To EU Or Not To EU

“In contradiction and paradox, you can find truth.” – Denis Villeneuve

On Saturday I, like a couple hundred thousand others, attended the All Under One Banner march in Edinburgh. I was struck by a couple of observations about the crowd beyond the sheer size of it.

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First, was the demographics. This march was significantly younger than many I’ve been to recently. The younger demographics have often been far more in support of independence than older folk but also tend to be less active in overt politics like this. This shift bodes very well indeed for the movement.

The other is the marked increase in the presence of EU flags and EuroScot flags amid the sea of saltires.

SaltireEU2

Brexit has made its mark in everything to do with Scottish politics and has done so prominently within the independence debate. Many – perhaps even most – of those who have moved from No to Yes since 2014 have cited Brexit as a primary reason for doing so. This is certainly the case for EU citizens who were told in 2014 that their right to live in Scotland would be in jeopardy if Scotland voted Yes and that resulted in Scotland being effectively kicked out of the EU. Of course, since then the UK has voted to leave the EU and has deliberately set about tearing up the rights of those citizens. It’s no wonder that EU citizens and their friends and families are more keen on Scottish independence than ever. Of course, on the flip side of this are those in Scotland who voted to Leave and now see Scottish independence as a threat to their ambition to get out of the EU (Indeed, some of these people heard Better Together’s claim that Scotland would be ejected from EU and saw it as an opportunity rather than a threat).

These arguments will come to a head in the next independence campaign but it’s here that I see some issues with current SNP policy that will need to be properly sorted out before that time. The SNP as a party has a policy of supporting an independent Scotland as a member of the EU. I have no problem with this. As a matter of fact, I have long considered myself to be a Europhile and completely support that goal.

I do, however, see some contradictions between the SNP’s stated goal of EU membership and some of their other policy positions. In their policies, I tend to see a party whose policies would be more comfortable with an independent Scotland being a member of EFTA and (perhaps) the EEA rather than full EU membership.

Now, don’t get me wrong. I have no gripe with a party in Scotland taking that position either – indeed I think there’s space for a pro-independence, pro-EFTA party in Scotland politics (which would open the distinction between, say, the pro-indy, pro-EU Greens) and I think it’s a perfectly valid position to argue for. But I still see the current SNP as a party that will need to either change its stance on EU vs EFTA or will need to change the following policies to be more in line with EU requirements.

Currency

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This is the big one that I have probably banged on about quite enough. Current SNP policy is that an independent Scotland will not have its own currency and will not join a formal currency union with the rest of the UK but would instead unofficially use the pound sterling (a process known as Sterlingisation) until Scotland meets a series of ‘six tests’ [Note: Actual official party policy as voted for by the members is for a transition “as soon as practicable” but the party leadership has interpreted that goal to mean “when the ‘six tests’ are met“]

It is very far from clear that Scotland will be able to become an EU member while it does not have a full currency. Membership rules state that a country must have a fully functional central bank and be able to demonstrate that it can manage a stable currency. Without a currency, a country has no central bank and therefore cannot meet this requirement.

In 2014, this was an easy question to answer. Scotland in currency union with fellow EU member rUK would have been able to demonstrate joint control of the pound via the Bank of England and therefore would be able to meet this requirement. An independent Scotland with its own currency would also be able to do so.

But what about a Scotland which is a junior member of a Sterling zone where all of the control is held by a country outside of the EU and especially when that country is busy trying to become Singapore-upon-Thames with aggressive undermining of the EU’s trade and financial policies?

I cannot see Scotland joining the EU while Sterlingised and I’ve yet to meet anyone in the SNP leadership who has been willing to go on record with a claim of being able to do so.

But what about EFTA? There isn’t an exact analogue of this kind of scenario but within EFTA there is a country which is part of the EEA but unofficially uses the currency of its much larger neighbour and where that country is not part of the EEA. Lichtenstein uses the Swiss Franc as its currency in this manner.

I can’t make any promises here but if I was arguing the case for Sterlingised Scotland to join EFTA and the EEA I think that’s the argument I would start with.

So if the SNP wants to be a member of the EU, it will need to change its current policy on currency. If it doesn’t want to change currency policy, it may well have to change its policy on the EU.

Civil Service

One of the more objectionable points about the SNP Sustainable Growth Commission was the Annual Solidarity Payment which I critiqued here. It was made of three parts. An indefinite payment of Scotland’s “share” of UK debt interest without any ownership of said debt nor any end date for said payments, the turning over of Scotland’s foreign aid budget to rUK to be spent by them and an annual payment to cover “shared services” – government services bought from rUK to cover gaps where an independent Scotland had not set up its own departments.

From an EU point of view, this may hit the same infringements covered in the currency section above. If Scotland is buying services from certain departments and cannot control them then how can it demonstrate compliance with EU law in them?

It also raises the question (unanswered within the Growth Commission report nor by the SNP since) of which departments would be left to rUK. Would this include foreign diplomatic services as well as foreign aid? Would it include broadcasting regulators (another area specifically mentioned within EU membership regulations)? Would an independent Scotland be buying services from the Home Office and DWP and therefore jeopardising the human rights of non-British citizens in Scotland even after we become independent?

I have no issue with Scotland and rUK working together at a government department level on areas of common interest but it must be a relationship of two equal departments working together rather than an independent state buying services from another. If we want to join the EU, then it absolutely must be this way seeing as we can no longer trust the UK with our rights or even with the personal data that we may have to turn over to them in order for those services to be delivered.

Fishing

RS-HMS-Scylla-colllides-with-Odinn-Credit-Ian-Newton

The European Common Fisheries Policy has been another contentious issue within the UK. Supporters say that by properly managing fishing stocks it has acted to preserve them more sustainably (albeit imperfectly) whereas dissenters oppose the fact that quotas have been distributed such that non-UK fishers can fish in UK waters (albeit ignoring the fact that quotas distributed WITHIN the UK are some of the most unequal possible despite this being entirely a matter for UK domestic policy).

The Scottish Tories in particular have made electoral strides by claiming that the SNP’s policy EU membership would bring Scotland back into the CFP and this is completely true. There perhaps is scope for reform from within and there is certainly scope for an overhaul of how domestic quotas are allocated but so far the SNP have not been strong on articulating how this would be done.

For my part, I regard the CFP to be an essential (if imperfect) environmental policy and should be reformed but that Scotland has an absolute duty to be part of the safeguarding of the marine environment whether it is a member of CFP or not. We absolutely cannot go back to the days of strip-mining the oceans until there is nothing left because there already almost isn’t.

But if the SNP really do want to hold to a policy of opposing CFP then again, perhaps EU membership isn’t really for them. Iceland and Norway declined to enter the EU because of CFP and Greenland left because of it. Of course, the flip side of this is that those countries have less of a focus on onshore agriculture and something where Scotland really could benefit from is a more dedicated voice speaking for Scotland within the Common Agricultural Policy. It may well be that to a large extent, the EFTA vs EU argument essentially boils down to whether one wants to focus on fish or on farms.

Borders and Trade

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Another beating stick of the Unionist movement is Scotland’s trade with rUK. Though declining as an overall share of exports and a minor partner for many premium goods, rUK remains the dominant recipient of Scottish goods and services overall. The Brexit process has shown just how complex it can be to try to break away from a political union whilst simultaneously keeping close ties with it. The UK laid down three red lines for Brexit. 1) England should get a “hard Brexit” and leave the customs union. 2) Northern Ireland should get a “soft Brexit” and remain border-free with the EU and 3) Both Northern Ireland and England should get the same kind of Brexit.

The current proposals by Boris Johnson have moved some way towards resolving this complication by throwing up a regulatory border between GB and NI and a customs border between NI and Ireland but this far from solves the actual problem and, in any case, is likely to be rejected by the EU.

A more sensible approach (barring the UK as a whole remaining within the Single Market and Customs Union) would be for Northern Ireland to remain there and for the rest of the UK to leave. It may be that this is where we end up before Brexit is finally resolved.

The SNP’s response to this is (quite rightly) that if this happens the Northern Ireland will have a competitive advantage compared to Scotland and thus Scotland should receive the same deal.

From an economic point of view, this is a sound argument but it does throw up the obvious problem that Northern Ireland’s remaining close to the EU as Great Britain diverges is designed to obviate the need for a border whereas the creation of divergence between Scotland and England would require the creation of one.

Of course, so, almost certainly, will independence and there are already models out there for what that border could look like. Scotland has an advantage over Northern Ireland in that there are fewer major crossing points and fewer roads criss-crossing the border multiple times. We also don’t have to work within an international peace treaty and the volatile politics which required it.

It’s also worth saying that more work needs to be done here and this is true whether Scotland is an EU or an EFTA member (particularly if we aim to be within the EEA).

But the shape of the border will be dependent on trade policy. Scotland could, theoretically, remain with the UK’s customs sphere post-independence (Yay, all the chlorinated chicken we can choke on!) but more likely we’ll want to shift our sphere more towards Europe in some way. How much? Well, for that, we’ll need more information. I mentioned that the majority of exports from Scotland go to rUK but that number is fairly useless without a corresponding number for imports. We don’t really know Scotland’s trade balance with rUK or with anywhere else. The data is woefully lacking. We desperately need a Scottish Statistics Agency (the creation of which is now also SNP policy – it just now needs to be done) to fill this gap (and others) so that sensible policies can be drawn up based on actual data.

And this is before we start to consider the implications of the SNP’s (again, to be celebrated) announcement that they want to see a Green New Deal in Scotland. As a committed Europhile, I must face a blunt truth. The EU is not yet ahead of the game when it comes to environmental policy and member states face severe restrictions when it comes to the kind of interventionist investment approaches that will be required to actually bring about a Green New Deal at the state level. We don’t have time to wait for everyone to be ready. Those who are must forge ahead and encourage others to catch up.

In this regard, diving straight back into the EU immediately after independence may run counter to a Green New Deal plan. It may be more sensible to join EFTA to protect the rights of EU citizens living here but remain slightly apart from the EU’s rules on State Aid and other restrictions until we get the ball rolling. From there, Scotland could become a major exporter of Green energy (particularly electricity and hydrogen) and use the leverage gained by that to encourage the EU to up its standards and become a major energy policy “uploader” to the EU rather than the passive “downloader” that we might become if we join quickly and simply accept all concessions to do so.

If the choice boils down to a Green New Deal Scotland and quick, concession-heavy EU membership then even I may be tempted by the former. But even despite this, I’d still like to see some clarity from the SNP over which one they would prefer themselves.

Conclusion

Obviously, not being a party member I’m not in a position to dictate what the SNP policy should or should not be but I do feel that all parties need to get their positions straightened out ahead of what could be another independence campaign.

As stated earlier, I have absolutely no problem with the SNP being a pro-EU party and have absolutely no problem with them being a pro-EFTA party. I’d prefer the first but welcome the diversity of the second. I could see a Scottish Parliament made up of pro-EU Greens and Lib Dems, pro-EFTA SNP, pro-UK Customs Union Tories and Labour and the Socialists perhaps aiming for some kind of Global “No Borders” Free Movement policy.

What I would worry about is a pro-EU party going to the EU with a bunch of non-EU compliant policies and then finding out the hard way that while UK negotiations with the EU have been dire, Scotland’s negotiations simply have no track record at all.

I’d also worry about an independence movement voting for, essentially, “independence in Europe” only for Scotland to find itself in EFTA as a “holding pen” option that slowly becomes permanent as the party of government simply loses the will to keep pushing for EU membership because the EFTA position suits where their policies are. That, I would gently suggest, would be disingenuous to those voters and what ever short term gain could be found by it would be paid back dearly in the future.

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3 thoughts on “To EU Or Not To EU

  1. Would it be possible to use the Euro in the same way as Sterlingisation, Euroisation if you will, with a view to setting up a Scottish currency or joining the Euro zone?

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    • Good question.

      Euroising would not help with setting up a new Scottish currency. Technically, the process would be the same but our preferred method would involve pegging the nascent £Pound to the GBP during the set-up phase. This would have the advantage of keeping prices the same when goods start to become dual-priced in both £S and £UK. Pegging to the Euro would cause a change of price as well as symbol.

      Euroising would also significantly hamper any attempt to join the EU and join the Eurozone. As with Sterlingisation, Euroisation prevents one from demonstrating a fully compliant central bank. This has been one of the key sticking points with Montenegro’s potential entry. Now, unlike Sterlingisation, Montenegro is using the currency of the political union that it is trying to join and so will (probably) eventually become an EU member and the ECJ has been working hard over the past decade to come up with a way to make it all work (and their successful entry would then set a precedent for a hypothetical Euroised Scotland) but even once that happens it’s not clear if Montenegro will join as a Eurozone EU member or will remain Euroised.

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      • Montenegro was the example I was thinking of and having been there (albeit on holiday), it seems unlikely that it would decide to change. Thanks for replying.

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