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Despite ideological alignments, Labour has a long way to go before it is trusted by Gibraltarian voters

How will Gibraltar swing in the next MEP elections?

Gibraltar won their right to vote in European Elections in 1999, and has since participated in two MEP elections (in 2004 and 2009) as a member of the South West England constituency. It has both times sided with the Conservatives. Dominique Searle, editor of the Gibraltar Chronicle, recalls why a backroom deal with Tony Blair might be the reason, and predicts where the parties will stand in the forthcoming MEP elections.

MEP election year, 2009

It was the bright blue spring of 2009 when a delegation from the British Conservative opposition party poured into Gibraltar with sweet words for the 18,000-strong electorate.

From the then shadow Foreign Secretary William Hague to Eric Pickles and Michael Ancram, there was a definite sense that the Conservative Party saw mileage - not only in trying to win local votes for the forthcoming European Parliament election, but in giving meaning to the vote back in Britain where it would be seen that loyalty to the Rock was part of embracing Europe, the Tory way.

The path to this significant display of wooing had been rugged, punctuated by several notable events.

First among these was Matthews v the United Kingdom, the European Court of Human Rights ruling which found that, by failing to organise elections in Gibraltar for the European Parliament, the United Kingdom was in breach of the European Convention for the Protection of Human Rights and Fundamental Freedoms of 1950. Until that point Gibraltarians had been disenfranchised, unable to take part in MEP elections. This long-fought right was earned just a year after the Conservative Lord Nicholas Bethell had been defeated by Labour in a bid to give Gibraltarians the vote.

Add to this picture that in 2001, following a ploy between Tony Blair and Spanish Prime minister Jose Maria Aznar, Peter Hain  - then Labour's Europe Minister - was tasked with developing a joint sovereignty deal by which Gibraltarians were to be faced with a fait accomplis plan over their future. In 2002 a referendum was held, in which 98 per cent of Gibraltarians voted to remain British. The sell-out deal eventually unravelled.


A politicised history

After three centuries of siege and political bludgeoning, Gibraltarians are a highly politicised population, a community genetically geared to battening hatches under siege and partying in moments of respite.

General elections on the Rock normally attract 80 per cent of the electorate, with referenda heading to 90 per cent. Our first European Parliament election in 2004 saw a 60 per cent turnout, which came close to double the UK norm. So, how would Gibraltar vote in 2009?

Despite clear support from Gibraltar's then opposition party, the Gibraltar Socialist Labour Party (GSLP) who returned to power in 2011, Labour received just over a third of the Gibraltar Euro vote in that election, with a majority enjoyed by the Conservatives. Many saw this as a punishment for the joint sovereignty deal.

But was it that deal alone which created disillusion with Labour? Other political choices have had a part to play too.

Ahead of the first 2004 election, the constituency of South West England was expanded to include the territory, a choice which felt like Westminster’s fudge on Gibraltar’s legally enforced right to vote for an MEP. True, there are shared naval traditions and they have the nearest matching weather, yet is seems improbable that any part of the UK could really conceive the immediate electoral interests of the people of Gibraltar, hemmed between North Africa and a Spanish state.

This disconnect of distance often results in misunderstandings. For instance, our local press is flooded with missives from a bizarre array of political figures and right wing parties suddenly inclined to juggle the concerns of Devon farmers with skirmishes with Spain. Much of it, no doubt, is done with good intention. But how does the centre-left leaning Gibraltar populace deal with overtures from the BNP?  And does UKIP really comprehend that an opt-out of Europe by the UK would be a political and economic disaster for Gibraltar?


This year’s elections

In practice, if there is unity on an issue on the Rock then its political leaders can deliver a block vote. Translated to a European election in 2014 - with a 20,000 electorate registered, amounting to some 16,000 votes - in a marginal UK constituency this could be a game changer for the favoured party.

Today’s Gibraltarian’s have their own concerns. Whilst the practical difficulties of living with a neighbour like Spain are largely unaffected by  Britain’s diplomacy, it is true that David Cameron has been holding Britain’s ground on the Gibraltar issue, saying many of the things Gibraltarians want to hear. After his unprecedented appearance at Gibraltar’s National Day public rally on 10 September 2013, David Cameron and his Conservatives would seem well placed to hold their lead from 2009.

The Labour team has found itself saying the right things recently too, though in a rather quieter voice. It has ideological alignments with the current GSLP/Liberal Gibraltar Government, which is steeped in socialist and trade union tradition albeit with large seams, it should be added, of Third Way styled politicians. Despite this, the Labour party really has a long way to go before it is trusted by Gibraltarian voters.

As for the Liberal Democrats, MEP Sir Graham Watson is among a team of MEPs from across the British political spectrum who have long and loyally batted for Gibraltar in Brussels and Luxembourg, where we would otherwise be abandoned. This is why the Liberal vote almost matched Labour’s at the 2009 vote.

Those who cast their vote this May might well be doing so as much to assert that it was a hard-won right as to send a muted signal to the UK political parties about how we judge their loyalty and performance.


The next step - an MEP of our own? 

In the end however, the fault for the pantomime that plays on our rocky stage is entirely our own. Having won the right to vote for an MEP, and therefore the right for local citizens to stand as one, Gibraltar should not have succumbed to aligning ourselves as a quirky addition to one of an already Euro-cynical collection of constituencies where we can have no real impact in relation to our own concerns and objectives. I believe we should have continued the fight for at least one MEP of our own in a Gibraltar constituency. 

So why the surrender? The answer is probably the political vanity of successive Gibraltar Chief Ministers. A Chief Minister on the Rock is a powerful individual, whether autocratic or collegiate in approach - the sort that the Spaniards would call el que corta el bacalao - "he who cuts and therefore distributes the saltfish". In a small place, that also means having to journey a continuous labyrinth of mostly unreasonable and undeliverable personal expectations.

The significance of a CM’s job derives not from that largely municipal role, but from their ability and necessity to manage relations with both Britain and Spain. The kudos for a CM who can handle the longstanding complexities of negotiating our British and Spanish relationships is huge.

Imagine, then, the rival a standing Gibraltar MEP would present - an international platform but none of the headaches of day to day management of the Rock. It is perhaps a competition that the CM, as captain of this challenging ship, neither needs nor desires.

No doubt Spain would object to us having our own man in what’s new? We have already ruled out their offer to vote for a Cadiz MEP, rather than to vote with South West England.

It is arguable that the success of Gibraltar and the motor for its high achievement has been thanks to, and not despite, the tensions that derive from the complex UK – Spain –Gibraltar trio.

That is why a few ugly queues at the border, imposed as they are now by Spain, will never solve anything.

The only path to resolution and normality in this region is tripartite dialogue between UK- Gibraltar and Spain.

Dominique Searle MBE is a journalist and editor of the Gibraltar Chronicle

Photo: Getty
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Gibraltar - impact of Brexit

Last week our editor took a general overview of some of the scenarios for Gibraltar if Britain were to leave the Euro. This week, as the atmosphere in the British Conservative Party becomes ever more toxic, Michael Castiel, partner at Hassans lawyers on the Rock, goes into more detail (this piece written before the Iain Duncan Smith resignation and subsequent arguments happened).

However unlikely it may prove, the prospect of Britain's withdrawal from the EU sends shivers through Gibraltar's financial services, gaming and tourism industries, which are at the core of Gibraltar’s economy. For, if Britain leaves the EU, Gibraltar goes too, and, should Brexit occur, it is Gibraltar’s relationship with the UK that as in the past, largely will shape Gibraltar's future.

Gibraltar joined the European Union in 1973 as part of the UK. While rights to freedom of services across borders of EU member states apply between Gibraltar and the rest of the EU, because Gibraltar is not a separate member state (and is in fact part of the UK Member State) those rights do not apply between Gibraltar and the UK. Instead a bilateral agreement, formalised almost two decades ago, gives Gibraltar's financial service companies the equivalent EU passporting rights into the UK. Accordingly and pursuant to such agreement, where EU rights in banking, insurance and other financial services are concerned, the UK treats Gibraltar as if it is a separate member state.

This reliance on the special relationship with the UK is recognised by both the Government and the Opposition in Gibraltar, and when the territory (which in this instance as part of the UK electorate) goes to the polls on 23 June, the vote to remain in the EU is likely to be overwhelming. This may have symbolic significance but realistically seems unlikely to influence the outcome. In actual terms, although some non-EU jurisdictions use Gibraltar and its EU passporting rights as a stepping stone into Europe, almost 80% of Gibraltar’s business dealings are with the UK.

But whether or not Britain maintains the 'special relationship' with Gibraltar, if Brexit becomes a reality, other factors will come into play, with the ever-present Spanish Government’s historic sovereignty claim over Gibraltar topping the list.

Recently Spain's caretaker Foreign Minister Jose Maria Margallo went on record that if the UK voted to leave the EU he would immediately 'raise with the UK the question of Gibraltar.' If this was to come about it could take one or more of several different forms, ranging from a complete closure of the border between Spain and Gibraltar, demanding that Gibraltar passport-holders obtain costly visas to visit or transit Spain, imposing more stringent border controls, or a frontier toll on motorists driving into or out of Gibraltar. The latter idea was in fact floated by the Spanish Government three years ago, but dropped when the EU Commission indicated that any such toll would contravene EU law.

Here, again, imponderables come into play, for much will depend on which political parties will form the next Spanish government. A Spanish government headed by the right wing PP party is likely to take a less accommodating attitude towards Gibraltar (the Foreign Minister having recently indicated that in case of Brexit the Spanish Government may opportunistically push once again for a joint sovereignty deal with the UK over Gibraltar) whereas a left of centre coalition will likely adopt a more pragmatic and cooperative relationship with Gibraltar in the event of EU exit.

The most significant changes to Gibraltar's post-Brexit operation as an international finance centre are likely to be in the sphere of tax, and while Gibraltar has always met its obligations in relation to the relevant EU rules and Directives, it has also been slightly uncomfortable with aspects of the EU's moves towards harmonisation of corporate taxes across member states.

Although it was formed as a free market alliance, since its inception fiscal matters have been at the root of the EU, but Gibraltar's 'special relationship' with Britain has allowed considerable latitude in relation to what taxes it imposes or those it doesn't. However, as is the case with other member states, Gibraltar has increasingly found in recent years its fiscal sovereignty eroded and its latitude on tax matters severely curtailed.

As in Britain, Gibraltar has benefitted from several EU Directives introduced to harmonise and support the freedom of establishment, particularly the Parent-Subsidiary Directive which prohibits withholding taxes on cross-border intra-group interest dividend and royalty payments made within the EU.

As a stepping stone for foreign direct investment, should Brexit come about EU subsidiaries could no longer rely on these Directives to allow tax-free dividend or interest payments to their holding companies based in Gibraltar. In the case of the UK, bilateral double tax treaties will no doubt mitigate the impact of the non-application of any tax related Directives. Gibraltar, however, is not currently a party to any bilateral double tax treaties. Accordingly, Gibraltar would either have to seek from the UK the extension of all or some of the UK’s bilateral tax treaties to Gibraltar (subject of course to the agreement by the relevant counterparties) or it would need to negotiate its own network of bilateral double tax treaties with a whole series of EU and non EU Member States. To say the least, neither of these options would be straightforward to implement at short notice and would need the wholehearted support of the British Government

Whilst Gibraltar’s economy is likely to be adversely affected should Brexit occur, there may be some potential benefits. An EU exit would result in fewer regulations and possibly may provide Gibraltar with greater exposure to emerging economies.

From a tax perspective, an EU exit would probably enable Gibraltar to introduce tax rules and incentives that are contrary to EU tax laws and would provide the Gibraltar Government more freedom to adopt competitive tax regimes that may be considered contrary to EU state aid rules. How possible or effective any such strategy would be is doubtful given the OECD driven anti-tax avoidance climate affecting all reputable jurisdictions whether within or outside the EU.

In this as well as other possible change much will hinge on any post-Brexit relationship with the UK - an issue which the Gibraltar Government addressed recently in a paper sent to Westminster's Foreign Affairs Committee. It stressed not only that 'EU membership has been an important factor in the development of Gibraltar’s economy' but also the importance of 'clarity as to the rights the British Government will protect and defend for Gibraltar in the context of its own negotiations.' 

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