With Brexit, Gibraltar a rock in a hard place
Border, economy questions rise
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.