Scottish independence and the European Union

With the referendum on Scottish independence less than two weeks away, a second key question - almost as important as the currency question, and in many ways interdependent - is what will happen to Scotland’s membership of the European Union in the event of a ‘yes’ vote?

One option would be for Scotland to be treated like Gibraltar, which is classed as a dependent territory of the United Kingdom. Gibraltar has its own Parliament and laws, and exemptions from some areas such as the customs union, but is largely treated as a ‘member’ of the EU and its residents can vote in EU elections as part of the South West constituency in the UK.¹ This seems to suit financial companies, with several insurers based on Gibraltar, and might therefore go down well with the Royal Bank of Scotland, Aberdeen Asset Management and other financial companies with operations in Scotland. However, I’m not sure that a supposedly independent Scotland would relish being classed as a dependent territory of the United Kingdom it had just voted to leave.

Option two is for Scotland to follow the lead of the Crown Dependencies (Jersey, Guernsey and the Isle of Man). These islands are not part of the European Union or the European Economic Area, and as such their residents do not automatically have the right to freedom of movement or goods and services throughout the EU. However, there are a number of exceptions:

• Residents of the Crown Dependencies have freedom of movement within the UK.²
• EU rules on customs apply to the Crown Dependencies as they do to the UK.³
• Residents of the Crown Dependencies can obtain EU citizenship via a parent or grandparent born in the UK, or a parent who holds citizenship of another EU state.

In addition, the Crown Dependencies implement some areas of EU legislation, such as data protection.⁴ As a result, they are considered to have adequate protections for personal data,⁵ which means that data from the UK can be processed and transferred there without additional restrictions. This option would seem to suit Scotland well, but it would require the co-operation of the UK and the EU, which is unlikely to be forthcoming.

The third option is for Scotland to remain a member of the EU with the same opt-outs as the UK, but as a separate country. This is what the SNP wants, and thinks it can get, but the European Commission appears to disagree. Opinions range from something can be negotiated⁶ to Scotland having to leave and re-apply, a process which could take five years.⁷ Any negotiations would be closely watched by countries such as Spain, which are worried about their own local separatist movements. I’m not convinced that such negotiations, even if eventually decided in Scotland’s favour, could realistically be completed by 24th March 2016 - the proposed date for independence.

The final ‘nuclear’ option would be for Scotland to leave the EU entirely. This would pose an interesting problem, as no country has ever left - voluntarily or otherwise. The customs duties, immigration controls etc. which would result from such a move could be fatal for Scotland, and I do not believe that anyone would willingly choose this route.

As with the currency question then, the answer to Scotland’s EU membership is ‘nobody knows’, with the Yes campaign insisting one option is certain and others claiming the exact opposite, both with reasonable but not entirely compelling arguments. A ’fudge’ which will cause problems for everyone other than lawyers therefore seems likely.