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Gibraltar: Country and Foreign Investment

Gibraltar-Spanish Relations

Spain and the UK have disputed the status of Gibraltar for nearly 300 years but in April, 2000, both Governments agreed to put the issue of sovereignty to one side and work co-operatively on administrative tasks. In effect Spain agreed to accept Gibraltar's status within the EU - an issue on which Spain had contended for many years.

It was also agreed that communications between Spain and Gibraltar would be handled by a 'postbox' mechanism whereby a unit of the FCO in London relayed messages in both directions.

Despite that agreement, however, the Spanish Foreign Ministry subsequently called for joint sovereignty of Gibraltar with a view to the Rock coming under full Spanish sovereignty after a period of time.

The Gibraltar Government was - not unexpectedly - unhappy about the situation; it would have liked to see the Spanish Government ease restrictions in three main areas: frontier queues - the Spanish border controls can cause delays; European Parliament voting rights; and the provision of more telephone numbers.

During 2001, tension between Gibraltar, the UK and Spain increased as talks restarted under the Brussels process set up in 1984. At a meeting in Barclelona in November boycotted by Gibraltar, British and Spanish Foreign Ministers agreed on a fast timetable for developing new sovereignty proposals. But by mid-2002 the UK and Spanish authorities were battling to save the talks from collapse.

In a referendum held by the Gibraltar government in November, 2002, nearly 99% of votes were cast against the joint sovereignty proposals.

In January, 2003, Spanish Foreign Minister Ana Palacio suggested that Spain's attacks on Gibraltar through the European Union were an attempt to protect EU member states from the threat posed by the Rock. Addressing issues which included shipping and Gibraltar's financial services and taxation regime, Ms Palacio urged the Union to harden its stance against Gibraltar, suggesting that EU directives and laws were being flouted by the jurisdiction in a number of areas.

By mid-2003 it was clear that the age-old stalemate between Britain and Spain had been re-established, and British Foreign Office minister at the time, Denis MacShane suggested that there was unlikely to be a resolution to the Gibraltar question for at least thirty years. "I don't think the people of Gibraltar will approve any steps on sovereignty until there has been a long period of calm and good relations with Spain," said Mr McShane. "I have respect for the Spanish position, but quite simply, I do not see any positive outcome on the issue for some time."

In September, then UK Foreign Secretary Jack Straw made a supportive statement in the UK Parliament, assuring the government of Gibraltar that he was willing to discuss the jurisdiction's long-term interest in EU integration, though stating that he would not pressurise the territory into changing its status in the EU.

In 2004, after fierce resistance from Spain, Gibraltar was incorporated into a UK European parliamentary constituency, and its citizens voted accordingly in the 2004 MEP elections.

The Spanish government persisted, however, and in July, 2005, a hearing began in the European Court of Justice. The Spanish argued that the British legislation broke the founding treaty of the then European Community because it allowed non-European commonwealth citizens to vote in EU elections. Spain also believed that the United Kingdom acted illegally by incorporating Gibraltar into the south western UK electoral constituency for the purposes of European elections.

Jack Straw and his Spanish counterpart at the time, Miguel Angel Moratinos made another attempt to resolve the sovereignty issue in November, 2004, when they met in Madrid, where it was agreed that progress should be made towards giving Gibraltar an independent voice in future sovereignty negotiations. As a result of the discussion, Straw and Moratinos agreed to discuss the setting up of a new forum for dialogue which will have an open agenda and within which Gibraltar could have its voice heard under a "two countries, three voices," format.

In September 2006, agreement over a number of outstanding issues relating to Gibraltar was reached between the UK's Minister for Europe, Geoff Hoon, Spanish Foreign Minister Migel Angel Moratinos and Gibraltar's Chief Minister, Peter Caruana.

Areas covered by the agreements included the expanded use of Gibraltar Airport, the full inclusion of Gibraltar in EU air liberalisation measures, recognition by Spain of Gibraltar's '350' international dialling code and unblocking by Spain of Gibraltar mobile telephone roaming in Spain.

However, relations appeared to be deteriorating again in March 2008, when a report published in the Spanish media suggested that the Spanish government was considering asking the Organisation of Economic Cooperation and Development (OECD) to place Gibraltar on its 'blacklist' of uncooperative tax havens.

In a two-page article published by the Spanish El Pais newspaper, the Spanish government effectively accused Gibraltar of helping to facilitate money laundering and tax evasion through its apparent reticence when dealing with Spanish requests for assistance in fraud and fiscal investigations.

According to the report, the Spanish government found the Gibraltar police force generally cooperative in criminal investigations, if in an "underhand" sort of way.

However, it added that this cooperation tended to dry up when Spanish authorities request information about Gibraltar-based companies, banks and insurers.

The report claimed that there were 28,000 companies, 28 legal firms and 115 lawyers registered in Gibraltar, but argued that most of these were operating outside the control of the financial authorities. It also suggested that Gibraltar's popularity as a domicile for global e-gaming firms "worries the experts in the fight against the laundering of dirty money".

Gibraltar's Chief Minister, Peter Caruana dismissed the Spanish allegations, telling the UK's Daily Telegraph newspaper that: "If the Spanish government is saying that the Gibraltarian authorities are not cooperating with Spain in the way we cooperate with other countries, then that is simply untrue."

Spain's conservative Popular Party, which won the general elections in November, 2011, has announced that it wishes to exclude Gibraltar from a tripartite forum on sovereignty talks.



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