Eurozone could not be forced on Scots

Andrew Hughes Hallett is correct in stating that if an independent Scotland is treated as a “new” member state following a dissolution of the UK Union (which is far from a definitive reading of the legal position) then, like all other countries joining since 1995, it would be obliged to adhere to the principle of membership of the Eurozone.

However, it is quite incorrect to assert, as some have done, this means that membership of the Euro thereafter can be imposed on an unwilling Scotland. The central issue which those asserting the opposite fail to appreciate is that a new EU member state is always able to avoid placing itself in a position under which it would be subject to the Treaty provision (Article 140 TFEU) on which their assertion rests.

While it is legally possible – though in my view inconceivable – for the Council of the EU to vote to end a member state’s derogation from its obligation to join the Eurozone, under EU law this only can occur where that member state has met the preconditions set out in the treaty for such membership – including the requirement that its currency has been in the EU Exchange Rate Mechanism (ERM) for at least two years.

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However, the monetary and exchange rate strategy of a new member on joining the EU, including whether or not to join the ERM, are entirely the responsibility and prerogative of the member state concerned. Membership of the ERM is, indisputably, a voluntary arrangement.

As I understand it, a post-independence SNP government would retain sterling (which is not inside the ERM) as Scotland’s currency, as it is perfectly entitled to do.

Self-evidently, therefore, Scotland would not comply with this (far less any other) pre-condition for Eurozone entry. And any subsequent decision to break with sterling and pursue Eurozone membership could, if wished, be decided by a national referendum.

The upshot is that it simply is not the case that an independent Scotland can be dragooned under EU law into membership of the Eurozone against its wishes – even if for some unfathomable reason the European Commission wished to initiate such a course of action thus far it never has contemplated.

Ultimately, it falls entirely to the new member state to decide whether or not it wishes to pursue a strategy leading to membership of the Eurozone.

Drew Scott

Professor of European Union Studies

Co-Director, Europa Institute

School of Law

University of Edinburgh

Old College

Edinburgh

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