Is Gibraltar set to become a “centre of excellence in education” within the Mediterranean? (Shutterstock)
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University challenge: can the Rock build its first uni?

John Law of the British Council analyses the opportunities and challenges for Gibraltar’s ambitious higher education plans, and says playing to “niche” strengths could be the secret to success

What do the teams on the popular TV quiz University Challenge, now in its 21st series on the BBC, have in common with Gibraltar? The answer is that both face a tricky and teasing set of questions in pursuit of their education ambitions.

The role and purpose of a university is difficult to define, due to the broad diversity of institutions found around the world. Traditionally “seats of learning”, many have now evolved to fulfil a particular mission, perhaps focusing on serving their local community or region, providing vocational education, industrial links or innovative research. The biggest challenge for any university is getting that focus right: one that suits the environment and context in which it operates and through which it can derive a sustainable flow of funding. Ultimately, for its survival, a university must raise the aspirations and opportunities of its students and prepare them as global citizens.

So, you’re a small country and you want to establish your first university. If you are lucky enough to be Gibraltar, with its high employment, and strong, self-reliant 21st-century economy, you might be thinking, what’s the problem?

Gibraltar’s Education Minister Gilbert Licudi recently announced that a new institute for higher education will enrol its first cohorts by September 2015. Does this signal that Gibraltar fits the typical “university-ready” profile, having reached a certain level of wealth and international reputation?

Certainly, there are lessons to be learned from the increased internationalisation of higher education. The University of Malta, for example, has 11,000 students including 700 international students, within an island population of around 420,000. It participates in the EU’s Erasmus exchange programme and the Bologna process for compatibility of higher education across Europe, indicating the importance of the international dimension. The University of Middlesex opened an international branch campus in Malta in 2013, offering courses in business, finance and ICT. The rationale here is their recognition of Malta as regional centre for international business – with the information and communications technology industry already a main pillar of the economy.

Interestingly, the University of Middlesex also opened an international branch campus in Mauritius in 2010. Lessons from these and other international ventures may transfer and be usefully implemented, but Gibraltar’s case is far from “typical”.

With an absence of natural resources, but home to high levels of business acumen amongst its outward-looking 30,000 locals, Gibraltar is uniquely positioned to question how a new university might be designed to be “fit for purpose” within its geographical and social context.

Flanked by Africa and Europe, Gibraltar is a strategically important as both a political and economic partner within the region. This has nurtured a buoyant service-based economy, encompassing a wide range of flourishing businesses: tourism, finance, shipping, telecommunications, e-commerce and e-gaming. With a spectacular GDP per capita (globally ranked in the top 20), how can such success be translated to higher education provisions that serve its local community and develops Gibraltar’s knowledge-based economy? Perhaps by playing to its strengths and focusing on supplying graduate talent to niche businesses.

Finding the right partner will be critical

The prospect of creating a “centre of excellence in education” within the Mediterranean presents both challenges and opportunities. While no single road map works perfectly, it is unsurprising that Minister Licudi has embraced partnerships. He announced the institution will include a School of Health Studies, a collaboration with Kingston University. Finance studies, including courses on Gibraltar tax and law, will collaborate with the London School of Economics. This indicates a vision and mission that aligns with national and international ambitions.

But what of teaching and learning versus research? As systems and institutions internationalise, new opportunities for conducting cross-border research offer rich rewards. Researchers returning from overseas are significantly more productive than those who have never travelled (72 per cent of UK researchers published abroad between 1996 and 2012). Key to driving innovation will be Gibraltar’s ability to enhance capacity in niche, world-class research through developing international networks.

It is notable that the new university will offer niche developments such as research in sports science in collaboration with UEFA. The School of Life Sciences and Gibraltar Mediterranean Studies will be predominantly research-driven, including post-doctoral studies. A language centre will appeal to international students eager to learn English. Such combined assets will undoubtedly attract international students and faculty, creating potential to become an education hub similar to models in Hong Kong or Singapore, but attracting students from the African continent.

So what of the challenges? Attracting talented academics and researchers can be expensive and problematic. When e-gaming arrived in Gibraltar 15 years ago, competent staff were scarce.  Now the pool of talent is stable, but it has taken time to develop. Experience shows that transnational education arrangements can help bridge this gap, by providing visiting faculty while local talent is developed. This highlights the importance of a strategic approach, with an intention to develop and progress the university over time.

It is understandable why the Gibraltar government has sought advice from the Seychelles, (90,000 population), which successfully launched its own university in 2009. The key message for Gibraltar must be this: finding the right partner is critical. International, multilateral partnerships will develop sustainable and mutually beneficial relationships. Only then will new generations of scholars interact and learn from each other in innovative ways. Who knows – perhaps a future series of University Challenge will feature a team from Gibraltar’s first institute for higher education?

Dr John Law is a higher education adviser with the British Council 

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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