Spain treads softly on Gibraltar despite EU veto win

Spanish sources say they will not rush into the delicate Gibraltar negotiations in the lead-up to Brexit

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Madrid 2 ENE 2018 - 09:05 ART

Spanish Foreign Minister Alfonso Dastis with the mayors of Campo de Gibraltar, discussing issues relating to Brexit. JULIÁN ROJAS

A source from Spanish government has indicated the government is committed to taking a cautious approach to the thorny issue of Gibraltar ahead of the Brexit talks between the United Kingdom and the European Union.

“We are not in a hurry and we don’t want to give the impression that we are rushing into such a delicate situation but we have won the first battle and now have the upper hand,” said a key senior official from the Spanish government involved in Brexit negotiations and its repercussions for the UK overseas territory known as the Rock.

Over the last three decades, Gibraltar’s statute “has led to a situation of unjustified privilege”

The comment came after European negotiator Michel Barnier reaffirmed on December 20 that the EU would support Spain’s vetoing rights over Gibraltar in the new Brexit negotiating texts. In March, the EU offered Spain the right to veto any decision regarding Gibraltar in the transition period between March 29, 2019 and December 31, 2020 and post-Brexit. While Gibraltar has recognized Barnier’s comments, it maintains the right to veto still needs to be ratified this January.

Spain and Gibraltar have not come to an agreement on how to use the Brexit negotiations to resolve their numerous issues and conflicts. Gibraltar, a rocky outpost on Spain’s southern Iberian peninsula, was captured from Spain in 1704 and ceded to Britain under the Treaty of Utrecht in 1713 and has remained a diplomatic flashpoint ever since.

In May, the Spanish Foreign Ministry outlined in a paper, Negotiations on the withdrawal of the United Kingdom from the EU, that the special regime the Rock currently enjoys “is a condition that Spain had to accept at the time [1986] to be able to join the then European Communities,” given that the United Kingdom had become a member back in 1973.

But over the last three decades, Gibraltar’s statute “has led to a situation of unjustified privilege,” the document reads.

The text points out that Gibraltar enjoys the four EU freedoms (free movement of people, goods, services and capital), yet is not part of the customs union or subject to British law, meaning that “it has developed its own regime which is extremely permissive in relation to tax, customs and business creation, which in practice has turned it into a tax haven.”

Regarding the right to veto, the government of Spanish Prime Minister Mariano Rajoy has said it was not easy to persuade the EU to take their side in the case of Gibraltar but Madrid succeeded with the help of private, diplomatic and political contacts, although it would have been stranger if the EU took the side of an overseas territory of a country that has broken with the EU over that of one of its oldest members. The EU could have sidelined the complicated issue, given the sweeping scope and complexity of the Brexit negotiations, but it did not turn a blind eye.

In more than 300 years of diplomatic sparring, Spain and Gibraltar have agreed to no measure or collaborative agreement

In a guidelines document, agreed upon by the European Council and the UK on April 29, 2017, a section (fifth) with two paragraphs (four and 24), stipulate that the Spanish government must be consulted on future agreements regarding Gibraltar.

“After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom,” reads section 24.

The decision was categorized as a win for the Spanish government, meaning that no agreement will be reached unless Spain approves of it now or in the future.

The British government meanwhile, has maintained that it will protect the interests of Gibraltar. British Foreign Minister Boris Johnson called the prime minister of Gibraltar, Fabián Picardo, currently on paternity leave, during the Christmas holidays to reaffirm the government support and “unmovable defense for the sovereignty” of the Rock. British Prime Minister Theresa May and other senior ministers and diplomats have reiterated that they will not agree to any pact with the EU, not even on trade relations, without the guarantee that Gibraltar is included. Official sources in Gibraltar have said this level of public support shows that the issue “is not relegated as a minor problem.”

Joseph García, acting prime minister of Gibraltar, has said he was surprised by Spain’s response to the EU directives, which he sees as mere guidelines. “It has to be kept in mind that the original intention of Spain was that this clause be applicable to the Exit agreement, but this has not yet been produced. However, Madrid’s bad intentions and bad faith shown by its efforts to win vetoing power over Gibraltar in the transition agreement is sadly typical.” The Rock has not said what it believes Spain hopes to gain with its so-called “predatory” initiatives against “a small community that voted 96% to stay in Europe” and against Brexit.

We have won the first battle and now have the upper hand
SOURCE FROM SPANISH GOVERNMENT

If Spain puts up barriers to a soft and flexible Gibralexit, those on the Rock and in the eight Spanish municipalities in the surrounding Campo de Gibraltar area believe the hardest hit will be the 10,000 to 14,000 workers who cross the border into the British territoryevery day to make a living. The mayor of the neighboring La Línea de la Concepción, Juan France has explained this to the Spanish Minister of Foreign Affairs Alfonso Dastis. Dastis has promised that he will work so that the status quo of the people is as undisturbed as possible and announced he will begin bilateral talks with the British government from January.

But the Foreign Ministry accepts it will be difficult for Brexit not to affect future conditions: how and by how much remain to be seen.

The government of Gibraltar would now like to reopen abandoned talks with Spain about the Córdoba Agreements of 2006, a tripartite forum which addressed concrete issues like the pending terminal from La Línea to the airport, the patrol cooperation of the bay, the eternal battle for the three miles of sovereign waters, tourism and opening a customs-free zone. In more than 300 years of diplomatic sparring, Spain and Gibraltar have not managed to sign off on any measures or collaborative agreements even though 25% of Campo de Gibraltar’s GDP (between €700 million and €1 billion) comes from the Rock and almost half of all those employed in the Rock are from bordering municipalities.

English version by Melissa Kitson

HAVEN FOR TAX DODGERS AND SMUGGLING

The Spanish foreign ministry believes it will have to try to take advantage of Brexit negotiations to discuss measures that address accusations that the Rock acts as a tax haven and center for smuggling. Authorities in Gibraltar accept that these are problems. They agree that there are 14,000 business listed in a territory with just 6.5 square kilometers and 32,000 residents but argue these companies comply with all the EU requirements against “cowboy outfits.” Authorities also highlight an Oxfam report that only lists the territory as a tax haven because it has yet to provide measures against BEPS (base erosion and profit sharing), a framework of procedures against tax avoidance established by the OECD, for which Gibraltar has already applied. The problem of tobacco smuggling is a problem, as in any border town, Gibraltar agree, but they argue they have increased taxes by 60%.

Correction: This section originally incorrectly referred to Gibraltar as a haven for “drug smuggling.” This was a translation error.