Being ejected from the EU, writes George Kerevan, might not be the worst option for an independent Scotland in the present economic climate
LET’S think the unthinkable and consider an independent Scotland choosing to remain outside the EU. Would it be draughty outside, or the making of the nation?
I’m prompted to consider this option after yesterday’s story in The Scotsman, that someone inside the European Commission has drafted a letter to a House of Lords Committee to the effect that an independent Scotland would have to apply for membership of the European Union.
As the European Constitutional Treaty says absolutely nothing about what happens if a member state voluntarily breaks up, the opinion of this European civil servant is just that – an opinion. If there were a move to eject Scotland from the EU against its wishes, the matter could only be settled by the European Court of Justice, which is the arbiter of constitutional questions. Besides, I’d like to see this EU civil servant get to work in Brussels if independent Flanders is also thrown out.
However, let’s be sporting and consider the case of Scotland having to apply to join. For starters, this inevitably means holding a referendum to see if Scots actually want to continue as members. They might not. Unionists fondly imagine that telling Scots they could be kicked out of Europe will frighten them into voting No in 2014. It could have the opposite result.
What do Scots think about EU membership? Once upon a time, in pre-Thatcher days, they were highly sceptical. In the 1975 Common Market referendum, only 58.4 per cent of Scots voted to join compared to 68.7 per cent in England and 64.8 per cent in Wales. Matters changed when Mrs T arrived and the Scots started to see the EU as a bulwark against her right-wing policies.
However, the eurozone crisis and the prospect of European political union seems to have led to a resurgance of the old Euro-scepticism. Several UK-wide polls conducted this year by YouGov suggest that 19 per cent of Scottish voters want to leave the EU, while another 36 per cent want a return of powers from Brussels. That makes a majority. (Caveat: these findings are based on a very tiny sample culled from UK data.)
Staying out of the EU would not consign Scotland to isolation. The latest poll in Iceland shows that 59.5 per cent of its people want to scrap their country’s EU application for membership. But what is the alternative to Brussels?
Gordon Wilson, former SNP leader, and Jim Sillars, the party’s former deputy leader, suggest Scotland should open negotiations to join the European Free Trade Area (Efta). There are four countries presently in Efta: Norway, Switzerland, Liechtenstein and Iceland. They share an “internal market” with the EU, giving the advantages of free trade without the burdens of membership.
Discussions with Efta would give Scotland some leverage in any negotiations for EU membership, which I think is what Messers Wilson and Sillers are after. On the other hand, no-one should think that Efta membership is a “get out of jail free” card. In return for giving Efta countries access to its internal market, Brussels demands that they acccept EU legislation and contribute financially – without having a vote.
Efta membership has attractions, in that it avoids being committed to joining the wobbly eurozone or to eventual political union. I’ve never understood the point of fighting for freedom from London control only to end up being run from Berlin. But Efta would be a way of structuring Scotland’s relations with the EU, not avoiding them.
Another alternative is joining the North American Free Trade Agreement (Nafta), which links Canada, the US and Mexico. Nafta operates more like an ordinary free trade zone than a blueprint for political union, but the huge size of the American economy versus tiny Scotland should give enthusiasts cause for thought. A US company is currently using Nafta to sue the Canadian government for $250m over Quebec’s moratorium on hydraulic fracturing.
Yet there is a kernel of sense in the idea of relations with Nafta. For many years the best argument for being inside the EU was that it was the main driver of global economic expansion. Not any longer. The gap between growth in the US (+2.2) and the EU (-0.4) is 2.6 per cent – the widest since 1993. This differential will grow to 3.4 percentage points in 2014 (if America does not fall off the fiscal cliff) and stay at that way through the decade. Economically speaking, being in the EU is like tying a lead weight to your leg and jumping in the river.
Let’s take this argument in an even bolder direction. Just how does Scotland reboot its manufacturing? The weakness in the Scottish economy is an absence of medium-sized companies (50-500 workers) to generate exports and jobs. To grow such a sector quickly may require a degree of public support and trade protection that is incompatible with EU regulations.
I’m not talking heavy-duty trade protection, which could result in sanctions. But an independent Scotland outside the EU would find it easier to provide direct aid, export subsidies and cheap credit for its companies. It could also ring-fence public orders and regulate our labour market better.
If all that is too rich for your blood, there remains the “half-way house” option of embracing EU membership but demanding opt-outs from rules that do not suit us. Denmark – though an EU member – has far more opt-outs from EU legislation than does the UK. Danish soldiers who took part in Nato missions in Bosnia immediately withdrew when the EU took control.
The counter argument is that Scotland would not be offered such opt-outs. In which case we could take our oil, our fisheries, and our net contributions to the EU budget and keep them. Yes, it would be windy in the outside world, but bracing winds are healthy.