Negotiating with the UK: Scotland's options
This article was commissioned by Wikiscot from Craig Dalzell at firstname.lastname@example.org. A fee was paid.
'Continuing state' and 'new state'
When states divide, an array of problems arises: status of existing treaties, membership of international bodies, citizenship of those living in the two states, division of natural resources, allocation of assets and liabilities. Resolving these problems inevitably requires negotiation,and how those negotiations are conducted will depend partly on how the agreement to separate was arrived at. The process may have been amicable or bitter, and it may have been driven by long-standing hostility, or by economic considerations, or by changed political circumstances. But those are not the crucial factors. The crucial factor is the formal status of the two new entities.
There are two possible statuses: either the parent state becomes the "continuing state" and the separating entity becomes a "new state", or the parent state is dissolved, creating two "new states", each with a new legal identity. Under the first outcome, the continuing state retains all its treaties and all its memberships of international organisations; this is what the UK did in 1992, when Ireland became independent and the "United Kingdom of Great Britain and Ireland" became the "United Kingdom of Great Britain and Northern Ireland". Under the second outcome, there is no "continuing state", so the old parent state has to renegotiate all its treaties and reapply for membership of all its international organisations; this is what Yugoslavia did, and Czechoslovakia. The separating entity has to negotiate new treaties and apply for new memberships under either outcome.
Not to be the "continuing state" would be a disaster for the remainder of the UK ('rUK') after Scottish independence. It would lose its seat on the UN Security Council (because it would lose its UN membership), and have to renegotiate any post-Brexit trade deals (because those are international treaties). It would be better for Scotland, too, for the rUK to be the continuing state, because that would help to ensure the political stability of the country it shares a land border with, and simplify negotiations over the transfer of assets and liabilities. So Scotland's negotiating position will almost certainly be that the rUK is the continuing state, and that the division of assets and liabilities should proceed on that basis.
Dividing assets and liabilities
The border between Scotland and rUK is stable and well-defined, so it should be easy to agree the transfer of immovable assets. The only area of possible dispute is the area of sea transferred to rUK control by the Scottish Adjacent Waters Boundaries Order 1999, but this area is no longer economically important.
Regarding moveable assets, the Scottish Government’s 2014 White Paper "Scotland’s Future" sought what is called a "Subtractive Split", whereby moveable assets and liabilities are divided proportionally. Population was suggested as the basis of the proportion; this basis has been used in other independence negotiations, notably in Czechoslovakia. In 2019-20, Scotland’s population was 8.2% that of the UK, so that proportion would be transferred to Scotland. Other bases, such as Scotland’s "historical contribution" to the UK, would be difficult to use, because rigorous data is lacking.
However, even a proportional division of assets and liabilities based on population allows room for dispute. Firstly, the rUK may be selective about which types of asset it offers to transfer - it may not want to transfer newly commissioned Navy vessels, for example. And secondly, the proportion of assets that Scotland needs may not match its population share. These difficulties could lead to Scotland accepting more in liabilities than it receives in assets. An alternative approach, therefore, would be for Scotland to offer to take an "Additive Share" of liabilities, that is, liabilities up to the value of the assets it receives, so if it received £50 billion worth of UK assets, for example, it would either accept £50 billion in UK liabilities or, to avoid ownership issues over liabilities, pay the rUK £50 billion over an agreed term. In deciding which assets it was willing to take, Scotland would have to balance the cost and condition of the offered assets against the time and money required to buy them or create them independently.
If things go wrong
If negotiations break down, or the assets offered by the rUK do not meet Scotland’s needs, then Scotland could adopt a "Zero Option" approach: the rUK retains all UK assets and liabilities, and Scotland buys from the rUK the assets that it can see have a value for the new country. In monetary terms, the result would be much the same as the Additive Share case. It is however worth noting that even Zero Option negotiations can fail if there is not goodwill on both sides. This happened between the Soviet Union and the Ukraine, when Ukraine, to bolster its international standing, asked for a greater share of the assets than the Soviet Union was prepared to agree to (and there was also a dispute about the value of the assets that had been transferred) (Treverton, p. 147).
The assets-and-liabilities settlement that best benefits both sides would be for Scotland to take, as an Additive Share, just the assets that it required in order to function as a viable state, and to agree a generous value for them, and to also endorse the rUK’s claim to be the "continuing state". In return, the UK would recognise Scotland as a newly independent country, and sponsor or endorse its applications for membership of international organisations such as the UN.
If on the other hand the rUK refused to negotiate amicably, then Scotland could revert to a Zero Option offer, and dispute the rUK’s claim to continuing status. The grounds of the dispute would be that the Treaty of Union, which brought the United Kingdom into being, is rendered void by the act of independence. International pressure would then be sought, and brought to bear, to take to the UN the claim that the UK has been dissolved.
- P. Williams and J. Harris, "State Succession to Debts and Assets: The Modern Law and Policy", Harvard International Law Journal, 42, 2, (2001). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2032920 (Free to download.) Accessed 19/10/2020.
- G. F. Treverton, "Dividing Divided States", University of Pennsylvania Press, 2014. https://www.upenn.edu/pennpress/book/15234.html (Summary, contents and excerpt from book.) Accessed 19/10/2020.
- UK Government, "The Scottish Adjacent Waters Boundaries Order 1999", Legislation. https://www.legislation.gov.uk/uksi/1999/1126/contents/made Accessed 19/10/2020.
- S. Brocklehurst. "Who has a right to claim North Sea oil?". BBC News Online, 16th April 2013. https://www.bbc.co.uk/news/uk-scotland-scotland-politics-20042070 Accessed 19/10/2020.
- Scottish Government, "Scotland’s Future", November, 2013. https://www.gov.scot/publications/scotlands-future/ Ch 10, then scroll to or search for "Transfer of assets". Accessed 19/10/2020.
- Scottish Government, "Government Expenditure and Revenue Scotland 2019-20", August 2020. https://www.gov.scot/publications/government-expenditure-revenue-scotland-gers-2019-20/ A. Supplementary Tables, Table A.1. Accessed 19/10/2020.