Rethinking Europe, Global HotSpots

The Scottish Vote and Europe’s Future

Scotland votes for more home rule within the UK, not independence.

Credit: Philip Lange, Shutterstock.com

Takeaways


  • Europe can breathe a sigh of relief. A problem avoided.
  • The EU and its other member states will have little interest in how the UK devolves powers to Scotland.
  • A mutually agreed divorce is the only realistic way in which a new country could be born within the existing EU.

Europe can breathe a sigh of relief. A problem avoided. The EU does not have to deal with a possibly contentious case of a divorce within its ranks. It also does not have to ponder a membership application from a country just breaking away from one of its key members.

Relations between Edinburgh and London will remain an intra-UK affair. The EU and its other member states will have little interest in how the UK devolves powers to Scotland and the extent to which it also grants more autonomy to its other regions.

Some would-be separatists elsewhere in Europe may still be emboldened by the fact that Scotland had a referendum. But Scottish independence would have strengthened the case of, say, splitting Catalonia from Spain – instead of dampening it.

What about the UK in Europe?

The passions arising from the Scottish referendum debate may have strengthened the anti-EU UKIP in England and the overall case for a future UK referendum on EU membership. But relative to a Scottish divorce from the UK, Scotland’s clear “No” to independence reduces the risk of Brexit.

The risk of an anti-EU rebellion among the Conservative members of parliament against David Cameron, their own prime minister, would have been worse if Scotland had ended the 307-year union with England and Wales.

On the positive side, the UK actually has reason to be proud. Settling a highly controversial issue with a referendum to which both sides of the argument have fully agreed is admirable. In history, wars have been fought about such issues.

A precedent for other regions in Europe?

The fact that Scotland then settled for more home rule instead of independence may contain somewhat the enthusiasm of others to try and go for independence.

More important, the Scottish case has some special features which set it apart from many other potential cases.

Scotland is a historic nation with well-defined borders. Notably, the Scots are not an ethnic minority within a nation state.

Catalonia and the Basque country in Spain may claim the same status of a historic nation as Scotland. But the Basque nationalists can be vague about their borders (what about Navarra?).

In Flanders, the issue of Brussels (historically Flemish, but largely French-speaking) makes a Flemish break from Belgium extremely difficult if not virtually impossible. In short, most other potential breakaway regions in Europe cannot claim a status fully comparable to that of Scotland.

Moreover, because the UK lacks a written constitution, Prime Minister Cameron could be flexible and simply agree to the terms of a referendum with the leader of the Scottish nationalists.

Many other countries do not have a procedure for an orderly referendum. That makes it more difficult to get a mutually agreed referendum elsewhere.

And without a mutually agreed referendum, independence for other historic nations within nations would be virtually impossible within the European framework.

What about Catalonia?

In Catalonia, the pro-independence camp wants to hold a referendum on November 9, 2014. The national parliament and constitutional court in Madrid will likely prohibit such a plan as unconstitutional.

The Catalan regional parliament may call a snap regional election as a proxy referendum for November 9 instead.

However, the key Catalan party, the pro-independence center-right, might well lose such a regional snap election and hence control of the regional government to the left-wing Nationalists in the wake of a highly-publicized tax-dodging scandal of its erstwhile political leader. It remains unclear whether the Catalan centre-right will really want to call such a snap election as a proxy referendum.

If Madrid now wakes up and offers the Catalans more autonomy – say, similar to the powers enjoyed by Spain’s Basque region, with a transition period in which Catalan financial transfers to the rest of Spain are gradually reduced – then the center-right Catalans may settle for such a deal. The other option, escalating a conflict, would be bad for Catalan business interests (and hence a key part of the party’s constituency).

No unilateral independence

A mutually agreed divorce is the only potentially realistic way in which a new country could be born within the existing EU.

A unilateral declaration of independence for Catalonia would be self-defeating. On top of all other problems Catalonia would encounter, it could not remain part of the EU without the consent of EU-member Spain.

The simple fact that Spain will always hold a veto over Catalonia’s future in the EU means that Madrid and Barcelona would have to agree first, before a valid process towards a referendum and potential Catalan independence within the EU could commence.

That insight is ultimately likely to force Barcelona and Madrid to strike a deal, likely on expanded autonomy for Catalonia – but short of full independence.

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About Holger Schmieding

Holger Schmieding is chief economist at Berenberg Bank in London. [United Kingdom] Follow him @Berenberg_Econ

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