How Scottish independence negotiations might go

imagining the course of indy negotiations

Epistemic status: highly speculative, obviously

Imagine if independence parties win a big majority in the upcoming Scottish Parliamentary election, and Prime Minister Johnson reluctantly bows to the inevitable and agrees to an independence referendum. I will explore how the independence process might happen. Obviously it won't happen exactly like this, but I expect it will be something similar.

When might the independence referendum be held?

After the Scottish parliamentary elections, the incoming Scottish government would make representations to the UK government to hold a referendum. If this took 6 months to arrange then in would happen in December 2021. it is more likely that it would be held later, both to ensure the Coronavirus emergency is over and because the UK government might not want to hold the referendum in the winter. So the most likely time is in early 2022, possibly in March, or May to co-incide with the local elections.

For this scenario I will assume the referendum happens in May 2022.

The referendum

I assume for this scenario that the vote is a narrow majority (52-48, same as Brexit) for independence.

Negotiation timescale

The referendum result would start the clock ticking towards independence. In the 2014 independence referendum, the date of Scottish independence was set at 24 March 2016, 18 months away from the referendum.

For Brexit, the date of leaving the EU was set in article 50 of the Treaty on European Union as 2 years after the UK notifying the EU of the intention to leave, although this was extended twice and the UK actually left the EU on 31 January 2020, 11 months after the original leaving date of 29 March 2019.

Given that Brexit took 2 years and 11 months, I think people on both sides will think that 18 months is too short a timescale to negotiate all the details of independence, so will settle on a 2 year negotiating period. This means independence would happen in May 2024. This would be a convenient date for the residual UK (rUK from now on), as there would be no Scottish seats contested in the next UK general election to be held before December 2024.

The negotiations

During the referendum campaign the UK government would no doubt talk tough, telling Scots that if they choose independence, they're on their own and they will get no help of co-operation from the UK, etc. After the referendum result, this rhetoric will be dropped as it will have served its purpose. Instead the new mood, both north and south of the border, would be one of co-operation, because:

1. Scotland and rUK share an island

2. they are going to be neighbours whether they get on or not

3. it's in both countries' interests that they do get on

4. both countries have a lot in common, such as shared language and culture, which means they will find it easy to co-operate should they choose to do so

5. all the above points are obvious to everyone

Furthermore, Scotland will have quite a good negotiating position, because if Scotland leaves the UK without any deal then:

• Scotland will not be responsible for any of the UK's national debt, about £33,000 for every person in Scotland (as of July 2020, but likely to rise due to Coronavirus).

• The UK's Trident submarine base at Faslane would revert to Scottish control, together with any submarines and other equipment there.

For these reasons, as well as the reasons above, the UK would be keen to do a deal.

What a deal might look like

I will discuss some areas that a deal would cover:

• transitional arrangements

• currency

• military and bases

• trade and customs

Obviously the Scotland-rUK independence deal wouldn't look exactly like I outline below, but I expect it would be something similar, given that both parties have a common interest in making the separation process work.

Transitional arrangements

The UK left the EU on 31 Jan 2020, with transitional arrangements that were set to expire on 31 Dec 2020.

Something similar would happen with Scottish independence. Scotland would formally become independent in (for example) May 2024, but transitional arrangements would be in place. During the transitional period, Scotland would continue use the pound sterling, and would continue to trade with the UK without any customs or tariffs.

The transitional period might initially last for about a year. It's also very likely that it would end gradually, ending sooner for some things than others.

Currency

During the transitional period, as I have just said, Scotland would continue to use the pound sterling. However, it makes sense for Scotland to have its own currency (the Scottish Pound or Scot£) in order for it to have fiscal autonomy, so it will change over in due course.

what a Scot£ 20 note might look like

On Currency Changeover Day, Scotland would move from sterling to Scot£. Bank accounts, wages etc would go seamlessly from sterling to Scot£ on a 1:1 basis. So would mortgages; this means people's mortgages would be denominated in the same currency they are paid in.

(Banks outside Scotland might prefer mortgages to continue to be paid in sterling, if they think Scot£ will decrease in value. But Scotland will have a strong negotiating position, as it would be hard for the mortgage lenders to repossess all these homes and sell them to get back the value of any loan, without the co-operation of the Scottish government.)

Military and bases

It is likely that Scottish regiments in the British army would become regiments in the new Scottish army, together with their equipment.

Typhoon fighter aircraft

The Scottish air force would get a share of the RAF's assets, probably including a squadron of Typhoon fighters.

The Scottish navy would get some of the Royal Navy's ships. It's likely that 1 or 2 of the Type 26 frigates currently building for Britain, Australia and New Zealand would go to the Scottish navy, forming the backbone of its surface fleet.

Military bases in Scotland would be taken over by the new Scottish armed forces. The exception would be the Trident submarine base at Faslane, which the rUK would retain control of until they could build their own replacement base. In the meantime, rUK would pay rent to Scotland for the use of the base.

Scotland would join NATO, and it is likely that the Scottish armed forces would train with the rUK armed forces; this would make it easier for them to work together in time of war. Scotland would probably be an arrangement for use of some of the UK's training facilities, to avoid expensive duplication.

Trade and customs

During the transition period, there would be no tariff or non-tariff barriers for trade between Scotland and rUK.

At some point, Scotland would join EFTA. When that happens the provisions of whatever trade agreement UK and EFTA have with each other would then apply for trade between Scotland and rUK. Since this is a known factor -- as trade between UK and EFTA is ongoing -- there would not be any big surprises so it would be easy for everyone to plan for.

At a later date, maybe around 2027, it is likely that Scotland will join the EU. Finland joined the EU in 1995, 3 years after applying, so Scotland might take the same amount of time.

(Or Scotland might take less time, because Scotland has previously been following the acquis communautaire (the EU's rules) for almost half a century, and would therefore not take long to re-align itself to them).

In any case, by the middle of the decade, the relationship between the EU and the UK will have settled down and become a known thing. So it will be relatively easy for rUK to apply to Scotland the same rules that it is already applying to trade with the EU, and easy for Scottish firms to apply to trade with rUK the same rules that they will have previously been applying (in reverse) to trade with the EU.

Again, there are likely to be transitional periods, both for Scotland-rUK trade and for Scotland-EU trade, as Scotland rejoins the EU.

Summary

If Scotland does become independent from the UK, it will be in both states’ interests to have smooth transitional arrangements. Since countries generally act in their own national interest, we can expect them to agree to a smooth transitional period.

While the UK will talk tough before and during the independence referendum, after that has been won, independence will be a done deal, and the UK will quickly ditch their tough rhetoric to work with newly-independent Scotland.