Nationalists face a stark choice on Europe if their fantasy of independence ever becomes a reality, warns DAVID MARTIN

 

The SNP has blown a gaping hole in their independence in Europe strategy.

According to Eddie Barnes of Scotland on Sunday the nats have come out implacably against greater fiscal integration in the Eurozone. Combine the fact that some form of Eurozone economic governance is a near certainty with the condition that any new member state signs up to the single currency you find that the SNP have put themselves  between a rock and a hard place. If their fantasy of an independent Scotland were to happen, the choice would be between staying out of the EU or being in and joining the single currency. The nats will huff and puff but no other choice will exist.

It is not difficult to understand why the SNP would be uncomfortable being part of a zone with tight rules on borrowing, common taxes and fiscal transfers. Even they would find it difficult to explain why a devolved Scotland should have a distinct corporation tax from England but an independent Scotland should harmonise its rate with countries in the Eurozone.

However, in openly admitting their concerns about Eurozone integration the nationalists have created a dilemma for themselves. The EU position is very clear: any new applicant to become a member state of the European Union has to sign up to be a member of the single currency. The only way out of this cul-de-sac for the SNP is their claim that they would not be a new member state. This is nonsense. The Doctrine of the Successor State leaves no doubt that the rest of the UK would assume the existing rights and obligations of our membership of the European Union. I have no doubt that Scotland would be welcome into the EU, but it would have to be negotiated and membership of the Euro would be non-negotiable.

Those who doubt who would have the privileges of the predecessor state should look at the break up of the USSR. The Russian Federation was declared the USSR’s successor state on the grounds that it contained 51 per cent of the population of the USSR. It was agreed that the Russian Federation would acquire the USSR’s seat on the United Nations Security Council and all Soviet embassies became Russian embassies.

This of course is no academic debate. With the referendum on independence pencilled in Alex Salmond’s diary, the SNP must come clean on what Scotland’s international position is likely to be. Are we to be an independent country outside the EU using the British pound, listening to the BBC but with border posts north of Berwick and Carlisle and customs controls at Stranraer because we have become an external border of the EU? Or are we to be part of a Eurozone with a different currency, a different tax regime and different fiscal strategy from our main market?

At any time such serious question about our future economic position would be unsettling. At a time of great economic uncertainty they could do untold damage to business confidence and inward investment and leave the Scottish economy in a state of paralysis for many years.

David Martin is one of Scotland’s two Labour MEPs. Follow him on Twitter at @DavidMartinMEP.

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14 thoughts on “Union, Europe or isolation?

  1. Excellent article David. One other question is this: firstly, do current EU member states have any kind of veto on new members, and what would be, say, Spain’s position, given its own separatist movements within its borders?

  2. The only sensible policy to have on the EU at the moment is ‘wait and see’ – the EU is going to change radically now, and it’s a bit silly to formulate future policy when things are in such a state of flux.

    It’s entirely possible, perhaps likely. that we will have a European political union by then, with the UK sitting outside either on the same basis as the non-EU EFTA nations or on the basis of a ‘2-speed Europe’.

    Europe is difficult for all parties as Euroscepticism does not entirely split along party lines. For example, is it still Labour policy to join the Euro?

    As for “isolation” – how’s that working for Switzerland and Norway? Not so bad, as far as I can see….

    CC

  3. Labour’s policy on the Euro under Blair and Brown was to wait and see. Has this changed? I’d guess not, so if that was and is right for the UK, why wouldn’t it be right for an independent Scotland in the future? Answering that question in the wrong way could provide good quotes for Tory and UKIP election materials in the next UK general election. It could even, all on its own, be an election loser.

    And perhaps Mr Martin needs reminding that that Sweden still isn’t any closer to joining the Eurozone – perhaps it is even further away due to the 2003 referendum – than it was in 1995. Olli Rehn is on record as saying that “it is up to the Swedish people to decide on the issue” of Eurozone membership. The Czech Republic’s head of government thinks that his country is no more obliged to adopt the Euro any time soon than Sweden is.

    The cast iron commitment by accession states to join the Euro seems to be rather flexible in practice, and perhaps not really all that different from Labour’s post-1997 non-binding commitment to do so if conditions were right. Those who want to join – so far only the Slovenes, Slovaks and Balts – make the effort. Those who don’t – Swedes and Czechs – don’t.

  4. Nationalist policy on Europe is a contradictory mess. They want to cut corporation tax in Scotland but not England, although that’s not practical under the UK system of fiscal integration……

    ….and they want eventually to jon the Euro and have low and competitive corporation tax, but the EU wants the Eurozone to have more, not less, integration of corporation taxes and no business tax competition.

    The interesting thing is that they are not under more ridicule from the press and public for their very evident inconsistency, to put it mildly..

    1. SNP policy on Europe is vague as much as contradictory I’d say, but all major political parties in Scotland tend to imitate Vicky Pollard when it comes to the EU: yeah but, no but, …

      It appears that the only concrete proposals to have been produced on “integration” of corporate taxes within the EU are the Common Consolidated Corporate Tax Base, which would initially be optional. And like it says in the Q&A, “the Commission has no plans to harmonise Member States’ corporate tax rates.” You don’t get much clearer than that.

      Those proposals are broadly similar to the apportionment systems used in the US (or Canada) to divide such taxes between the federal government and the various states (or provinces). The EU documents you’ll find at the end of the earlier link list all sorts of supposed benefits to governments and businesses, and some of those claims may even be supported by evidence from the US and Canada.

      So, given that Canada and the US and even the EU can come up with tax systems which make it possible to share corporate taxes across jurisdictions, it is hard to accept that it is beyond the abilities of the Treasury and HMRC to do likewise. If corporate taxes aren’t devolved it will be because there is little desire to do so at Westminster.

  5. Currency is a tricky question for the SNP, and indeed for other parties (as others have commented above). I may be about to shock you now, but as a supporter of independence I would favour a pragmatic approach. Why not keep Sterling as Scotland’s currency, until such time as it seems beneficial to change, either to a Scottish currency or to the Euro (if it’s still around!)?

    Independence doesn’t have to be an abrupt rupture of everything familiar. If the use of Sterling proves necessary for economic stability for the first 5 or 10 years of independence that’s ok by me. Whilst we wouldn’t be in charge of interest rates, etc. during that period there would be plenty of other important things that we would take charge of (foreign and defence policy to name but two). And what’s 5 or 10 years compared to the many years of independence that lie ahead? Doing things gradually is a sensible way to proceed.

    Regarding border controls at the “external borders” of the EU, you might be interested to learn that Switzerland, Norway and Iceland (non-EU) are all part of the Schengen area and as such don’t have border controls with other Schengen countries. Similarly new EU members would be expected to adopt Schengen as it is now part of the acquis communautaire. So whether Scotland ends up inside or outside the EU we may not need those border controls at Stranraer. Except of course for travellers from non-Schengen countries like…the UK and Ireland! But given the precedent of the (normally!) open border between the UK and Ireland I wonder if rump UK would really want to insist on having your border posts erected north of Berwick and Carlisle? I’m pretty sure Scotland wouldn’t want them!

    PS I’m intrigued by your capitalised phrase “The Doctrine of the Successor State”. Googling this phrase (enclosed in quotes) returns a solitary hit…this very article. Doesn’t seem quite so scary after that.

  6. How likely is it that the EU would reject Scotland’s application for membership (if we accept that Scotland would be ejected from the EU and have to reapply) if we refused to adopt the Euro?

  7. “According to Eddie Barnes of Scotland on Sunday the nats have come out implacably against greater fiscal integration in the Eurozone”

    When? I don’t remember any anouncement of any tactical retreat/U-Turn regarding Europe. As far as I could tell, their policy was for an Independent Scotland to enter the European Union/Euro at the earliest opportunity. If there is to be a policy retreat to the John Major position, it can only be good considering the train wreck that the Eurozone currently is.

    While we are on Europe, Is Labours position still that entry to the Euro would only come after a referendum?

  8. Don Mc-what is the mechanism for this ejection? As I have previously stated Greenland had a difficult job trying to leave the EEC. I dont think it a bad thing for Scotland to be out of the EU as long as our trading arrangements can be maintained.
    I have doubts about trading in Sterling as I believe the pound would come under big pressure with the end of the Union. It may be England/RumpUK would seek the shelter of the Euro, though I doubt it.
    Both Scotland and England have to improve their competitiveness and stop relying on endless currency devaluation which beggars us all.

    1. Well the premise for this entire article is that, somehow, Scotland would be ejected from the EU upon gaining independence. How, exactly, this would happen isn’t explained. The point I was making, though, is that even if we accept that unprecedended event, would the rest of the EU really reject Scotland’s application if we refused to adopt the Euro?

        1. I think you’ve got the wrong end of the stick, Alex. This article is basically making the assertion that, post independence, Scotland would be forced to accept the Euro or be isolated. I think that assertion is based on the false premises of (a) – Scotland would be ejected from the EU and need to reapply; and (b) – Scotland’s application would be rejected unless we accepted the Euro.

          It is these premises I am questioning.

  9. I just wonder how many of the unionists here have really considered that by focussing their arguments on Scotland’s options after independence they are suggesting that independence is the likely outcome of the referendum.

    1. It’s always a danger to give credence to foolishness.

      But if you don’t challenge, creationism and nationalsim and other silly isms claim to win because you haven’t responded to their claims….. the Earth was created on 24th October 2006 BC, “independence” will improve anything important……

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