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SCOTLAND’S ROLE IN THE EUROPEAN REFERENDUM

SCOTLAND’S ROLE IN THE EUROPEAN REFERENDUM

By Gordon Wilson

Director of Options for Scotland and a former Leader of the Scottish National Party.

20th February 2016

 

Britexit for the UK? In, out and shake it all about for Scotland? Shortly after the uncertainties of thee independence referendum, the UK and Scottish electorates have to face up to another ‘generational’ choice on staying in or leaving the European Union. It is again not a simple decision. On one hand, there is Brussels greedy for a European federation, anathema to many and on the other hand, the problems of leaving the single market without a parachute!

In all probability Project Fear will win the day with many who, fearful of the political dangers from an unreformed EU, opt to remain to safeguard jobs. And in a turbulent world, who could blame them? It is therefore no surprise that the latest polling test in the UK for ‘staying’ is running at 55%.

This paper is not about the pros and cons of membership. That debate is accelerating. Instead, it will look at the strategic options for Britain and Scotland, together with the likely outcomes post-referendum, whichever way it goes.  David Cameron’s cosmetic renegotiation should not be the issue; it is worthless. Instead, the electorate should look at the long term implications of membership as part of the strategic future of Britain and Scotland.

In short term, this European referendum will be influenced by jobs and economic stability as against sovereignty. Beneath the surface, views on immigration control will be a substantial determinant. Britain is likely to stay in Europe. But will an unreformed Europe survive in its current form or will it implode under the strains of European mass immigration, the Euro Zone (still fragile) and Greek indebtedness? The sensible approach is to expect the status quo to triumph. But if not, what will be plans B, C and D?

And then there is Scotland. How will a Brexit on English votes go? Will there be grounds for a second independence referendum, if Scotland’s vote is over-ruled?  How will rEU react to a UK divorce? Will this encourage the EU to be more favourable to an independent Scotland pledged to rejoin the European Union? For many Scots, winning independence or blocking it will determine whether they will vote to stay in or leave!

IF BRITAIN STAYS IN

The first obvious consequence is that there will be no early demand for a second independence referendum. This peels away one layer of uncertainty. There is no evidence that the Scottish people will want a rerun of an independence referendum. If there were to be one, it would be because of the impact of austerity, opposition to London Control and then again only when the pro-independence movement was able to demonstrate that Scotland will be viable despite the drop in the world price of oil.

The price of oil will rise, especially since the output of oil from fracking in the United States is in decline but the timetable for a rise cannot be set with over-supply and a possible global recession in the offing. Indeed, any economic case for independence would be better presented on a platform of why Scottish economic performance and population growth have lagged behind those of southern England. Is this a consequence of UK Government policies and could an independent Scotland do better? As a political weapon, oil is a busted flush although it still carries economic advantages. It is time the SNP recognised that.

How will Britain staying in impact on both Britain and the EU?  At no time, has the UK ever been other than an unenthusiastic, semi-detached member. It has placed more weight on its ‘special relationship’ as a client state of the United States. It has faced both ways, enthusiastically westwards and with growing reluctance and distaste eastwards. Far from seeking to maximise its influence as a major partner through joining the German-French axis it has become a sea anchor dragging back progress..

So on securing a vote to stay in, the UK will be forced to jettison its previous world view. Put bluntly, it will have to become pro-European and less isolationist. Standing superciliously on the sidelines will be a thing of the past. This is a simple deduction but one which will cause political overload in London. In the much longer term, if the Euro zone survives, logic dictates that adoption of the Euro is inevitable..

On the European side, the decision of the UK to remain in the EU will encourage the federalists to accelerate programmes for unification in the knowledge that the YES outcome will weaken the UK’s ability to object.  So in one swoop, a referendum designed to enhance Britain’s sovereignty could lead in time to its loss. The unification of the states and kingdoms of Italy and Germany in the 19th century provides historical precedents. So far there has been little or no speculation on what will happen if Britain votes to stay in.  It is time there was a critical examination of the repercussions. There will be no such thing as a status quo.

IF  BRITAIN VOTES TO LEAVE.

The weakest part of the case for Britain to leave is this: what will happen to trade with Europe and beyond when EU negotiated trade treaties with third parties are lost? It is obvious that a deal must be done, but within what timescale and on what conditions? Switzerland opted to negotiate separately with the EU rather than join the existing EFTA framework and took around 10 years to do so.

Naturally, the Leave campaign will stress that special arrangements will be made but Project Fear will feed upon uncertainty just as happened over currency during the Scottish referendum. Where is Plan B? It will be needed.

If the UK opts to short-circuit the processes by applying to rejoin EFTA, this would be sensible. But if it wishes because of the size of the UK economy to negotiate its own treaty, it ought to face up to a reality check. There is no way the EU is going to confer Single Market trading benefits without requiring the UK to adhere to the principle of open movement of citizens, thus rendering the whole object of Britexit superfluous.

In a global economy, a Fortress Britain attitude will just not work!

IF A DIFFERENTIAL VOTE – ENGLAND LEAVES, SCOTLAND REMAINS! WHAT THEN?

Will a UK Brexit against the wishes of Scotland lead to a second independence referendum? This has been much canvassed in the media and academia, so much so that foreign diplomats are maintaining serious interest in the Scotland problem.

Thus far, the SNP leadership has exercised caution. As well it may! The slowdown of the global economy combined with the economic shock of loss of employment from offshore oil does not exactly create the right conditions to be sure of a YES vote in Indyref2. A strong medium to long term case can be made for Scotland benefitting from independent economic management, given the failures of UK economic management that have over a century led to de-industrialisation, excessive emigration, poverty and poor life expectancy. As yet, there has been no attempt on behalf of the national movement to establish a more sustainable narrative.

Nevertheless, the SNP leadership may have difficulty in holding the line in face of demands for an early referendum to defend Scotland’s interests. There is no doubt that opinion in Scotland demonstrates higher support (62% in Ipsos Mori of 10 February 2016) for EU membership compared with the UK. Indeed, this poll registered 54% ready to vote for independence from the UK, a substantial upsurge from the 45% of 2014 but still not high enough.

On the face of it, this is an issue that will not go away. Any decision for a further independence referendum could only be based on the temper of the people at the time.  There is no guarantee that Stay voters who opposed Scottish independence would put loyalty to the EU before the UK or that the third of SNP supporters who were anti-Europe would adopt a pro-Europe stance. The SNP will not easily forget that when the people voted for the Scottish Assembly in 1979, the reaction to its rejection by London was sullen defeatism rather than activism! People do not always behave in the way politicians expect.

So let’s assume that Scotland clearly signals by a large margin that it wishes to stay in the EU while rUK does not. Amidst the consternation within Europe of Brexit, will the EU wish matters confused further by supporting the secession of a province of the UK?  If the EU saw dangers in supporting Scottish independence in 2014, it would only change its views out of pique at the British decision and this is improbable. The EU is no friend of Scottish independence because of potential secessionist perils in Belgium, Spain and Northern Italy.

A SECOND EUROPEAN REFERENDUM?

The most likely outcome of a Brexit, especially one based on a narrow majority, is for the EU to fall back on trusted past measures. In the cases where, treaty changes were voted down, the EU resume negotiations, this time making as few concessions as it could get away with and arranging a second confirmatory referendum that would reverse the first decision. Indeed in the closest parallel, that of Greenland leaving the EU, there was a second vote. The political elites in the UK are most certainly likely to throw their weight behind any lifebelt on offer from Brussels.

EUROPEAN ECONOMIC AREA (EEA).

The missing link in the whole process is neither the EU nor EFTA but the unknown European Economic Area (EEA). The EEA could be described as the third and economic leg of the European Union trading tripod. It monitors the single market providing equal conditions of competition while maintaining the institutional autonomy of the Contracting Parties – and all members of the EU and EFTA must sign the EEA Agreement. It is governed by a Joint Committee and an EEA Council. Membership of the EEA or an Agreement with the EEA gives access to the trading benefits of the single market. Like most things connected to the EU, the arrangements are of Byzantine complexity but basically they allow for prior legislative consultation with EFTA. A further discussion of the EEA can be found in a paper on the Options for Scotland website under ‘Scotland in Europe – The independence Dimension’.

Furthermore EFTA has the power to ‘grandfather’ trade agreements with third party countries and this could give scope for Scotland as later described.

For the moment, it is not necessary either to be in the EU or EFTA to obtain the benefits of free trade. There are 25 EFTA Free Trade Agreements,  capable of  extending to ‘territories’. The EEA has a role in monitoring these agreements. It is a route for the UK or Scotland in the event of a Brexit although the UK would given its self-perceived importance opt for direct negotiations with the EU despite the difficulties if immigration control remained an issue.

Membership of EFTA would give immediate access to these trade agreements but this is not on the political agenda of the UK and Scottish Governments which support full membership of a reformed’ ‘European Union. Should this not be Plan B for the Scottish Government, at least?

There has been a great deal of misrepresentation about the weakness of membership of EFTA, mainly based on alleged imposition of EU legislation without consultation. This is not accurate as EFTA countries have a right to be consulted early on in the decision-making process through the EEA and then only in relation to the requirements of the single market and arguably have more influence than Scotland with its tiny proportion of MEPs. Also, the accusation is that they have to pay for the privilege by making huge contributions to EU development funds.. This is true for Norway which is one of world’s richest countries but would not be for Scotland which is relatively poor by north western European living standards. Comparative GDPs provide the basis for these calculations and the costs of EFTA membership for Scotland would be much less than its present contributions to EU budgets. As to popular acceptability, the Norwegian political elites would like Norway to be an EU member but have been thwarted twice by the Norwegian people.

If there are pros and cons of EFTA membership, what are they? An email from the Royal Norwegian Embassy in London to Nick Dekker of 23 November 2015 spells it out:

“Norway is deeply integrated with the EU through the EEA-agreement. Norway’s trade with EU countries accounts for a greater share of our foreign trade than of Britain’s. In relative terms, we have more EU labour immigrants than the UK does, as we are also part of Schengen. We implement more than three quarters of EU legislation, and we regularly align ourselves with EU positions on foreign and security policy. The EEA agreement is vital to Norway as it gives us open access to our largest market – the EU. It has been crucial for the development of the Norwegian economy, for Norwegian businesses, for Norwegian jobs and our welfare.

As you mention, Norway has to implement EU regulation. Over the last 20 years we have implemented more than 10,000 pieces of EU legislation, which is around three quarters of all EU legislation, You are also correct when you say Norway have to pay for this agreement. In the period 2009-2014 Norway paid E1.79billiom to the EEA grants programme.

There are, however, certain areas that the EEA agreement does not cover, which allow greater national autonomy. These areas include the Common Agricultural and Fisheries Policies (although the Agreement contains provisions on various aspects of trade in agriculture and fish products); the Customs Union; the Common Trade Policy; the Common Foreign and Security Policy; Justice and Home Affairs (even though the EFTA countries are part of the Schengen area); the Economic and Monetary Union.” (Author’s emphasis)

As to EU legislation, the highly controversial Transatlantic Trade & Investment Partnership treaty is in the final stages of negotiation. This is a charter for uncontrolled Big Business to muscle into the public sector such as the National Health Service by law. TTIP will fall into the area of Common Trade Policy excluded from the control of the EEA. It will apply to EU countries by obligation but only to EFTA countries or those in Free Trade Agreements with EFTA if they so decide.   

VITAL CAMPAIGN ISSUES.

STAYING IN

Strengths

The one and only issue is access to the Single Market and the jobs at stake. It will stand or fall on that one case.  A powerful campaign will be fought on trade, trade, trade, and jobs, jobs and jobs.

With, of course, a contrasting Project Fear!

The threat of the break-up of the UK.

Weaknesses

The Cameron deal is cosmetic. It does not deal with sovereignty or provide any barriers to greater integration or immigration which worry many UK citizens.

By validating the EU, it gives the Euro-federalists the opportunity to push for greater integration and the creation of a super-state with a military wing.

BRITEX1T

Strengths

Restoration of British Sovereignty                                                                                                          Freedom to control borders                                                                                                                       Curbing immigration

Weaknesses

Dislocation of trade with the EU.                                                                                                                      Potential loss of jobs                                                                                                                                                  Long negotiating period for a separate trade treaty or abandonment of special deal                         International isolation                                                                                                                                       Loss of international prestige                                                                                                                       Threat of Scotland leaving the UK

IF SCOTLAND VOTES STAY AND UK VOTES LEAVE

Unionists in Scotland in favour of staying in have a number of distinct questions to answer.

With 6 MEPs, how can Scotland’s national interests be safeguarded in the EU especially in a climate of increasing European integration?  Being more pro-European does not cut deals. This is for member states. Scotland has no right to negotiate, this being a power reserved to Westminster.

Those in favour of Brexit also have to define how Scotland’s trading position will be safeguarded. What input will the Scottish Government and the other devolved administrations have over the timescale for withdrawal and negotiation of a treaty with the EU? Is there a risk of Scottish interests being treated as pawns for sacrifice as with our fishing waters in 1973. What answers will be available before the fateful vote on 23 June?

The SNP Government should proceed with extreme caution before seeking another referendum based on Scotland acceding to the EU. Looking at the low level of support for a second ‘go’ at 36% (as against opposition of 46%), there will be a high irritability factor induced by voter fatigue after a Scottish General Election and two referendums – a case of triple jeopardy. And then in an adverse economic climate, with 47% believing they would have been worse off with independence, it would be a hard sell to win, especially when a third of SNP supporters want out of the EU!

NOT THE WHOLE HOG BUT A SCOTTISH SOLUTION

There is another solution available. The free trade agreements open to EFTA under the EEA Agreement and WITH the EU are open to territories as well as to states. The EU is against recognising an independent Scotland. But what if Scotland as an interim measure makes an application for a trade agreement as a ‘territory’ instead of as an independent state? The level of internal opposition within the EU would be less and we would fit in with current rules and practice.

There is a drawback. EFTA or the EU will request the consent of the UK Government. The UK Government can give that consent under Section 30 of the Scotland Act 1998 as used in subsequent legislation to enable the Scottish parliament to make an application.

If the UK Government refuses to give that consent, then given the threat to Scottish jobs from that refusal, public opinion as to the necessity of a second referendum may change. It would not be in the political interests of the UK Government to allow that set of circumstances.

The end result may be a deal safeguarding Scottish interests and extending Scottish autonomy. If not, it will be an important argument for independence in some future referendum. It is a surprising paradox that the SNP’s slogan of Scotland in Europe can work both ways whether Britain stays in or leaves the EU.

So some good could come from the EU referendum after all!

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