Scotland's Independence Referendum

Scotland's Independence Referendum

CRS Insights
Scotland's Independence Referendum
Derek E. Mix, Analyst in European Affairs (dmix@crs.loc.gov, 7-9116)
September 15, 2014 (IN10150)
Introduction
"Should Scotland be an independent country?" Residents of Scotland wil
answer this question in a referendum on September 18. The "No" campaign
had a 22-point lead in August, but after a shift in favor of independence the
referendum appears headed for a close finish. The latest poll
numbers indicate that the race is too close to predict.
Scotland, England, Wales, and Northern Ireland are the four "nations" that
comprise the United Kingdom—the world's sixth-largest economy and fifth-
largest military power (by expenditure), and the country often considered
the United States' closest ally. Scotland's population, about 5.3 million, is
over 8% of the U.K. total, and Scotland's gross domestic product (GDP) is
nearly 10% of the U.K. total. The crowns of England and Scotland were
joined in 1603 and their parliaments merged in 1707.
In 1998, the British Parliament passed an act creating a Scottish Parliament
with powers over regional issues. The Scottish National Party (SNP) won a
majority in the Scottish Parliament in 2011 and intensified its push for a
referendum on more devolved powers or outright independence. In 2012,
UK Prime Minister David Cameron and Scottish First Minister Alex Salmond,
who leads the SNP and is the chief advocate of independence, agreed on a
single-question, in-or-out referendum. Cameron asserted that he agreed out
of respect for Scotland's election of a party that has long wanted a
referendum.
The Case for Independence
Advocates of independence view the referendum as a chance to realize a
long-held dream of self-determination. Some Scots assert that they have
long been marginalized by the U.K.'s economic policies and that Scotland
contributes more to the U.K., through oil revenues, than it receives in public
spending. Advocates assert that independence would allow Scotland to
follow its preferences in fiscal and social policy, preferences that they argue
are more social democratic than the prevailing ideology in England.
Supporters maintain that with a per capita GDP similar to the U.K. average,
and above the U.K. average with energy revenue included, an independent

Scotland would be a wealthy country with a dynamic economy. They argue
that Scotland possesses some of Europe's largest oil reserves and renewable
energy potential, and that the country holds a strategic geographic position
for transportation and fisheries.
According to First Minister Salmond, independence would take effect in
March 2016 following negotiations on the terms of separation. Salmond also
asserts that an independent Scotland would enter the European Union (EU)
around the same time it gains formal independence. An independent
Scotland would convene a constitutional convention to develop a written
constitution.
Salmond's preferred monetary plan is to continue using the pound sterling in
a currency union with the U.K., with monetary policy remaining under the
Bank of England. His "Plan B" is to unilateral y keep the pound. Supporters
of the "Yes" campaign have suggested that an independent Scotland may
not accept its share of the U.K. national debt if London refuses to agree to a
currency union.
Negotiating the immediate removal of the U.K.'s nuclear weapons from
Scottish territory is a top SNP priority. Salmond prefers that an independent
Scotland remain a member of NATO, although he would plan to include
safeguards on the use of Scottish troops in the new national constitution.
The Case Against Independence
All three major U.K. political parties have campaigned against Scottish
independence (as the "Better Together" campaign). Advocates argue that
the SNP's economic vision is unrealistic and based largely on assumptions
about ownership of North Sea energy supplies. Union supporters assert that
Scotland currently benefits from a proportionally higher level of public
spending, and that an independent Scotland would face large cuts to public
spending and higher borrowing costs.
U.K. officials have ruled out agreement on a currency union with an
independent Scotland, maintaining that the Eurozone crisis showed fiscal
rules are not enough to ensure stability in a currency union of sovereign
states with differing priorities. Critics point out that Salmond's "Plan B"
means Scotland would have no control over monetary policy, no central
bank, and no lender of last resort. This prospect has led banking, financial
services, and other business leaders to warn of a corporate exodus from an
independent Scotland, putting thousands of jobs at risk.
EU officials indicate that legal opinion on a "fast track" for Scotland's
membership is mixed, and that the procedure, including unanimous approval
by all 28 member states, could be "difficult, if not impossible." NATO officials
indicate that an independent Scotland would be treated as a new applicant,

likewise requiring the approval of all 28 member states to join the alliance.
Some observers have questioned whether the SNP's strong stance against
the U.K.'s Trident deterrent and general anti-nuclear stance would put an
independent Scotland at odds with NATO's strategic concept.
U.K. officials characterize the SNP's defense plans as unrealistic, arguing
that an independent Scotland would struggle to generate and pay for armed
forces and military capabilities. Critics also express doubts about Scotland's
ability to create new security and intel igence agencies and warn that an
independent Scotland would leave the whole of Britain more vulnerable to
security threats.
U.S. Views
U.S. policy has been to remain neutral in the Scottish independence debate.
In June, however, President Obama stated "... we obviously have a deep
interest in making sure that one of the closest allies we will ever have
remains a strong, robust, united, and effective partner," while stressing that
it is "up to the people of Scotland."
Of particular concern to U.S. defense planners is that the U.K.'s Trident
nuclear deterrent is deployed on submarines based in Scotland. A push by
an independent Scotland to eject the submarines could force the U.K.
to decide whether to scrap its nuclear deterrent or retain it by making
additional defense cuts elsewhere.
More widely, analysts note that the referendum has implications for other
independence movements, especial y the Catalan nationalist movement in
Spain that has been pushing for a similar vote.

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