By Mike Peacock
LONDON, May 30 (Reuters) - Small northern nation to vote onindependence in peaceful referendum. Should the world care at atime when Ukraine has pitted East versus West in an echo of theCold War?
Scotland has punched above its weight for centuries,bringing the world Adam Smith, the father of the free market, aswell as the steam engine, television and penicillin.
And there are more pressing reasons to pay heed to a Sept.18 vote which could see Britain lose 5.3 million Scots.
"BREXIT"
A lot of energy has been expended arguing whether anindependent Scotland could join the European Union. Even moretelling would be its absence from the debate about whether therest of Britain should remain part of the EU.
Overall, Scots are more pro-EU than the English and if theyvoted to secede this year would not get a say in a planned 2017referendum on Britain's place in Europe.
As a result, the chances of England, Wales and NorthernIreland voting to quit the EU would rise. Scotland may onlyaccount for around 4 million of the UK's 45 million voters butwith opinion finely balanced they could prove decisive.
Among the international factors here is that of Britain'smain ally, the United States. It has been reserved about itsview of the Scottish debate but has made it abundantly clearthat it wants to see Britain at the heart of the EU.
Secessionists are trying to use the EU question to theiradvantage in the Scottish campaign, hoping it will help shiftopinion polls which suggest the campaign to remain part of theUK is holding onto a slim lead.
Scottish nationalist (SNP) leader Alex Salmond says thebiggest threat to Scotland staying in the EU is Prime MinisterDavid Cameron's pledge to hold an in-out EU referendum. He cannow point to anti-EU UK Independence Party's win in Europeanelections to emphasise the threat of Scotland being dragged outof the bloc by English votes.
RIGHT-LEANING WESTMINSTER?
Scottish independence would also alter the calculus fornational politics in the rest of the country.
The opposition centre-left Labour party has 41 members ofthe Westminster parliament in Scottish seats while thecentre-right Conservatives have only one.
Take those out of the equation and the path for Labour to win power looks daunting, though whichever way the Sept. 18referendum goes Scots will get to vote in national Britishelections next year.
That raises another uncertainty. If Labour won in 2015, itmay have to call an early election once it loses its ScottishMPs if it was robbed of its parliamentary majority.
"There would probably then be a more or less immediategeneral election for the Westminster parliament, probably inlate 2016 or early 2017, with ... a significant probability of aConservative victory," Nomura bank said in a recent note.
That loops back to Britain's EU membership since the Conservatives are committed to holding a plebiscite while Labouris not.
The irony is that the Conservatives have traditionally beenthe strongest defenders of the union and Cameron's positioncould come under threat if the Scots vote to go their own way,destabilising his party as it moves into election mode.
INVESTOR UNCERTAINTY
For investors, there are many unknowns to ponder.
What share of Britain's debt would Scotland take? Would itretain the pound? Would it get the lion's share of oil revenuesfrom the North Sea, estimates of which vary wildly? Would itfollow a different fiscal policy?
All of the above will lead to nervousness as the referendumnears though markets continue to price in a "No" vote.
What is certain is that minus Scotland, Britain would slipdown the pecking order from being the world's sixth largesteconomy.
There could even be questions about whether it continued tomerit a seat on the U.N. Security Council and be a member of theGroup of Seven economies at a time when power is shifting to theworld's big emerging economies.
Ratings agency Moody's says an independent Scotland couldexpect an investment-grade credit rating but face higherborrowing costs than the rest of Britain. If negotiations withLondon on how to separate proved acrimonious, its rating wouldbe lower.
Rival ratings agency Fitch said the UK would need longer torecover its triple-A debt rating if Scotland split away.
The Scottish National Party wants to keep sterling but thatis opposed by all the main political parties in London. On theforeign exchanges, the pound could slide after Scottishindependence.
The $2.5 trillion UK economy is Europe's biggest destinationfor foreign direct investment, a key driver of currency flows.Without Scotland - assuming it did not keep the pound - thoseflows would fall.
The British Treasury has said it would honour all existinggovernment debt regardless of whether Scots vote forindependence, a move aimed at preventing bond market volatility.
Oil giants Royal Dutch Shell and BP havesaid they want Scotland to remain part of the UK and insuranceand pensions heavyweight Standard Life has warned itcould move partly out of Scotland if it secedes.
"Given a choice, we want to know as accurately as possiblewhat investment conditions will look like 10 or 20 years fromnow," Shell chief Ben van Beurden said in March.
DEFENCE
Britain has four submarines carrying Trident nuclearwarheads operating out of the Faslane naval base in Scotland.The SNP wants nuclear weapons removed from an independentScotland at the earliest opportunity.
Former British defence chiefs warned against such a movelast month, saying it would cost billions of pounds, cutthousands of jobs and create resentment internationally.
At a time of heightened tension with Russia, NATO allies arelikely to be concerned, although it would likely take years tomove the naval base.
The future of the nuclear submarines are seen by some as oneof Scotland's main bargaining chips in getting what it wants inthe 18 months of negotiations that would follow a "Yes" vote towork out how it leaves the United Kingdom.
The Royal United Services Institute think tank has warnedthat London and Edinburgh would have to work hand-in-glove onsecurity and intelligence matters.
If they did not, there was a risk that weak Scottish capability could make it vulnerable to foreign intelligence andterror networks and provide a route for them into the UK.
SECESSIONISTS IN SPAIN
Europe is watching keenly, none there more so than Spain.
The government in Madrid has refused to allow Catalonia tohold a vote on independence in November but the region has vowedto press ahead with a non-binding referendum anyway.
If that is blocked, Catalan President Artur Mas said hewould call an election which would be seen as proxy vote onindependence.
A Scottish vote for independence would embolden theCatalans. That may be one reason why officials in Brussels havetold the Scots that it would be difficult for them to join theEU.
New states have to be voted in unanimously by existingmembers and Spain could well block it.
NORTHERN IRELAND
Scottish independence could also have a destabilisinginfluence on Northern Ireland which has been thrown into a boutof soul-searching by the detention of Sinn Fein leader GerryAdams for questioning in connection with the 1972 murder of amother of 10.
He was released without charge.
Though a 1998 peace deal largely ended decades of sectarianviolence, Northern Ireland remains deeply split betweenProtestants who mainly want to remain part of Britain andCatholics tending to favour unification with Ireland.
The unionists have particularly close links with Scotlandwhile those who favour uniting with Ireland could seize upon aScottish "Yes" vote to press their claims more forcefully.
(Editing by Jeremy Gaunt)
