Can Scotland stay in the EU, while the rest of the UK leaves? Or is there no way, short of independence, around England and Wales dragging Scotland – plus Gibraltar and Northern Ireland – out too? This is the debate Nicola Sturgeon has placed firmly on the table.
Certainly, the EU has a track record of interesting political fudges. Cyprus today, though a divided island, is in the EU, but with the EU’s laws suspended in the internationally unrecognised Turkish Cypriot north. And, after the Berlin Wall fell, German reunification meant East Germany was instantly part of the EU without needing a long accession process. Greenland is outside the EU while being part of Denmark which is a member state.
But whether such examples suggest a way for Scotland to stay in while England and Wales leave is doubtful. Only European states can apply to join the EU – and so get a seat, votes and a voice in the Council of Ministers.
Unless it became an independent state, it’s hard to see how Scotland could join that top table. Could Scotland, while still part of the UK, make foreign policy decisions in Brussels with the other EU foreign ministers, or sign EU trade deals that didn’t apply to England and Wales?
If Brussels went along with this, it would have a string of EU regions asking to join the Council of Ministers; and if Westminster went along with it, it would be passing UK state sovereignty to Scotland.
So is the debate opened up by the First Minister just a ruse ahead of a second independence referendum?
In fact, there are interesting and tricky questions that do need answering as to whether Scotland – and Northern Ireland, or London or Gibraltar – could stay in the EU’s single market, if the UK leaves the EU, and England and Wales are not in the single market. If possible, it could provide a very welcome route to softening Brexit’s impact on Scotland.
Of course, the whole of the UK could join the European Economic Association (EEA) like Norway, getting full access to the single market, but requiring free movement and a budget contribution. The Leave vote would then have the perverse result that the UK kept market access, and Brussels’ rules, while throwing away its political power, vote and voice.
But then Scotland would have little need to attempt to set up a separate relationship with the EU, while remaining in the UK.
But if England and Wales decide to go for a free trade deal, without free movement, they would be excluded from large chunks of the single market. Financial organisations and foreign direct investment would surely move elsewhere.
Scotland might grasp this opportunity and aim to stay in the single market. This would raise a number of conundrums. Could Scotland have a free movement deal with the rest of the EU, while England did not – meaning EU citizens would have the right to live and work in Scotland but not England. It’s feasible but would England go along with it?
Equally, financial groups based in Scotland would then retain the sought-after "passporting" rights the City of London would have lost. But if England and Scotland had different systems of financial regulation, with different rights in the EU for companies and branches located in either of the two countries, this starts to look more like independence than home rule.
The EU also has complex regulations that Norway as an EEA member must follow on rules of origin so third countries do not use Norway as a backdoor into the single market. Scotland would have to follow those rules of origin with respect to English imports into Scotland – customs controls at the border perhaps?
There might be a more patchwork approach than this – with Scotland having more access to the single market than England but not for all sectors. But if it’s a complex, differentiated set up, in the end voters might prefer being either out of the EU with the rest of the UK, or in the EU, as an independent member state.
And if Scotland goes for independence in the EU, timing starts to be critical. If Article 50 for Brexit talks is triggered by the end of 2016, then it’s only two years before Scotland will indeed get dragged out with the rest of the UK.
Ms Sturgeon has put some tricky but important questions on the table. The answers will underpin where the EU and independence debates go next.
Kirsty Hughes is an Associate Fellow of Friends of Europe.
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