With Brexit, Gi­bral­tar a rock in a hard place

Bor­der, econ­omy ques­tions rise

The Washington Times Daily - - FRONT PAGE - BY MARTIN AROSTEGUI

GI­BRAL­TAR | Ne­go­ti­a­tions over Bri­tain’s exit from the Euro­pean Union start­ing this week are likely to prove long and dif­fi­cult, but per­haps nowhere will they be more dis­rup­tive than on this rock out­crop­ping/colony of 32,000 Bri­tish sub­jects that juts out of Spain’s south­ern tip.

Brexit is cast­ing un­cer­tainty for com­mu­ni­ties through­out the United King­dom and Europe that will be af­fected by changes in trade, free­dom of move­ment and job prospects, as Bri­tish Prime Min­is­ter Theresa May tries to win the best pos­si­ble exit deal from the EU.

But few have as much di­rectly at stake as the Gi­bral­tar­i­ans, 95 per­cent of whom voted last year in fa­vor of stay­ing in the EU out of fear that they could be left at the mercy of Spanish de­signs to im­pose its sovereignty on “The Rock.” Along with North­ern Ire­land, Gi­bral­tar is one of the few places where Bri­tain shares a land bor­der with another EU state,

com­pli­cat­ing the di­vorce pro­ceed­ings im­mensely.

Spain lost Gi­bral­tar in an 18th-cen­tury war with Bri­tain, which es­tab­lished a naval base at the strate­gic en­trance to the Mediter­ranean and col­o­nized it with mi­grant la­bor­ers from Malta, Cyprus and parts of North Africa, as well as with na­tive Spa­niards from south­ern An­dalu­cia. Spain has been try­ing to claw back the small spit of land ever since.

Right-wing dic­ta­tor Fran­cisco Franco, who ruled Spain dur­ing much of the last cen­tury, closed the nar­row land con­nec­tion to Gi­bral­tar as a way of pres­sur­ing Bri­tain for its re­turn. The bor­der was re­opened when Spain joined the EU in the 1980s un­der a demo­cratic gov­ern­ment. The joint mem­ber­ship of London and Madrid in the EU tended to limit ten­sions over Gi­bral­tar to a low sim­mer, but Brexit will bring changes in pol­icy on Gi­bral­tar, a se­nior Spanish of­fi­cial said.

One clause in the EU state­ment last month out­lin­ing con­di­tions for Brexit ne­go­ti­a­tions stip­u­lates that Spain must ap­prove any new trade ar­range­ment with Bri­tain over Gi­bral­tar.

“Brexit leaves us un­pro­tected,” said Jonathan Sacra­mento, news di­rec­tor at the Gi­bral­tar Broad­cast­ing Corp., Gi­bral­tar’s main TV chan­nel. “If Spain shuts the bor­der again, it would to­tally par­a­lyze our econ­omy.”

Spanish For­eign Min­is­ter Jose Gar­cia-Mar­gallo did lit­tle to calm fears af­ter the shock re­sult in the Bri­tish ref­er­en­dum last year, say­ing Brexit rep­re­sented “Spain’s big chance to re­cover Gi­bral­tar.”

Spain also flexed its mus­cle in Au­gust 2013 when po­lice beefed up bor­der con­trols over a plan by Gi­bral­tar of­fi­cials to build an ar­ti­fi­cial reef that ham­pered Spanish fish­ing ves­sels op­er­at­ing in con­tested wa­ters. Ve­hi­cle and pedes­trian traf­fic in and out of The Rock ground to a vir­tual halt over sev­eral days as pass­ports and bags were metic­u­lously in­spected un­der the blaz­ing sun.

“If Spain cre­ates long bor­der queues to­day, God help us af­ter Brexit,” said Paul Del­mar, a taxi driver who earns his liv­ing by fer­ry­ing tourists from the bor­der bar­ri­ers to the his­toric town cen­ter lined with pubs and duty-free shops.

In the 2013 stand­off, a spe­cial EU del­e­ga­tion flew in to urge the Spanish gov­ern­ment to re­lax bor­der con­trols. The lo­cals say they know there will be no such in­ter­ven­tion af­ter Brexit.

Not a pawn

De­spite the cloud hang­ing over Gi­bral­tar’s fu­ture, some are putting on a brave face.

“Gi­bral­tar is not go­ing to be a pawn in the Brexit ne­go­ti­a­tions,” said Gi­bral­tar’s main elected of­fi­cial, Chief Min­is­ter Fabian Pi­cardo, who down­plays much of the scare talk.

He noted that 92 per­cent of Gi­bral­tar’s trade is with Bri­tain, mainly in fi­nan­cial ser­vices. A fifth of all Bri­tish auto in­sur­ance poli­cies are writ­ten in Gi­bral­tar, ac­cord­ing to the lo­cal gov­ern­ment, which of­fers tax ad­van­tages to in­sur­ance com­pa­nies and banks. Be­cause of its unique sta­tus, Gi­bral­tar has be­come one of the world’s big­gest cen­ters of on­line gam­bling, which is re­spon­si­ble for 1 in 10 jobs in the en­clave.

With Brexit clip­ping ac­cess to the Bri­tish market, Mr. Pi­cardo said, English­s­peak­ing EU na­tions such as Malta and Ire­land may turn to Gi­bral­tar as a gate­way to the U.K. There could even be op­por­tu­ni­ties to grow, he added.

Los­ing its edge?

With Gi­bral­tar set to join the rest of Bri­tain out­side of the EU, there are rum­blings that The Rock’s fi­nan­cial market ad­van­tage with EU coun­tries may be in jeop­ardy. An EU Court of Jus­tice rul­ing last week held that Gi­bral­tar could not be treated as an in­de­pen­dent tax ju­ris­dic­tion sep­a­rate from the rest of Bri­tain once Brexit takes ef­fect.

Spanish gov­ern­ment sources say pri­vately that the EU has tended to over­look Gi­bral­tar’s off­shore prac­tices — which many in Madrid say have been used to evade taxes and laun­der ill-got­ten funds — while Bri­tain was still in the EU. With London headed for the door, the be­nign ne­glect could be end­ing for The Rock if sus­pi­cious money move­ments are de­tected.

Gi­bral­tar au­thor­i­ties say the colony’s laws against money laun­der­ing are im­mac­u­late and con­form to EU and Bri­tish stan­dards.

But Gi­bral­tar is not with­out its own cards in the poker game. Spain would pay a price for tight­en­ing the bor­der and crack­ing down on Gi­bral­tar busi­nesses since over 7,000 Spanish work­ers cross into Gi­bral­tar each day for well-pay­ing jobs in the ship­yard, a Coca-Cola bot­tling plant and a float­ing casino.

“It is not black and white; there’s al­ways gray in the mid­dle,” Adrian Hogg, chair­man of the Gi­bral­tar Funds and In­vest­ment As­so­ci­a­tion, re­cently told Euronews.com. “Yes, we would lose EU, but we would gain from else­where.”

About 40 per­cent of the jobs in the Spanish bor­der town of La Linea and sur­round­ing com­mu­ni­ties de­pend on Gi­bral­tar’s econ­omy, which reg­is­ters an an­nual growth rate of 10 per­cent. A lo­cal Spanish mayor who rep­re­sents the bor­der com­mu­ni­ties has said that cut­ting ac­cess to Gi­bral­tar would cre­ate an “eco­nomic dis­as­ter zone” in a coun­try where job­less rates un­til re­cently were above 20 per­cent.

The NATO fac­tor

Spain is also a mem­ber of NATO, which re­lies on Gi­bral­tar’s strate­gic naval fa­cil­i­ties. Nu­clear sub­marines re-pro­vi­sion and load tor­pe­does on the way to war zones in the eastern Mediter­ranean and the Per­sian Gulf in berths carved into Gi­bral­tar’s un­der­wa­ter caves.

Spanish an­a­lysts say ob­jec­tions from the Bri­tish Min­istry of De­fense scut­tled a deal on joint sovereignty ne­go­ti­ated with Prime Min­is­ter Tony Blair, a La­bor Party mem­ber, in 2003.

But Gi­bral­tar’s econ­omy is no longer sus­tained by de­fense spend­ing. It with­stood Franco’s block­ade when Bri­tish de­fense spend­ing ac­counted for 65 per­cent of its gross do­mes­tic prod­uct, ac­cord­ing to lo­cal of­fi­cials, and Gi­bral­tar is now much more de­pen­dent on pri­vate in­vest­ment and tourism.

The de­ter­mi­na­tion of Gi­bral­tar­i­ans to re­main part of Bri­tain was last af­firmed in a 2002 ref­er­en­dum in which 99 per­cent of res­i­dents voted against ac­cept­ing Spanish sovereignty, even in di­luted form.

“If most of us are against Brexit, all of us want to stay Bri­tish,” Mr. Del­mar said.

Spanish of­fers to al­low Gi­bral­tar­i­ans to keep their Bri­tish na­tion­al­ity, to re­tain au­ton­omy over their ed­u­ca­tional and court sys­tems, and to pre­serve English as the of­fi­cial lan­guage did lit­tle to move them.

“It’s a mat­ter of wait-and-see,” said a shop­keeper on Gi­bral­tar’s main com­mer­cial thor­ough­fare. “Much de­pends on what gov­ern­ment there is in Spain when Brexit hap­pens.”

Spain’s cen­ter-left so­cial­ists have tended to be more ac­com­mo­dat­ing to Gi­bral­tar than the Pop­u­lar Party con­ser­va­tives who are now in power. A gov­ern­ment of the left­ist party Pode­mos wants to sever ties with NATO and close the naval base.

The weak show­ings of Mrs. May and her Con­ser­va­tive Party in na­tional elec­tions this month have raised even more con­cerns. Hop­ing to build her man­date ahead of the Brexit talks, Mrs. May finds her­self head of a weak­ened gov­ern­ment in London that could be un­der pres­sure to sac­ri­fice Gi­bral­tar’s in­ter­ests to se­cure Spain’s sup­port for key con­ces­sions from the EU.

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