This article is from the archive of our partner National Journal

Residents of Scotland will head to the polls Thursday to vote in a referendum for independence. A yes vote would break up the United Kingdom, and there's enormous uncertainty as to what lies ahead for Scotland and the rest of the U.K. if the Scots should choose to secede. Right now, the polling on the referendum is very, very tight.

Here are some of the biggest questions facing Scotland and the U.K. ahead of the vote, and some of the absolute worst-case scenarios that could become reality, according to experts in and outside of Scotland.

+ The  Sound of Raasay and the Isle of Skye in Scotland. (Dan Kitwood/Getty Images)

The Economic Questions: Debt, Oil, and Currency

This is what Scotland's economists must see in their recurring nightmares: Newly independent, their nascent nation finds itself saddled with debt, struggling because of low oil prices, and still enslaved to the whims of London's monetary policy.

With so much still up in the air, an independent Scotland could end up in one or more of these traps.

The debt question will loom large in independence negotiations if Scots vote yes on Thursday. In January, Her Majesty's Treasury in London committed to paying back the entirety of the U.K.'s debt, whatever the outcome of Thursday's referendum. That means that Scotland can technically walk away from its share of the United Kingdom's debt and start from scratch, says Richard Kerley, chair of the Centre for Scottish Public Policy, an independent think tank based in Edinburgh.

But that's not necessarily the best idea: If Scotland ducks out of its obligation entirely, it may spook lenders and find it very difficult to borrow in the future. But take on too much debt, and an independent Scotland may never get off the ground.

Whether or not Scotland ends up with a large share of debt, it's going to need a solid source of income in order to make good on the myriad promises the Scottish National Party has dangled in front of voters. It may be able to find that underground.

"There's always a reason why people all of a sudden have the oomph to walk out of a long-standing relationship," said Scheherazade Rehman, economist and director of the E.U. Center at George Washington University. "Scotland's oomph is oil." The rich North Sea oil deposits would belong to an independent Scotland, and the SNP is banking on that oil revenue to help pay Scotland's bills.

But a national economy that leans heavily on one particular natural resource is asking for trouble. It's called the resource curse: When a country can use a profitable resource as a crutch, there's little incentive to develop other industries and create a diverse economy. All's well until that resource runs out or its price drops—then the country's economy tanks without any other profitable industry to fall back on.

This curse could be Scotland's, says Rehman. Scotland is small, and it could survive largely on oil revenue, as long as prices stay stable. "But that's a long-term mistake," she says. The moment prices fall—if fracking really takes off in the U.S., for example—Scotland will find itself in deep trouble.

But at the root of the debt and oil questions lies a simpler one: What currency would end up in Scottish wallets? Rehman says that staying on the pound—the solution currently proposed by the Scottish government—makes the most sense for Scotland, but it comes at the cost of losing control of monetary policy.

The Bank of England controls the pound, so Scotland would have no say in setting policy, even though its economy would feel the effects. Although this would leave the Scottish economy vulnerable to London's policies, Rehman says, "there is probably no other sensible arrangement."

Practically, the Scottish government would want to arrive at some sort of an agreement with the British government so that its own central bank could coordinate with the Bank of England to set policy, Rehman says. Kerley agrees. He envisions the cooperation in the form of a currency union, which would allow the Bank of Scotland some amount of say in setting interest rates and other aspects of monetary policy.

But the rest of the U.K. isn't so keen on sharing the pound with Scotland if the latter were to choose independence. A poll this week showed that 63 percent of people in England and Wales would oppose a currency union with Scotland.

So what happens if things go awry? Rehman imagined a worst-case scenario: "They get their independence, oil revenues are not as large and long lasting as they thought, and boom! They get into trouble. Who bails them out?" With Scotland a part of the U.K., the Scottish economy can lean on the Bank of England as a lender of last resort. If Scotland's on its own, there's no one to catch it when it falls. "The Bank of England has made it very clear that it will not" play that role, says Michelle Egan, a professor at American University's School of International Service.

In the end, Scotland's economic situation comes down to a whole lot of uncertainty, and uncertainty can wreak havoc on an economy. Kerley says it's already having an impact, driving down the value of the pound.

But it doesn't have to go this way. Robert Rowthorn, professor emeritus of economics at the University of Cambridge, thinks Scotland could end up ahead. If they refuse to pay debt and oil revenues stay high, he says, the long-term outlook could be quite good. But the initial transitional period, he predicts, will be tough. "They're spending money on this and that. Where are they going to get it from?" Rowthorn said. "They will just have to tighten their belts for a decade."

+ Eilean Donan Castle, by the Kyle of Lochalsh in Scotland. (Jeff J Mitchell/Getty Images)

The Political Questions: Nuclear Submarines and David Cameron

When it comes to politics, Scotland isn't the only country with a lot riding on Thursday's vote. If it were to secede, the remnants of the U.K. would also be faced with some serious problems, chief among them the question of where to put their nukes.

The United Kingdom only has one nuclear delivery system, and it's made up of four submarines that are based out of a naval base on the west coast of Scotland. The U.K. policy of "at-sea deterrence" requires that one of these submarines be deployed with nuclear warheads at all times. The only problem is that the SNP has been pushing its anti-nuclear platform, and has promised to ask the U.K. to relocate the nuclear facilities if it were to win independence.

If this were to happen, says James Acton, senior associate in the Nuclear Policy Program at the Carnegie Endowment for International Peace, London would be faced with "a series of unpalatable options." The new U.K. could choose to give up nukes entirely, but that doesn't align with the policy of the current government. It could move its nuclear facilities south of the border, but such an operation would be "expensive, time consuming, and controversial."

Or—and this Acton considers the most likely compromise—the U.K. could strike up an agreement with another country to base its nuclear system abroad for some time. The probable candidates, Acton says, are France and the U.S. The latter is most likely to play host to the U.K.'s nukes, probably at the facility at Kings Bay, Georgia, but the process of negotiating a deal with the U.S. and moving the nukes would likely take several years.

From London's perspective, the worst-case scenario in negotiations over nukes would be if the SNP insisted that the facility be dismantled immediately. There's no other location in the U.K. that could house them right now, so the warheads would most likely have to sit in storage outside of London until a new facility could be built.

If the Scottish were flexible, however, London would be elated to score a long-term or permanent lease on the current base. There's a lot of daylight between this scenario and all the others: "Everything else is much, much worse," Acton says.

If the SNP chooses to make good on its promise to force the U.K. to move its nukes, that'll just be one more headache for the one man who stands to lose most from a yes vote on Thursday: U.K. Prime Minister David Cameron.

If Scotland votes to leave, there are elements of Cameron's party who might want him to "fall on his sword and go," says Egan. Senior party members have warned that they may call for a vote of no confidence if Scotland leaves. Cameron has been fighting hard, especially recently, to keep Scotland part of the Union, partly because his job is under threat, Egan says, and partly because he doesn't want to go down in history as the prime minister who oversaw the crumble of the United Kingdom.

But there's even more at stake here than the prime minister's fate, or even that of his party.

Scotland's departure would bring about a fundamental shift in U.K. politics, Egan says: The conservatives have always had "shallow roots" in Scotland, but it's their Labour opponents who will lose a chunk of their voter base and a number of seats. A U.K. without Scotland is more conservative and more anti-European, raising the specter of a successful referendum to leave the E.U. in a post-Scotland U.K.

There's a lot riding on Thursday. Even a no vote, Cameron has made clear, would not signal a return to the status quo. "There's no going back to the way things were," the prime minister said in an emotional speech in Aberdeen this week. A no vote would trigger a set of policies called devolution that would give the Scottish Parliament more power over its people, even within the framework of the United Kingdom.

The referendum, however it is decided, will change Scotland and the U.K. forever. Whether Scotland becomes a successful independent nation, a failed state, or remains a part of the union, generations will look back at Thursday's vote as a turning point in the history of the British Isles.

The Economic Questions: Debt, Oil, and Currency

This is what Scotland's economists must see in their recurring nightmares: Newly independent, their nascent nation finds itself saddled with debt, struggling because of low oil prices, and still enslaved to the whims of London's monetary policy.

With so much still up in the air, an independent Scotland could end up in one or more of these traps.

The debt question will loom large in independence negotiations if Scots vote yes on Thursday. In January, Her Majesty's Treasury in London committed to paying back the entirety of the U.K.'s debt, whatever the outcome of Thursday's referendum. That means that Scotland can technically walk away from its share of the United Kingdom's debt and start from scratch, says Richard Kerley, chair of the Centre for Scottish Public Policy, an independent think tank based in Edinburgh.

But that's not necessarily the best idea: If Scotland ducks out of its obligation entirely, it may spook lenders and find it very difficult to borrow in the future. But take on too much debt, and an independent Scotland may never get off the ground.

Whether or not Scotland ends up with a large share of debt, it's going to need a solid source of income in order to make good on the myriad promises the Scottish National Party has dangled in front of voters. It may be able to find that underground.

"There's always a reason why people all of a sudden have the oomph to walk out of a long-standing relationship," said Scheherazade Rehman, economist and director of the E.U. Center at George Washington University. "Scotland's oomph is oil." The rich North Sea oil deposits would belong to an independent Scotland, and the SNP is banking on that oil revenue to help pay Scotland's bills.

But a national economy that leans heavily on one particular natural resource is asking for trouble. It's called the resource curse: When a country can use a profitable resource as a crutch, there's little incentive to develop other industries and create a diverse economy. All's well until that resource runs out or its price drops—then the country's economy tanks without any other profitable industry to fall back on.

This curse could be Scotland's, says Rehman. Scotland is small, and it could survive largely on oil revenue, as long as prices stay stable. "But that's a long-term mistake," she says. The moment prices fall—if fracking really takes off in the U.S., for example—Scotland will find itself in deep trouble.

But at the root of the debt and oil questions lies a simpler one: What currency would end up in Scottish wallets? Rehman says that staying on the pound—the solution currently proposed by the Scottish government—makes the most sense for Scotland, but it comes at the cost of losing control of monetary policy.

The Bank of England controls the pound, so Scotland would have no say in setting policy, even though its economy would feel the effects. Although this would leave the Scottish economy vulnerable to London's policies, Rehman says, "there is probably no other sensible arrangement."

Practically, the Scottish government would want to arrive at some sort of an agreement with the British government so that its own central bank could coordinate with the Bank of England to set policy, Rehman says. Kerley agrees. He envisions the cooperation in the form of a currency union, which would allow the Bank of Scotland some amount of say in setting interest rates and other aspects of monetary policy.

But the rest of the U.K. isn't so keen on sharing the pound with Scotland if the latter were to choose independence. A poll this week showed that 63 percent of people in England and Wales would oppose a currency union with Scotland.

So what happens if things go awry? Rehman imagined a worst-case scenario: "They get their independence, oil revenues are not as large and long lasting as they thought, and boom! They get into trouble. Who bails them out?" With Scotland a part of the U.K., the Scottish economy can lean on the Bank of England as a lender of last resort. If Scotland's on its own, there's no one to catch it when it falls. "The Bank of England has made it very clear that it will not" play that role, says Michelle Egan, a professor at American University's School of International Service.

In the end, Scotland's economic situation comes down to a whole lot of uncertainty, and uncertainty can wreak havoc on an economy. Kerley says it's already having an impact, driving down the value of the pound.

But it doesn't have to go this way. Robert Rowthorn, professor emeritus of economics at the University of Cambridge, thinks Scotland could end up ahead. If they refuse to pay debt and oil revenues stay high, he says, the long-term outlook could be quite good. But the initial transitional period, he predicts, will be tough. "They're spending money on this and that. Where are they going to get it from?" Rowthorn said. "They will just have to tighten their belts for a decade."

+ Eilean Donan Castle, by the Kyle of Lochalsh in Scotland. (Jeff J Mitchell/Getty Images)

The Political Questions: Nuclear Submarines and David Cameron

When it comes to politics, Scotland isn't the only country with a lot riding on Thursday's vote. If it were to secede, the remnants of the U.K. would also be faced with some serious problems, chief among them the question of where to put their nukes.

The United Kingdom only has one nuclear delivery system, and it's made up of four submarines that are based out of a naval base on the west coast of Scotland. The U.K. policy of "at-sea deterrence" requires that one of these submarines be deployed with nuclear warheads at all times. The only problem is that the SNP has been pushing its anti-nuclear platform, and has promised to ask the U.K. to relocate the nuclear facilities if it were to win independence.

If this were to happen, says James Acton, senior associate in the Nuclear Policy Program at the Carnegie Endowment for International Peace, London would be faced with "a series of unpalatable options." The new U.K. could choose to give up nukes entirely, but that doesn't align with the policy of the current government. It could move its nuclear facilities south of the border, but such an operation would be "expensive, time consuming, and controversial."

Or—and this Acton considers the most likely compromise—the U.K. could strike up an agreement with another country to base its nuclear system abroad for some time. The probable candidates, Acton says, are France and the U.S. The latter is most likely to play host to the U.K.'s nukes, probably at the facility at Kings Bay, Georgia, but the process of negotiating a deal with the U.S. and moving the nukes would likely take several years.

From London's perspective, the worst-case scenario in negotiations over nukes would be if the SNP insisted that the facility be dismantled immediately. There's no other location in the U.K. that could house them right now, so the warheads would most likely have to sit in storage outside of London until a new facility could be built.

If the Scottish were flexible, however, London would be elated to score a long-term or permanent lease on the current base. There's a lot of daylight between this scenario and all the others: "Everything else is much, much worse," Acton says.

If the SNP chooses to make good on its promise to force the U.K. to move its nukes, that'll just be one more headache for the one man who stands to lose most from a yes vote on Thursday: U.K. Prime Minister David Cameron.

If Scotland votes to leave, there are elements of Cameron's party who might want him to "fall on his sword and go," says Egan. Senior party members have warned that they may call for a vote of no confidence if Scotland leaves. Cameron has been fighting hard, especially recently, to keep Scotland part of the Union, partly because his job is under threat, Egan says, and partly because he doesn't want to go down in history as the prime minister who oversaw the crumble of the United Kingdom.

But there's even more at stake here than the prime minister's fate, or even that of his party.

Scotland's departure would bring about a fundamental shift in U.K. politics, Egan says: The conservatives have always had "shallow roots" in Scotland, but it's their Labour opponents who will lose a chunk of their voter base and a number of seats. A U.K. without Scotland is more conservative and more anti-European, raising the specter of a successful referendum to leave the E.U. in a post-Scotland U.K.

There's a lot riding on Thursday. Even a no vote, Cameron has made clear, would not signal a return to the status quo. "There's no going back to the way things were," the prime minister said in an emotional speech in Aberdeen this week. A no vote would trigger a set of policies called devolution that would give the Scottish Parliament more power over its people, even within the framework of the United Kingdom.

The referendum, however it is decided, will change Scotland and the U.K. forever. Whether Scotland becomes a successful independent nation, a failed state, or remains a part of the union, generations will look back at Thursday's vote as a turning point in the history of the British Isles.

This article is from the archive of our partner National Journal.

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