Originally published on 2012/10/25

Alex Salmond, leader of the Scottish National Party, and First Minister of Scotland has often promised that Scots would get the chance to vote for an independent Scotland outside the Union with England. Some claim that this pledge has been one of the main reasons why the SNP decisively won the last elections by a landslide. So far, governments in London had rejected any talk about referenda or an independent Scotland. Indeed, no British prime minister wished to become the one under whom the Union between England and Scotland would be dissolved. Tony Blair, understanding the growing appeal of separation, tried to contain political forces by developing the “devolution” policies that granted each part of the UK some degree of autonomy to govern themselves. Northern Ireland, Wales and Scotland were given parliaments and a limited portfolio of policy areas in which they could develop their own agendas and approaches, independently and without meddling from London. The most crucial policy areas, such as finance, foreign policy or defence, however, have remained with the government in London. Whereas the government in Northern Ireland has been moving between suspension and short terms of policy-making, the governments in Wales and Scotland have been more stable and active, and in particular in Edinburgh politicians have taken a liking in conducting politics without interference from the South. Devolution has calmed separatist sentiments for a while, however, since 2007 the SNP has been on the rise, repeatedly putting the independence vote onto its agenda, forcing Downing Street 10 to take into consideration such a scenario.

Prime Minister David Cameron, certainly not known to have ever promoted the idea of separating the English and its northern neighbour, has agreed with Salmond that a referendum on the Union shall be held in 2014. The aim is simple: to resolve the issue and silence voices calling for an independent Scotland. Scots will be asked a simple Yes/No question (though simplicity is in the eye of the beholder) and will thus be able to determine the future of their country.

The question arises why Cameron would agree to such a move and what benefits Scotland’s leadership believes a breakaway from the Union will have.

Political considerations

  • Cameron claims that he could not ignore the election results in Scotland which swept into government a separatist party. Even though that is true the question remains whether voters were influenced chiefly by the pledge to secure a referendum or by disappointment of the other (Labour, LibDem and Conservative) parties’ records. The government in London felt that after SNP secured 69 out of 129 seats in Holyrood tension over the state of Union would only continue to rise, especially after the council elections in May 2012 confirmed the strong support for SNP when the party continued to increase its share of councillors by securing almost 60 additional seats (424 out of 1200).
  • For SNP securing a referendum agreement on the independence vote with London was essential as it was one of the core promises of the party. Failure in this matter might have resulted in a disenchantment of voters with Salmond (something Cameron probably would not mind a bit) – not dissimilar to the fate of LibDem leader Nick Clegg in the current coalition government in London, whose has been marginalised by Cameron.
  • Both party leaders have hinted at the possibility that, should the referendum fail to produce a majority for an independent Scotland, talks about further devolution might be held. This would fall short of full sovereignty for Scotland but might nonetheless result in a greatly expanded portfolio of areas future governments will be able to legislate.

Scottish economic considerations

  • Scotland’s wealth, derived among others from its vast oil and gas fields in the North Sea, certainly plays an important role in the debate as the government aims to ensure the majority of oil and gas revenues will flow into the coffers of the government in Edinburgh, not London. Furthermore Edinburgh is one of Europe’s most important financial centres, and in the past few years the country has become one of the strongest supporters of renewable energy sources (RES) in Europe. Already now it is a net exporter of electricity and given its ambitious goals of generating 80% of its energy needs from renewables by 2020, and 100% by 2025 (later announced to be reached by 2020!), huge electricity export surpluses are expected to contribute to the state budget in the future. The government is very optimistic and developments are very promising indeed, with RES providing around 35% of energy needs in 2011, and reports suggesting steady progress. Whether the 2020 goals are entirely realistic is an altogether different issue, however. Legislation and governmental support greatly encourage investors to believe in Salmond’s green Scotland.
  • However, oil and gas revenues are chronically volatile, rising and falling depending on world market demands and therefore not a reliable source of state revenue. The cash flow from oil and gas sales will certainly provide a nice additional source of revenue, but should not be the main pillar for the government’s budget (as for example in Russia or Venezuela, where falling oil rises often translate into governmental action, such as cutting social service budgets or military expenditure). Additional pressure would arise from taking over responsibility for pensions and other social service related costs that might easily exceed the revenue from oil and gas.
    There are, however, many areas that could provide the government with a more predictable income, such as the services sector, exporting technological solutions to harness the power of RES or the manufacturing sector and tourism.

The status of EU membership

What will happen after Scotland gains independence? Will it automatically receive EU membership status or will it have to apply for it and if so, would the process be fast-tracked given its previous membership as part of the UK? There seems to be currently no clear answer to this question. Whereas the Scottish government seems to be confident that Scotland would automatically be granted membership status, statements from Brussels seem more cautious and might even hint at the possibility that Scotland would initially find itself outside the EU. Commission President Barroso seems to suggest the latter, indicating that any new country wishing to join the EU would have to (re-)apply for membership: “A new state, if it wants to join the European Union, has to apply to become a member like any state. In fact, I see no country leaving and I see many countries wanting to join.”

Whether the independence vote will succeed or fail, whether Cameron has outsmarted Salmond, and whether support for independence actually picks up (currently around one-third of the population), is all to be seen. For the time being many questions remain.

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More on Renewables in the EU and globally can be found in the REN21 global status report(2011)

A great overview over the Edinburgh Agreement and questions relating to its content, consequences and prospects can be found at the Guardian’s website.

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