels of productivity and no significant net capital flows between them. You don't.
11 January 2012 11:57AM
Really interesting - I've just skipped through to try and find a reference to the euro question. Do you know what time it was?
11 January 2012 12:01PM
Not really. Currencies get adopted unofficially because they're better stores of value than the official currency (as in Zimbabwe). Doesn't mean it's a sensible route to follow. A tiny country like Montenegro gets away with it (despite the ECB's grumbling). But I'd hope Scotland has bigger aspirations.
Why don't you want your own currency, anyway? Isn't that a bit, you know, of a self-esteem thing?
11 January 2012 12:03PM
You can create a currency simply by putting an indelible stamp on Scottish banknotes. Thinking about it, you'd likely see an exchange rate emerge pretty quickly between Scottish notes and BoE notes in any case. The market has a way of working these things out.
11 January 2012 12:03PM
Really? Ireland kept the £ from 1921 until it got its own Saorstát pound in 1928, then the Irish Punt in 1938, all of which was pegged to Sterling until it joined the Euro in 2002.
11 January 2012 12:03PM
"Please try not to make such an idiot of yourself. Independence is a complex situation, and not everything can happen overnight. Using Sterling as a stopgap is both entirely technically feasible and a perfectly normal policy which has been adopted all over the world."
The point is either you can branch out on your own or you can't - if you're out of the club then shouldn't have it both ways by keeping the currency. Scotland/SNP should put up or shut up just like this drawn out referendum.
11 January 2012 12:07PM
If scotland had to reapply, would it get in ?
I can see a case for a Spanish veto so not to get up the hopes of the basque and the catalan.
11 January 2012 12:08PM
It's already happened before. Morocco (68th in the table of oil-producing nations) was turned down in 1987.
11 January 2012 12:10PM
After a detailed attempt to cover what will/would be a complex unchartered area it seems strange to pluck such a misinformed reactionary comment. If and when Scotland gains independence there will no longer be a UK as we have now, self evidently.
11 January 2012 12:10PM
Not really true. The punt was floating against the pound from 1979, which coincided with Ireland stopping being a backwater of the UK and becoming a proper, independent economy. Scotland is doomed to the same fate (in the unlikely event it leaves the UK) unless it floats its own currency.
There are rather more complex international capital flows in the 21st century than the early 20th, of course.
11 January 2012 12:14PM
It seems those who are against the independence of Scotland are trying to find as many obstacles as possible to derail the process. It is for the Scots to decide what they want to be with respect to the UK and to Europe. Incidentally, membership of the euro is not automatic and requires passing a number of convergence tests, plus the agreement of the Scottish people. Scotland is not the only part of a European state which is looking for its own independence. There is also the case of Catalonia in Spain. The difference though is that the UK, even with its biased attitude on the subject, has a much more democratic tradition than Spain, where the possibility of a separate Catalan state is seen as subversive. Perhaps the era of the old European nation states is over, which wouldn’t be a bad thing considering all the wars and disasters that have been caused in their names.
11 January 2012 12:16PM
If they do that woudn't be a problem, one less hurdle to get over; Scotland has friends globally and other markets, but it wouldn't be in either Westminster or EUs interests to cut Scotland out.
I take it France will be taking Trident, or perhaps the EU as a whole will take the UN security council seat, unless England can find a suitable base for both Trident and the two huge nuclear storage dumps in Scotland?
11 January 2012 12:16PM
er... the UK isn't a nation state. An independent Scotland (or Catalunya) would be.
11 January 2012 12:17PM
> Salmond doesn't decide, we the sovereign electorate of Scotland decide.
Really? The way that the UK has been allowed to decide on joining and leaving the EEC/EU?
Salmond needs the referendum to prove that Scots want independence from the UK, they only way he can really force independance (without a definite decision from the Scots population the UK goverment can legitimately ignore the SNP's requests for independence as being merely their personal stated opinion and nothing more).
What makes you so sure that once independant the Scottish goverment would be a model of democracy and continue to hold referendums on important matters like joining the EU, rather than simply ignoring what the population wants and doing what suits the politicians (as we are used to from the UK governments)? It's a severe case of rose-tinted spectacles to think that because the SNP wants independence from a discredited UK goverment that this can be extrapolated to mean that the SNP will be a model democracy.
11 January 2012 12:17PM
I find it ironic that the very people that object to the Euro on the grounds of loss of sovereignty, seem to support an independent Scotland staying in a Sterling area wholly controlled by a foreign country.
11 January 2012 12:18PM
Unfortunately for you, you don't get to decide that. In reality, the fact is that you CAN keep the currency, and the SNP's policy is to do so in the short term, then let the Scottish people decide where to go next.
11 January 2012 12:19PM
The fact that it has a good track record of doing what it said it would do.
11 January 2012 12:23PM
Actually it is true, Ireland kept Sterling for 7 years until 1928, so is the intention spiteful on the part of posters here or what?
11 January 2012 12:24PM
But since the SNP is being comprehensively out-thought and out-manouvered by George effing Osborne, do you really feel they are in a position to take such an important decision and get it anywhere near right?
11 January 2012 12:25PM
What happened to the Irish economy during that period?
11 January 2012 12:26PM
"Unfortunately for you, you don't get to decide that."
Correct me if I'm wrong but unless authorised by Westminister you wouldn't be able to print sterling, so in effect we would decide.
11 January 2012 12:27PM
No. The Euro by then would have removed all the small countries with dodgy economic grounding. Scotland would fall squarely into that category.
11 January 2012 12:28PM
You mean in the same way Westminster/GB was monitored by the Council of Europe (and UN) on account of the lack of democracy in the consituent nations, which co-incidently gave us our Assemblies in Wales and Ireland and Government in Scotland?
I'm afraid GB/UK plc does not have the best democracy in the world - so your suggestion is a case of Pot/Kettle/Black.
11 January 2012 12:31PM
I was refering to the decision to hold a referendum and vote on it.
Currency - We already print our own notes - anything else?
11 January 2012 12:33PM
Good question. Spain has been active in blocking Kosovan membership of the UN, but has not blocked Slovak/Slovene/Croat etc. membership of the EU. Based on this they probably they would allow Scottish EU membership.
The original post is correct in pointing out that, dejure Scottish Euro membership (so long as it wishes to be in the EU) turns on whether the Scots can inherit the UK's derrogation - ERM II was only "voluntary" for member states with a derogation which Scotland would not have unless it could inherit the UK's.
However, a simple look at what has happened in Poland and the Czech Republic shows that they have kept their currencies. It is impossible to imagine them at any point being forced into the Euro against their will, or threatened with expulsion if they did not - so, de facto, if Scotland had an established currency at the time of accession, it would be able to keep it.
Speaking as someone who is pro-union, I do not think this argument is a helpful one. Instead we should concentrate on the undoubted benefits that Scotland receives from the Union. A simple look at the fates of the smaller economies in Northern Europe in recent years (The Republic of Ireland, Iceland) shows what would likely have happened to Scotland had it declared independence earlier.
There is no doubt that the Scottish are entirely capable of founding their own country, arguments to the contrary are patronising. Threats to hinder an independent Scotland are beneath us - we are not China - and will only drive the Scottish public into the arms of the SNP.
The true question is whether Scotland would be better off or not if they did - and the answer is quite simply that economically, culturally, and politically, they would be much worse off. And so would the rest of the UK.
Hopefully the Scottish public will see this, and say a loud NO to this plan that will make a million people (UK people in Scotland and Scottish in the rest of the UK) foreigners in their own country.
11 January 2012 12:34PM
Questions to Which the Answer is Dunno. For a start, an independent Scotland will have a referendum to vote to join the EU. Then, Salmond will have to negotiate with the EU as to whether we are a new state or not. He might like to point out that Scotland is far older than nations like Germany, France wouldn't be an independent state if it wasn't for Scottish troops fighting on their side, and that all Scots were given dual French nationality for hundreds of years because of that.
11 January 2012 12:35PM
Something the author has neglected to mention is that, if Scotland has to negotiate entry as an accession state, then presumably the UK would be able to veto them joining. Which doesn't exactly put the SNP in a strong negotiating position for dividing up the family silver.
11 January 2012 12:35PM
Do your homework mate.
11 January 2012 12:36PM
Total stagnation. The civil war didn't help though.
11 January 2012 12:37PM
Well, quite. I don't think they've really thought it through.
11 January 2012 12:38PM
It's a side-issue, and I expect to see more of the same in the future.
We KNOW the truth. The reality.
We keep asking people to read McCrone. GERS. Aslen. And more recently Oxford Economics.
Read the reality of the Scottish economy, (and it's very different to what Westminster claims), and why services up here are so much better than elsewhere.
We've watched 'Diomhair'.
We KNOW why the Euro, defence, passports, and all the other, easily resolved issues will be front and centre of the Unionist argument.
It's because they don't want others to read the truth.
Truth that doesn't come from the SNP, but from Westminster itself.
Go and read it.
Please.
Then tell us why we're wrong, and Westminster is right.
11 January 2012 12:38PM
That is totally disingenuous of you since Norway seems to be the closest analogue to Scotland. How's Norway doing?
Gies back oor Oil fund that ye squandered on Trident, Iraq, Afghanistan and the City of London.
11 January 2012 12:39PM
Yes, because nothing would win Scottish hearts-and-minds like a threat to block Scottish EU membership which could only be said to be motivated out of spite. Sure, they wouldn't be in a great position whatever, but I'd much rather such negotiations never happened.
11 January 2012 12:41PM
And just how much oil is there left in the tank? How much less will be left in 2014?