THE currency issue has long been pivotal to the independence debate for its economic and fiscal implications. Yet it sits at the heart of an independent Scotland’s accession to the EU.
To become an EU member state, Scotland would have to apply in the normal way after formal independence. Since participation in the single currency is now a requirement of EU membership, the government of Scotland would undoubtedly need to make a commitment in good faith to join the euro.
However, Scotland would control the timetable. It could defer its fulfilment of the euro criteria for years. Neither the EU institutions nor the member states would oblige Scotland or other countries to take up the euro at a particular time or pace.
For instance, a senior German official expressed to me that Germany is pointedly uninterested in whether or when non-euro member states enter the single currency.
READ MORE: Top analyst calls for Scotland to 'fully embrace' the euro
Scotland would in all probability need to establish its own currency first, before then transitioning to the euro at some point. Since the process of joining the euro involves the progressive convergence and then transfer of monetary policy, it follows that Scotland requires a monetary policy – and a currency.
These realities are fairly straightforward. The EU’s expectations are consistent and rules-based. The real paradox is our currency debate. The question must be asked: why is the euro so unpopular in Scotland?
Scotland is demonstrably a pro-European country. By contrast, public reaction towards the euro often appears viscerally negative. Even within the independence movement, the seeming default presumption is to reject the euro out of hand.
This unfavourable sentiment could derive from concern of possible burdens on trade and wider economic and financial links between Scotland and rUK. The euro crisis and the EU’s central response also did little to promote confidence in joining the single currency.
READ MORE: Why it’s time for Scotland to ditch the GERS figures
Yet the UK’s caustic debate on the euro, driven by Eurosceptic mentality, has probably been the most significant factor. UK-level institutions, from Westminster politicians to London media, have long fostered a climate of hostility and fear towards participating in the euro.
The truth is that the single currency is the norm across the EU. At present 19 of the EU27 countries (70%) are in the eurozone. Nearly all of the remainder will eventually join. Ireland and Finland – countries to which many in Scotland look for inspiration – have been part of the euro project for more than 20 years.
Indeed, after EU accession it may well be to Scotland’s advantage to join the euro. Should an independent Scotland over time reduce its trade dependence on the UK and increase its trade with partners in the EU, taking up the single currency would further facilitate that EU trade.
Scotland would be a European small state. It would benefit from the large European monetary union – and the world’s second reserve currency – in which it would have a say. The vast majority of small states in the EU have already reached the same conclusion.
Beyond economics and trade, the euro question is fundamental to what kind of EU member state Scotland would seek to become. For many EU decision-makers, the single currency – even more than the internal market – is the core of the EU. Future political integration will largely be based in the eurozone.
READ MORE: Claim sterlingisation ‘should be last resort’ after independence
SCOTLAND can only have influence in the EU where it participates. Outside of the euro, Scotland would be disconnected from some of the EU’s most important decisions on the Economic and Monetary Union and the future of European integration.
For a state of Scotland’s size, successful EU membership depends upon making positive contributions to the development of the union and participating as fully as possible in its common endeavours. Taking a place in the core – in the eurozone – would be fundamental to Scotland’s level of influence in setting the EU’s direction.
These political and strategic dimensions need to become part of the currency debate. We should move beyond the UK’s Eurosceptic fear and look instead to counterparts like Ireland, Austria, Finland and Portugal. Scotland’s currency decisions would be integral to its place in the EU.
Anthony Salamone is managing director of European Merchants, a political consultancy in Edinburgh
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel