A recent article on the Crown Estate in Wales led me to ponder the question of what happens after a state collapses. Believers in Welsh independence seek the breakup of the UK into three sovereign states: Cymru, England, and Scotland. It seems to be assumed that Northern Ireland would reunite with the Republic of Ireland.
This may appear obvious, but it needs to be said: we must start from the basics when discussing the question. What becomes of the assets and liabilities of the former UK? This is going to be of critical importance to us if we embark on a future free of London’s rule for the first time in centuries.
Let’s talk money
As of September 2023, the date of the latest available figure, the UK’s national debt is £2,654,200,000,000. That’s trillions. The most recent available data on taxpayers projected that in the financial year 2021–2022 there would be 31.6mn taxpayers in the whole of the UK. In the same tax year, Wales had 1,460,000 taxpayers: 4.62% of the UK total. That would give us a share of the UK’s national debt equal to £122,624,040,000, or £83,989 per taxpayer in Wales.
I’ve chosen to count by taxpayer to illustrate that there are different ways of approaching this. It might be done by the number of people living in Wales, or only the number of adults. We might count everybody, or only those with UK citizenship at the time of state dissolution. We might count only those who chose Welsh citizenship, regardless of where they live, but not those – primarily English – living in Wales but not citizens or Green Card holders. The choice of method would be an early and important part of independence negotiations.
Or we might just say that we’ll inherit not a single penny of debt, and start with a blank slate.
I need to make it clear that I’m not a lawyer, and particularly not a specialist in international law. Nevertheless, international law covers this situation and, like common law in England and Wales, is strongly grounded in precedent. So what precedents are there in recent times for a situation when a state like the UK ceases to exist, breaking up into several smaller countries?
Dark warnings
As far as I can tell, there are two: Yugoslavia and the Soviet Union. In the first case, Yugoslavia completely disappeared and was replaced by Croatia, Serbia, Slovenia, Bosnia and Herzegovina, and the Republic of Macedonia. (Kosovo separated from Serbia, but later). Yugoslavia’s assets and liabilities were divided between those states. All joined the United Nations (UN) as new states, while Yugoslavia’s seat disappeared.
In the second case, the Russian Federation asserted itself as the successor state of the USSR, and was recognised as such by the international community. Russia thereby inherited the Soviet seat on the UN Security Council and the USSR’s reserves and other international assets, while continuing to be bound by treaties signed by the Soviets. However, it also took on the whole of the Soviet Union’s national debt, paying it off completely by 2017. The other former Soviet republics became independent countries with the assets that were within their borders, and no inherited debt.
It’s common for unionists to try to frighten the Welsh people with dark warnings about the dire consequences of inherited debt for the Welsh economy after independence. In fact, the only country which would face problems is England, regardless of the precedent followed, be it Yugoslav or Soviet. And which one it would be is a matter for England alone.
That’s because, being far and away the largest and most populous of the four nations, it would be up to England to decide whether or not it followed Russia’s example. If not, then the UK national debt would be shared between the newly independent countries. However, it wouldn’t be up to London to dictate the allocation.
Successor state
Let’s assume a scenario in which the UK state was no more and Northern Ireland did indeed seek to reunify with Ireland. First, England would need to persuade the Irish government that it should accept Northern Ireland’s share of UK debt, which wouldn’t be certain. Second, following the Yugoslav precedent, debtors’ representatives and international bodies like the IMF would participate in the negotiations as well as the new states. Third, that precedent says the debt would be distributed proportionally according to the benefit received. It would not be on a per capita or other population basis.
Given that Wales has historically experienced chronic underinvestment, England would almost certainly have to take on the bulk of the debt. The Welsh share, contrary to unionist fear-mongering, would be very small.
Furthermore, in this scenario, England – like Cymru and Scotland – would become just another ordinary member of the UN General Assembly. The former UK seat at the Security Council would be reallocated to a country with a better claim, such as India.
Given the attitudes we see dominating Westminster, I find it difficult to imagine England accepting this dramatic fall in international stature. It’s more likely that it would follow Russia’s example, becoming the legal successor state of the UK. If so, it would retain the UK’s position in international affairs, including the Security Council seat and all existing treaties. It would also, however, have to assume the entirety of the UK national debt, which might make its financial status rather shaky.
That, of course, would be England’s problem, not that of Cymru.
The Welsh state and the Crown Estate
To return to Gwern Gwynfil’s article on the Crown Estate: it’s not devolved in Wales as it is in Scotland. However, since the reign of George III the revenues of the Crown Estate have been managed by the government in Westminster. This means that accounts are available, and we’ll be able to determine a figure for all of the wealth extracted from Wales by the Crown from 1760 until independence.
To this, we’ll be able to add the billions taken from us in respect of HS2, and the other occasions on which Wales has been short-changed. No doubt our accountants will be able to work out the interest due. We’ll be asking for it all back during independence negotiations – either to further reduce our debt in a Yugoslav scenario, or as a claim against the UK assets England would inherit in a Russian scenario. It’s not lost to us forever; it’s just a loan under duress to England, and we will see it repaid.
The independence movements in the Celtic countries also need to start lawyering up, putting international lenders on notice that the dissolution of the UK will affect them. A process must begin to discover who’ll be affected, identifying who might need to be involved in the negotiating process and building friendly relationships with them.
It’s time to stop talking about independence in general terms and to make detailed preparations. We need to know what international law says, who the players will be when the UK state splinters, and how we’re going to work with them. Let’s get ready to make our case now.
