On 18 September 2014, Scotland will vote in a referendum on whether or not it should declare independence from the UK.  Much debate in the referendum campaign has focussed on an independent Scotland’s (iScotland) relationship with and membership in the EU.  This is a unique situation: never before has a constituent part of an EU Member State declared independence and sought to remain a member of the EU.  There are many unanswered questions, with legal and political implications.

The UK enjoys specifically negotiated EU membership terms.  The ‘yes’ campaign seeks ‘continuity of effect’ in iScotland’s relations with the EU, i.e, the same treatment for iScotland (see pages 221 and 222 of here), including:

• Opt-out from membership of the Euro.  All Member States of the EU are obliged to join the Euro once the necessary preconditions are fulfilled (see).  The UK and Denmark have negotiated formal opt-outs from Euro membership (the UK’s opt-out is enshrined in Protocols 15 to the TFEU and the Treaty on European Union (TEU), which also specifically maintains the UK’s autonomy in monetary policy).  Sweden has an informal opt-out.  It argues that membership of ERM II, a prerequisite of Euro membership, is voluntary, and that on account of its non-membership of ERM II, it hasn’t met the qualifying criteria for Euro Membership.

• The Schengen Agreement, on reduced border controls between participating states.  All EU Member States participate in the Schengen arrangements, save for the UK and Ireland, which negotiated opt-outs, and recent accession states, Bulgaria, Croatia, Cyprus and Romania, which are legally obliged to implement Schengen in time.  Protocol 19 to the TEU requires new EU Member States (i.e., likely iScotland) to accept Schengen in full.

• The UK’s budget rebate.  The UK benefits from a partial rebate to its financial contributions to the EU.  The rebate was estimated at £3.3 billion in 2013 (see page 14 of here).  On a GDP pro-rata basis, this rebate it worth approximately 8%, or £264 million to Scotland.

The ‘yes’ campaign argues that iScotland’s membership terms can be negotiated with the EU using the expedited mechanism at Article 48 of the TEU.  The ‘yes’ campaign claims that this mechanism, which allows for amendments to the EU treaties, would facilitate necessary treaty changes prior to iScotland’s independence (i.e., in the expected 18-month period between a yes vote in the referendum, and formal independence).  Only Member States, the European Parliament or the European Commission can initiate the expedited process under Article 48.  Prior to independence, Scotland won’t have direct representation on these bodies, so the process could likely only be started by the UK Government, which it might refuse, until bilateral iScotland/rUK terms of secession: currency; share of natural debt; share of North Sea oil and gas reserves, are agreed.  The more likely route for accession is Article 49 of the TEU, the route followed by other accession states.   The process for negotiating and joining the EU pursuant to Article 49 can be lengthy.  iScotland has a reasonable argument for expedited accession, having been de facto member since the UK joined the EU in 1973.  However, iScotland’s pursuit of the beneficial UK opt-outs detailed above, could slow the negotiation and accession process.

Approval of new members to the EU requires unanimous approval from existing members.  There has been speculation on whether certain countries might veto iScotland’s application so as to dissuade domestic regional independence movements.  Spain, with concerns on the Catalan independence movement, is a commonly cited example, but no Member States have said they would veto an application by iScotland.  Furthermore, iScotland’s approach to its future currency will impact on an application to join the EU.  Olli Rehn, a former EU commissioner for monetary union, is on record saying that iScotland could not join the EU unless it had its own central bank.  If correct, then Serlingisation (a currency option for iScotland examined in an earlier GlobalPolicyWatch blog is incompatible with iScotland’s EU membership).

Amongst the uncertainty, one thing is clear.  Negotiations involve give and take, and it seems highly unlikely that on EU accession, iScotland could retain the full group of beneficial opt-outs presently enjoyed by the UK.  Indeed, iScotland might not retain any of the opt-outs or a portion of the UK’s rebate.  With its opt-out, the UK has a sometimes reputation as an awkward member of the EU; it’s not clear that other Member States would welcome a second awkward member.  One anomaly of accession by iScotland is that failure to achieve an opt-out from Schengen would lead to light-touch border controls with other EU Member States.  In this scenario, in order to maintain current levels of control over movement with the EU, the rUK would need to impose controls on its border with iScotland.

A complicating factor in the political debate is the commitment from the UK Conservative Party, to give the UK electorate a referendum on continuing EU Membership, if the Conservatives win the next UK General Election in 2015.  There is far stronger support for EU membership in Scotland than in the remainder of the UK, and in particular in England.  Scottish/European relations long predate the 1707 union between Scotland and England that created the UK; the Auld Alliance between Scotland and France dates from the late 13th Century, reflecting a common need to curtail English expansion.    If Scotland votes for independence it will once more forge relations with Europe direct, possibly contemporaneously with the rUK withdrawing from the EU.