Brexit Fears

Scottish Independence Could Shake Europe's Foundations

scottish yes-no-AFP-CHANGED
There's no room for 'maybe' in this group.
  • Why it matters

    Why it matters

    England is considerably more skeptical towards the European Union than Scotland, making it more likely voters would vote against British E.U. membership in a planned referendum.

  • Facts

    Facts

    • Many E.U. leaders fear the rise of euroskeptic political forces in England if the Scots decide to terminate the 307-year-old union.
    • There also are concerns that other regions that have long agitated for independence, such as Catalonia in Spain, would be emboldened by the Scots to push for their own states.
    • Banking and investment experts say a departure from the E.U. would heavily damage London’s position as a global business financial center.
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The German national soccer team must have a prominent new fan in British Prime Minister David Cameron. He should have been greatly relieved when the Germans defeated Scotland 2-1 in a European championship qualifier match on Monday night.

A Scottish victory over World Cup champion Germany would have propelled the already exuberant national euphoria of the Scots, just 10 days ahead of a referendum on Scottish independence. The British leader would have been hard pressed to prevent a Scottish majority vote on September 18 in favor of leaving the United Kingdom.

But soccer put only a minor damper on the Scots and their dreams of nationhood. London is worried. So is Brussels. Terminating the 307-year-old “Treaty of Union” between Scotland and England would trigger a political earthquake with shockwaves felt not only in the British Isles, but deep into the European Continent.

If Scotland were to exit the United Kingdom, there would be good reason to fear its impact on a highly significant second referendum likely to be held in 2017, when the British will decide whether they want to remain a member of the European Union. If the traditionally Europe-friendly Scots are still around to vote, they could tip the scales and be the force that keeps Britain in the European Union. But without Scotland, there’s increased danger that the anti-European forces in England will finally win the upper hand. The European Union would then have to come to terms with the fact that the United Kingdom would be the first member state in its history to exit.

A successful push for the Scottish independence movement would even have more far-ranging effects in the south of the bloc.

The separatists in Catalonia would be encouraged. The regional government there is demanding its own state and has scheduled a referendum, in the face of strong opposition from the central government. While London gave its approval for the Scottish referendum, Madrid is forbidding a similar vote on Catalonia. But it’s possible the Catalonians will ignore the ban if the Scots are successful in seceding.

No one knows how the European Union would actually deal with new states in its territory. Would they be accepted into the community on a fast track, or would they go through protracted negotiations like every other member candidate? Would they continue to receive funds from the European Union for their farmers and economically underdeveloped regions? Would an independent Catalonia be allowed retain the euro, although it might not meet the required participation criteria?

Many E.U. leaders are secretly wishing the Scots will stay British for a long time.

There are no answers to these questions because the European Union has never experienced the founding of a state on its own territory. Although new nations were created after the collapse of Yugoslavia and the division of Czechoslovakia, this happened prior to membership.

For this reason, many E.U. leaders are secretly wishing the Scots will stay British for a long time. This sentiment is widely shared by executive boards of the major banks and industrial enterprises. The City of London is watching the Scottish referendum with great concern as more than a few bankers worry Scottish independence could mark the beginning of the end of London as a financial center.

There is speculation at a large U.S. investment bank that without the Scots, Britain won’t stay in the European Union and London will no longer make sense as a premier site for European financial business. Scenarios already are being developed for a possible move of vital financial centers to Dublin, Paris or Frankfurt.

Would Scotland benefit economically from independence? Many economists doubt it. A majority of Scots are left-wingers wanting more lavish social benefits when the liberal-conservative Tory-led government in Westminster is no longer in charge. Yet a generous welfare state must be financed and requires a strong economy. Whether the oil and gas fields in the North Sea are sufficient to drive the Scottish economy over the long run remains uncertain.

David Andersen translated this article. Jeff Borden also contributed to this story. The author can be reached at berschens@handelsblatt.com 

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