Great Scott! Britain’s two faces on Europe unmasked

Published in Business Spectator (Melbourne), 6 February 2014

Before becoming Foreign Secretary in the British government, William Hague was one of the most sought-after celebrities on the speaking circuit. That was not least due to his wit and sense of humour. So Hague would probably have appreciated the irony when his German colleague Frank-Walter Steinmeier visited London to lecture him on the need for Britain to remain in Europe.

What was so ironic about it? Well, just a few weeks earlier it was Hague who lectured the Scots on the need to stay in Britain if they wanted to stay in Europe.

The two issues, a potential British exit from the European Union (often dubbed ‘Brexit’) and a separation of Scotland from the rest of the United Kingdom, are complicated enough in their own right. But their combination poses a dilemma for the British government.

At the same time that London needs to praise the advantages of EU membership to the Scots, it downplays the importance of being an EU member to everybody else. What sounds totally illogical makes perfect sense when seen through the prism of political necessity.

The Scottish National Party had long fought for independence from the UK. When the party won the 2011 elections to the Scottish Parliament, they immediately began preparations for a referendum on secession. This independence referendum will be held on September 18. The question put before Scottish voters will be simple enough: “Should Scotland be an independent country?” The answer to this question is more difficult – not least because it is unclear how such independence would play out in practice.

One of the core disputes about Scottish independence revolves around the issue of Scotland’s EU membership. The SNP may be a nationalist, separatist party, but bizarrely, its wish for an independent Scotland only concerns parts of the relationship with London, not with Brussels. So while the SNP wants to get out of the United Kingdom as soon as possible, it has no desire to turn its back on the EU. And it wants to have both on their own terms.

If the SNP had its way, Edinburgh would be independent from London but nevertheless continue to use Sterling as its currency. It would no longer be ruled from Whitehall, but it would still have Her Majesty as head of state. It would even seek membership of the Commonwealth. It does not really sound like filing for a divorce, but more like steps towards an open relationship.

As for Scotland in the EU, the SNP’s position is a similar cherry-picking exercise. It would want to remain part of the EU but, just like Britain today, it wants to continue to enjoy the freedom to deviate from the EU on individual policies. Not least would the SNP want to keep its share of the ‘British rebate’, a deal negotiated by Margaret Thatcher that ensures the UK pays less to the EU than it would have to according to its size. And of course the SNP also wants to have the right to abstain from the Euro, which is obligatory to adopt for ordinary members of the EU once convergence criteria are fulfilled.

The question that will be put to Scottish voters is therefore somehow misleading. More honestly, it should be: “Should Scotland be a privileged EU member enjoying some opt-outs, run by the Bank of England, and become a member of the Commonwealth?” Admittedly, that is not the most straightforward way of putting it, but comes close to the SNP’s wish list.

It is an entirely different matter whether this wish is at all realistic. One of the most disputed issues is indeed whether an independent Scotland could remain part of the European Union or whether it would have to reapply to join. As always, there are disagreements among constitutional and international lawyers and it is beyond this column to decide who is right.

What is far more interesting, and actually quite entertaining, is to watch the British government’s threats to Scotland concerning its status within the EU as an independent nation. The Foreign and Commonwealth Office recently published a paper in which it argued that independence would cost Scotland dearly – if it tried to become an EU member.

Whitehall claims that Britain’s EU rebate could not be transferred to an independent Scotland as it had been negotiated between the EU and the UK. On top of that, Scotland would lose payments from the EU’s Common Agricultural Policy and structural funds. In total, London estimates that an average Scottish household would lose between £750 and £1,440 over the next six years if Scotland gained independence.

The more London pressures Scotland into staying in the UK, the more it needs to praise the wonderful benefits of Britain as part of the EU. Thus the government’s paper explains that the “UK has been a key player in the EU ever since” it joined it in 1973. Other countries probably did not share the view of Britain as an enthusiastic EU member. It also claims that the “UK enjoys favourable terms of membership, reflecting its unique position and interests”. If that is the case, then why does the British government make so much noise about its Brexit referendum? This referendum is to be held after the next general elections, but only if Prime Minister Cameron gets re-elected.

Just a couple of days before William Hague presented the paper explaining the benefits of belonging to the UK and the EU to the Scots, his cabinet colleague George Osborne, Chancellor of the Exchequer, sounded quite different. In a speech, he launched a blistering attack on the EU. Its institutions were not fit for purpose, it desperately needed reform and, if it did not change, then Britain would leave.

The Conservative British government is trying to have it both ways. Membership of the EU is a great gift which you would lose by becoming independent, they say to the Europhile Scots. Being part of the EU is like belonging to a club of continental losers and bloated welfare states, they say to their Eurosceptical core constituency.

So when the German foreign minister just reminded William Hague what a great institution the EU is and how important it was for Britain to remain a member, Hague could have replied: “But that’s what I just said to the Scots!”

The Germans don’t want to lose Britain as an EU partner, if only to balance out France. Not even George Osborne wants Britain to leave the EU, if only to protect the City of London’s dealings with the continent. London does not want to lose Edinburgh for fear of being even less important than it is already. And Scotland does not really want to leave either the UK or the EU, or at least not fully.

If opinion polls are an indication, that’s exactly how it might play out. The Scottish independence campaign is regularly outpolled by supporters of the union, and Tories are so far behind Labour that it is doubtful whether David Cameron’s Brexit referendum will ever be held.

In the end, nothing might change at all. But this nil-result would have been brought about by the most entertaining political drama.

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