Chief Minister Fabian Picardo
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The Gib Statesman: Chief Minister interviewed

Gibraltar's current Chief Minister Fabian Picardo was elected on a campaign of change and claims to have brought radical reform to the Rock’s political framework. Charlotte Simmonds hears the backstory.

Fabian Picardo, Chief Minister of Gibraltar and leader of the Gibraltar Socialist Labour Party (GSLP), is sitting in the front room of Gibraltar House in London, drinking a cup of Earl Grey. It’s four o’clock. Light streams in through wide windows facing the Strand and, as he sits with tea in hand, the quintessentially British scene befits this politician, who governs a territory that has been part of the UK for over 300 years.

Yet it turns out that tea breaks are an infrequent occurrence in Mr Picardo’s busy schedule. “I only drink it two or three times a year,” he confides. “I know some people who drink tea all day, but for me it’s strictly coffee in the mornings – and I don’t often get a chance for a hot drink in the afternoon.”

Picardo is in London for a full week of meetings, including sit-downs with the Labour leader, Ed Miliband, and the Minister for Europe, David Lidington. He is here with his Deputy Chief Minister and long-time colleague Dr Joseph Garcia, who leads the Liberal Party of Gibraltar, to discuss issues that have been high on the political agenda lately: increased border tensions with Spain, the forthcoming elections to the European Parliament and Gibraltar’s status in the EU.

“I say to everyone that Gibraltar’s most important relationship in the world is with the UK,” Picardo tells me, “but that our second most important is with Spain.” While he says the former is in “a golden era” and that the current parliament “thinks instinctively like Gibraltarians on our issues”, the latter has entered a more troubling period.

Since the conservative Partido Popular was elected in Spain in 2011, the country has returned to a staunchly anti-Gibraltar outlook. On its watch, incursions into Gibraltar’s territorial waters by Spanish government vessels, a row over the expansion of an artificial reef built by marine conservationists, and an increase of over two hours in the average border delay since 2012 (Gibraltar has submitted more than 500 complaints about this to the European Commission) have all occurred, and are seen as attempts to undermine the Rock’s existence.

Picardo laments this backtracking, in the light of a 2002 referendum in which 98 per cent of Gibraltarian voters rejected a proposal for joint Spanish-British sovereignty. This was viewed as a turning point in the territory’s efforts to decide a future for itself. It was followed in 2005 by a trilateral dialogue in which British, Spanish and Gibraltarian officials resolved a number of critical disputes. By 2006, Gibraltar and the UK had ratified a new constitution that advanced a more mature and independent relationship between the pair. Border fluidity improved, Gibraltar received a dialling code, and the Spanish government opened a cultural institute in the territory’s urban centre.

“The Partido Popular made it clear while in opposition that it was against the dialogue and would wreck any attempt to work with us unless it saw movement on the issue of Spain’s claim to sovereignty,” he explains. “Things were hugely positive when the trilateral process began, particularly when Miguel Ángel Moratinos [Spain’s foreign minister in the Socialist government of the time] visited Gibraltar in 2009.” He was the first to do so in three centuries.

“Since then it’s been the complete opposite,” Picardo continues. He says the Partido Popular has “fought it out at the frontier” and tried to choke Gibraltar’s economy. “I sincerely hope this relationship will change, and I believe it can,” he tells me. “We should be exploiting our proximity, our cultural nuances and our bilingualism.”

From an economic perspective, Gibraltar has the opportunity to support neighbouring Spanish communities. “Gibraltar creates about 10,000 jobs in the hinterland, and we could easily see that number become 20,000 or 30,000 in a region with 40 per cent unemployment,” Picardo says. “I recently learned that Gibraltar, as an employer, is the third largest in Andalusia. And yet we’re getting whipped daily by Madrid rather than thanked and encouraged to do more.”

Clashes over the territory’s fate might make the most noise internationally, yet most of Picardo’s agenda has been domestic. In fact, he’s trying to reshape the Rock’s entire political system.

Picardo was politicised at an early age – his youth coincided with a decisive time in Gibraltar’s history in the late 1980s, when the outspoken founder of the GSLP, Joe Bossano, was promising a future of self-sufficiency.

“There was a sense at the time that Gib­raltar was emerging,” he recalls. “Bossano’s mantra was that you could not have the right to self-determination if you were not a self-sufficient people. By the late Eighties, Gibraltar had seen the same political party – the AACR [the Association for the Advancement of Civil Rights] – in power for 40 years. Economically, we were moving away from the funding and control of the British Ministry of Defence. We needed to find new industries. Bossano showed us what our future could entail if we were prepared to work hard enough. Everyone felt they had a part to play in that generation, and I saw myself as someone who could advance Gibraltar’s case internationally.”

Picardo studied law and went on to join the GSLP during the 16 years it spent in opposition. From 1996 to 2011 the territory’s governing party was the Gibraltar Social Democrats (GSD), a centre-left party that inherited the socialist direction established by Bossano. Picardo accepts that the economy expanded under the GSD’s leadership but claims that by the end of its term the public had grown restless.

“The people of Gibraltar were craving modernisation. They wanted to see a completely different approach to politics. Under the previous administration, for example, parliament only met two or three times a year, which meant questions raised in January could take until July to answer.”

The GSLP campaigned in 2011 on the slogan “It’s time for change”, armed with a manifesto of commitments 80 pages long.

“Change is the most successful slogan in politics, but you can only deploy it at the right time,” Picardo says shrewdly. “We hit that moment where the people and the opposition party were on the same page, and it resonated.”

Parliament now meets ten times a year and “Chief Minister’s Questions” has become a televised occasion, in keeping with the Westminster tradition. Picardo calls himself “a parliamentarian” and enthusiastically recalls his visit to PMQs earlier that day. “Isn’t it fantastic?” he chuckles. “A real bearpit of a debate!”

His administration advocates an ethos of transparency. Gibraltar’s first Freedom of Information Act is soon to be published, and the government’s Planning and Development Commission has been overhauled to make its proceedings public. Picardo also appointed the Rock’s first Minister for Equalities, Samantha Sacramento, who succeeded in passing the Civil Partnerships Act this March, ending legal discrimination against same-sex unions. “We’ve crossed a Rubicon in Gibraltar,” he says of the new law. “We are moving in a direction of openness.”

Picardo says accountability and debate are what motivated him. “I’m not in politics for something called ‘power’,” he explains. “I’m here because I want that exchange, that accountability. What I love more than anything about being a politician in Gibraltar is that the people never let me forget that I’m just Fabian, that guy they put there. They can remove me whenever they like.”

If being held accountable is what Picardo craves, than he’s governing the right people. Political apathy isn’t in Gibraltar’s vocabulary: voter turnout at election time often exceeds 80 per cent, and those who don’t think the GSLP is setting the right agenda make their opinions known. The strongest voice of discontent comes from the opposition Gibraltar Social Democrats, who have particularly criticised the government’s multimillion-pound public spending plan and the “lack of clarity” in its thinking around the intention to join the Schengen Agreement and the EU’s Customs Union, both of which could affect local business and investment. Although Picardo cuts an affable public figure, many in the GSD camp accuse him of hiding poor policy behind a “populist smokescreen”.

“The time had come when my predecessor [the former Chief Minister and GSD leader] Peter Caruana was too much the protector of his own style,” Picardo says, commenting on the parties’ differences. “Europe had changed a lot while he was in office and a generational shift was needed. I represented that from Peter, just as Peter represented that from Joe [Bossano].”

Of Gibraltar’s culture of debate, he says: “We are 30,000 people with 30,000 opinions. You don’t get people in Gibraltar who think politics doesn’t matter at a national and international level.”
Picardo talks passionately of the territory’s struggles and achievement. You seem proud of Gibraltar, I say.

“I’m proud of Gibraltarians,” he retorts, “but I’m not proud of Gibraltar. I’m in love with Gibraltar. It’s a completely different emotion, and not one that’s exclusively mine. I think that’s the reason we have managed to succeed – all of us have put our shoulder to the wheel and found the role we have to play in advancing our collective cause.”

For more from the NS and Gibraltar media hub visit: newstatesman.com/gibraltar
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Charlotte Simmonds is a writer and blogger living in London. She was formerly an editorial assistant at the New Statesman. You can follow her on Twitter @thesmallgalleon.

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.'