Scotland Joining the EU after Independence

There has been much talk about Scotland and being in the EU should the country gain independence. This talk has been interesting, but again the clear cut requirements of Scotland in the EU are still not clear.

Salmond and the SNP believe and state that Scotland would have to reapply but that this will be achieved by simply talk to the EU and that Scotland would keep its place in the EU without any formal requirements. The timeline to achieve this is 18 months. Those in Westminster believe that Scotland would need to reapply to the EU and the UK would continue its presence in the EU without Scotland.

What we all want to know is which side is talking sense and what the truth behind Scotland being a part of the EU post independence really is.

Well essentially both are telling a form of truth to a point. The truth is that it is not totally agreed on how Scotland will fair in joining the EU post independence.

What we do know is that NATO has already said Scotland would have to apply as per any new country wishing to join; this is because under international law Scotland would be deemed a new state and not a continuation of a state after breaking from the UK. This is contrary to Alex Salmond’s SNP who believe that NATO membership would automatically happen should they gain independence.

Now the EU has not come out and said similar to this yet, in fact many EU members have abstained from openly talking about what would happen as they see the independence issue as a domestic one for the UK (Scotland included at present). There are a few however, that have spoken and the few that have do say that an independent Scotland would be a new state and would need to apply to the EU. Some did say that the process may be quicker because of its current inclusion in the EU as part of the UK.

To achieve EU status there would be many obligations/objectives that Scotland would have to achieve; now this is not going to happen in 18 months. Some of these will involve setting up border controls on the Scottish/English border because England is not part of the Schengen agreement and Scotland as a new state would have to and joining the EU Fiscal Pact.

The true answer to the question of how quickly Scotland could become an EU member is not clear as it all depends on the political nature of the EU member states and whether they will accept Scotland as a continuation state or a new state. With NATO already stating international law dictates Scotland is a new state and would need to apply to NATO, it may be hard for the EU to see things differently.

My personal opinion is that Scotland is likely to be seen as a new state and as such the joining process will have to be followed and this will take longer than the 18 months the SNP stated it would take. Also Scotland will have to agree to all EU demands for joining and won’t be able to simply decide to pick and choose which bits it wants.

Scottish Territorial Waters and North Sea Oil Share

Rough Example of Boundaries

There has long been an argument from Scotland that the majority of the North Sea Oil is theirs. In fact the SNP first used the slogan "It's Scotland's oil" back in the mid to late 1970’s when they first attempted to gain Scottish independence.

There is still huge debate about what would be classed as Scottish territorial waters should Scotland gain independence, something that would heavily influence the North Sea oil share they would get. Some say however that the territorial waters are just the tip of the iceberg when it comes to North Sea oil for two reasons, which are:

•    The Oil companies tend to have a London based head office so would still be paying UK tax
•    Historically the UK government has been heavily involved in subsidies and grants to support North Sea Oil development which they are unlikely to simply let go off.

Whilst the above is true, I am digressing so let’s get back to the main debate of Scottish territorial waters.

SNP claims that 90% of North Sea oil and gas would sit in Scottish waters after independence and this has heavily been claimed for its economic plans. This would be worth around £6 billion to £12 billion per financial year to the Scottish treasury.

In total (as of 2007) the UK had 590 oil and gas platforms in the North Sea, a large number of the gas platforms sit off the East Anglia coast, but the oil platforms sit further north.

Now the reason the waters are muddied on this subject (sorry I can’t help my puns) is that this percentage greatly depends on the trajectory of the territorial waters at the England/Scotland border.

Currently maritime law is governed by Scots Law in the north and English Law in the south. The Continental Shelf Act 1964 and the Continental Shelf (Jurisdiction) Order 1968 defines this as being at the 55th parallel north on the map. Under the 55th parallel north, Scotland would have the 90% stake which they claim.

Unfortunately territorial waters are not simply defined by longitude and latitude parallels and are genuinely done so through an extension of the continental shelf of the land mass. An example of this is the recent territorial claims the US, Russia, Canada and other countries are laying on areas of the Arctic as part of their continental shelves...again for gas/oil reasons.

Territorial waters are set under the United Nations Convention on the Law of the Sea III and this governs the Exclusive Economic Zone (EEZ) a country has over the resources in the sea for its own use. Generally the EEZ is set at 200 nautical miles from the coast of a country, or further if it’s proved the continental shelf extends past that point.

Based on the United Nations Convention on the Law of the Sea (UNCLOS III) it could be said that as the land border of Scotland and England has a north eastern trajectory at Berwick, the majority of the North Sea Oil would therefore sit under the UK and not be part of Scottish territorial waters.

There has not been any concrete conversation and agreement on the territorial claims of Scotland to neither agree nor deny the waters they claim. What we do know is that the waters would amount to around 60% of the total UK maritime waters, a colossal 500,000 square kilometres. It will be interesting to see how conversations occur around Scottish territorial waters as I imagine the UK won’t want to budge and give too much away based on financial revenues from water, whilst Scotland will want as much as they can get to encompass as much of the oil platforms as possible.

Both sides will have a point around where the water boundaries lay, but it’s not going to be straight forward and looking at it I cannot conclusively say what the boundary should be.

Scotland Plans to Retain Sterling

There has been much media attention today about Scottish plans to retain the Pound should they gain a yes vote in September 2014. The result of this media attention is that many people are jumping behind battle walls and screaming out rhetoric of all types.

The truth of the matter is that in the short term of independence this is to be expected at least. Should a YES vote occur in Scottish independence, it will take a lot of time to sort out all the buearocracy surrounding setting up and governing the country. Longer term we are not so sure of the impacts to the UK and to Scotland. We are still awaiting further detail and analysis on how this would serve both the UK and Scotland should Scotland retain Sterling as a currency.

On the face of it, one could say that for the Scottish it has a negative. The negative being that the Bank of England would be the sole bearer of decisions affecting the currency and Scotland would therefore still have their currency governed by an outside influence. Some from the Scottish camp feel they would have some form of power in say on the BoE. My understanding is that Scotland would lose some of its current powers around the Sterling currency and therefore would have less say than they currently have should they be independent.

The positives for Scotland include the fact it would continue as it currently does with a currency it knows well and can plan a longer term exit should it wish. You only have to look at Ireland to see how it worked as Ireland retained Sterling for a few decades after breaking away from the United Kingdom.

Overall the resulting arguments from both sides stir many more questions than answers because we need further fiscal explanation to have a clearer view on the impacts to both Scotland and the UK should Scotland retain Sterling. It also begs the question on whether citizens of the UK should have a say on whether an independent Scotland has the right to use Sterling and what impact it has on them if George Osborne’s view is correct about economic policy as stated below.

Scottish Finance Secretary John Swinney view:

"What the Treasury's paper is designed to do is to make things sound as difficult and obstructive as possible and I don't really think it is a helpful contribution to the debate.

"We invited a number of leading international economists, including Joseph Stiglitz and Prof James Mirrlees, to advise us on the macro-economic framework that we have put forward and I have accepted their recommendations in relation to currency.

"I think they put forward a very rational and considered case for the establishment of a sterling zone that can work in the interests of Scotland just as much as it operates in the interests of the United Kingdom."

Chancellor George Osborne on the other hand says:

"The fundamental political question this analysis provokes is this - why would 58 million citizens give away some of their sovereignty over monetary and potentially other economic policy to five million people in another state?"

"The rest of the UK, as the larger economy, would be much more exposed to the risk of an independent Scotland running into fiscal and financial difficulties.

"Let's be clear - abandoning current arrangements would represent a very deep dive indeed into uncharted waters.

"Would a newly independent Scottish state be prepared to accept significant limits on its economic sovereignty? To submit its economic plans to Westminster before Holyrood?"

Scottish Independence

Scottish Independence is a contentious subject, there are many in both Scotland and the rest of the UK stirring up all kinds of ill informed views on the subject. The problem I foresee with independence is that the people of Scotland are currently only getting rhetoric of bias from both Westminster and Holyrood.

With a monumental decision for the Scottish to make and the rest of the UK to accept, it seems fitting that we try and split the wheat from the chaff and write an unbias view on what we expect to happen. The idea of this blog site is to give people an outlet to discuss the different views of what people think in an informed and non malicious manner.

I have different views on the subject, but my own feeling is that the information given still doesnt allow me the true view of whether its in the interest of the people of Scotland. I will learn along with everyone else who decides to join my debate on whether it is right for the people of Scotland to vote YES or NO in 2014.

Just to let you know I am an Englishman, but one that works as an analyst and therefore my job is to ensure an unbiased view in everything I review and propose.