Scotland faces running gauntlet to join EU
We’ll send you a myFT Daily Digest email rounding up the latest Bank of England news every morning.
After he was named the next president of the European Commission, one of the first things Jean-Claude Juncker did was to puncture the hopes of any Scottish nationalists confident of soon becoming citizens of the EU’s 29th state.
In the next five years, Mr Juncker said, the EU would not take on any new members but would rather “consolidate what has been achieved among the [existing] 28”.
Officials in Brussels noted the alarm in Edinburgh and moved quickly to explain that the new president had been talking about the Balkans, adding that Scotland would be a “special case”. But deliberately or not, Mr Juncker had made the point that there is no guarantee an independent Scotland will be able to join the EU.
EU lawyers and constitutional experts have no doubt that Scotland’s accession to the bloc is possible but Edinburgh will have to run a lengthy gauntlet of potential vetoes, crucially from Spain, which fears a Scottish Yes could accelerate Catalan dreams of independence. It will also need to deal with the question of joining the euro, which is now in theory obligatory for any new member.
Lord Kerr, chairman of the Centre for European Reform and Britain’s former envoy to Brussels, warned that it was impossible to predict how any of these votes and negotiations would go. “The fact is that the EU would be uncharted waters,” he wrote in a recent appraisal of Scotland’s prospects.
The only certainty among the treaty experts in Brussels is that Scotland’s admission to the EU will not be as automatic or seamless as the Scottish National party insists. To gain membership, Scotland will have to apply for admission and will face the following hurdles:
1) Recognition as a new country, particularly by Spain
Once it has been recognised by London, Scotland will need the same from all the other member states before it can apply (or reapply) to join the EU. José Manuel Barroso, Mr Juncker’s predecessor, said this year that it would be “very difficult, if not impossible” to secure a green light from all 28.
Five EU countries – including Spain and Cyprus – have still not acknowledged Kosovo’s independence. Officially, they argue, this is because Kosovo made a “unilateral” declaration, unrecognised by Serbia, its former master. Scotland’s case is therefore different, as José-Manuel García-Margallo, Spanish foreign minister, has acknowledged – but he is adamant that Scotland will have to reapply for membership, at the very least.
The approval process could be tortuous, requiring parliamentary debates and votes. Some countries, such as France and Austria, have also considered referendums for accepting new EU members, but these were proposed largely with Turkey in mind.
2) Commitment to joining the euro
All countries in the EU must be committed to joining the single currency. Denmark and Britain won “opt-outs” that are no longer available to new applicants. Olli Rehn, the EU’s former economy commissioner, has been categorical that keeping the pound would be incompatible with joining the EU.
“As to the question whether ‘sterlingisation’ [keeping the pound without the oversight of the Bank of England] were compatible with EU membership, the answer is that this would simply not be possible, since that would obviously imply a situation where the candidate country concerned would not have a monetary authority of its own and thus no necessary instruments of the economic and monetary union,” he wrote in a letter to Danny Alexander, chief secretary to the Treasury, this month.
Lord Kerr says a way to negotiate this challenge could probably be found: “A declaration of intent to join at an appropriate unspecified future date would probably suffice.”
However, it is unclear whether other EU nations or applicants would accept a commitment from Scotland that was tactical rather than sincere. Edinburgh would need time to show it was managing its own budgets and currency system responsibly.
Sweden has a de facto opt-out from the euro by not meeting some technical criteria but the EU has said it will be less tolerant of such tactics from new members.
3) Managing a transition
Increasing speculation centres on a potential “transitional agreement” that would grant Scots special rights akin to membership while their application for readmission was going through the system. People involved in the case of Greenland – which left the European Economic Community in 1985 – say the bureaucracy of an exit is gruelling and would be best avoided if Scotland is going to return to the bloc after a brief period outside.
Lawyers say it would be logical for the EU to agree to a temporary deal so Scots would remain locked into EU standards for, say, agriculture and labour while their reapplication is considered. The status of Scotland’s fisheries would be particularly sensitive as EU quotas are won in hard-fought negotiations where national population is important. An independent Scotland would lose leverage.
A transitional agreement would be an unprecedented compromise for an unprecedented situation. However, the idea of non-EU states conforming with EU law is not unusual. Countries such as Norway, Switzerland and Serbia often have to abide with large parts of the acquis – the body of EU legislation on topics ranging from competition to energy – because of the amount of business they conduct with the bloc.
Scotland could also take advantage of the period between the referendum and independence. Although the SNP envisages independence in March 2016, a delay would give it longer to negotiate EU admission in parallel.
4) Forget that rebate
In some respects, Scotland would be able to carry on in the EU much as it did as part of the UK, still sending six lawmakers to the European parliament.
Lord Kerr, however, said Scotland would almost certainly not be able to continue to enjoy Britain’s rebate from budget contributions that Margaret Thatcher, then prime minister, won in 1984.
“Existing member states, many much poorer in per capita terms than Scotland, would not agree to pay more to let the Scots pay less.”
Get alerts on Bank of England when a new story is published