Scottish First Minister Alex Salmond announced March 21 that Scotland will hold a referendum on independence Sept. 18, 2014, seeking to end its 305-year political union with England. However, it is unlikely that full independence will be achieved. There are several issues that Scotland would need to account for or overcome along the path to independence. The government believes that an independent Scotland would base its economy on North Sea energy resources, but that depends on three things: a favorable resolution in disputes with London over the division of the United Kingdom Continental Shelf, future oil and natural gas production levels, and energy prices. Scotland accounts for more than 90 percent of British offshore oil production and more than half of its offshore natural gas production, generating some 10.6 billion pounds ($16.1 billion) in energy-related tax revenues in the 2011-2012 fiscal year. Salmond has repeatedly stated that an independent Scotland could raise more than 50 billion pounds from such tax revenues in the five years after independence, enabling it to follow Norway's example in the creation of oil-related sovereign wealth funds. In addition, the Scottish government believes it would get around 90 percent of the North Sea oil and natural gas fields after the division of British territorial waters. However, London would probably dispute this assumption, and the demarcation of territorial waters would be a key disagreement between the two, should Scotland become independent. Scotland's projections about energy-related revenues may also be too optimistic. It is widely believed that North Sea oil and natural gas production has already peaked. While there may be moderate increases in production in the coming years, there are no signs that new fields will be enough to replace declining production. Finally, oil and natural gas revenues are linked to energy prices. Recent energy-related tax revenues in the United Kingdom have been volatile, and an independent Scotland would be more vulnerable to price fluctuations than it is now. Because the United Kingdom's basic geopolitical imperatives are to dominate its territory and secure the immediate seas surrounding it, keeping Scotland within the United Kingdom is a strategic necessity for London. An independent Scotland would threaten both imperatives because it would create a new state north of England that could eventually challenge the United Kingdom's position in the North Sea or make an alliance with an external power. As a result, London is likely to accommodate Scottish nationalism by conceding more autonomy in order to weaken calls for complete independence.
