Rock that sticks in Spanish throats

Date: 02/10/1997

IT IS part of the European Union but not completely. It is a dependent territory of one member state, but is claimed by another as its own. The people who live there say they are independent and proud to be so. Welcome to Gibraltar.

Essentially a very big rock, Gibraltar is a tiny territory in the straits between the southernmost tip of Spain and Morocco in North Africa.

The Rock itself is 1,400 metres high, covers an area of just 6.5 square kilometres and accommodates a population of 30,000.

It was captured from Spain by the British in 1703 and in 1713 Madrid ceded the territory to London 'in perpetuity'. At the time, the Rock was a crucial strategic asset as controlling Gibraltar meant controlling access to the entire Mediterranean sea.

Ever since they gave the territory up, the Spanish have argued that the 1713 deal was not worth the paper it was written on and have claimed it back.

Indeed the whole issue blew up again this week when the Gibraltan government opened a small office in Brussels.

Spain warned that the representation should not be used as a means to enter into political negotiations with the EU institutions.

Government officials on the Rock countered that they were simply following a practice which is increasingly popular with the Union's city and regional authorities. “Our official line of communication will remain the UK Representation to the EU,” said one.

Gibraltar's capacity to form the grit in relations between Spain and the UK was also underlined in the aftermath of the June Amsterdam summit as a dispute erupted which, for a time, threatened to delay the signing ceremony for the new treaty taking place today (2 October).

Madrid, anxious that its claim over Gibraltar should not be diluted, wrong-footed London and Dublin in the dying moments of the summit negotiations by successfully changing the wording on UK and Irish participation in certain border-free activities under the Schengen Convention.

The diplomatic battle which ensued was only resolved when an additional declaration was added to the treaty confirming that the European Commission would act as honest broker if any dispute were to arise between the two non-Schengen members and other EU countries.

Gibraltar's current legal status is as a British dependent territory with its own government - first elected in 1964 - responsible for the day-to-day running of the Rock's affairs. In 1969, the territory drew up its own constitution and held a referendum in which citizens voted to retain basic political and economic links with London.

In the same year, following a United Nations enquiry into the Rock's future which Madrid considered favoured its claim, Spain closed its border with Gibraltar. It was only reopened in 1982, after Spain became part of the then European Community (EC).

Gibraltar itself joined the EC along with the UK in 1973, but is not covered by the Common Agricultural Policy or European Union rules on value added tax and the free movement of goods.

Since Spanish accession, London and the Gibraltarians themselves have regularly complained that the border controls between the Rock and the Spanish mainland remain excessive. Citizens of Gibraltar complain that they regularly have to wait for hours, often in hot and uncomfortable conditions, before being allowed to cross the frontier.

Critics argue that as the trip between the two territories is a voyage within the EU, the delays amount to a direct contravention of the basic Union principle of free movement of people.

“In legal terms, there is no justification for what the Spanish are doing. There is no frontier west of the Polish-Russian border where this level of petty systematic harassment continues. The queues are there because of sheer bloody-mindedness,” claims one long-time observer of politics on the Rock.

But Madrid counters such criticisms by pointing to Gibraltar's reputation as a major conduit into the Union for contraband cigarettes and cannabis from North Africa. In addition, the Spanish argue that as the UK is not a signatory to the Schengen Convention, they are obliged to continue with Gibraltar frontier checks.

“If the UK signed Schengen, we could open up the border,” explained one Spanish official.

London has repeatedly said it has no intention of joining the accord. Indeed, the whole Schengen issue illustrates the UK's rather ambivalent attitude towards the Gibraltar question.

“The UK's position on Gibraltar often seems a bit weak. They are pushing for an open border between Spain and the Rock, but are not trying to do that in a wider European context,” explains Tony Venables, head of the Euro Citizen Action Service (ECAS).

ECAS and the Gibraltar Association for European Rights (GAER) recently published a report outlining a series of practical and largely non-political measures which they felt could significantly relieve border congestion.

The document, entitled Report on Gibraltar and the European Union's Rules on the Free Movement of People, suggested such basic ideas as 'streaming' traffic crossing the border with different lanes for private cars, commercial vehicles and coaches.

The most recent event to rekindle the Gibraltar debate was this summer's hand-over of Hong Kong by the United Kingdom to China.

Many Spanish pointed out the irony of an EU member state giving up one dependent territory to a regime regularly criticised for its human rights record, but not prepared to make a similar concession to a Union partner.

Despite its somewhat turbulent relations with the rest of the EU, Gibraltar has in recent years attempted to build itself a reputation as a tax haven and financial centre. It hopes eventually to be able to compete with cities such as Luxembourg and Dublin.

But the task will not be easy. One of the first things the territory will have to do is clean up its somewhat tarnished image as a haven for smugglers.

Since it hit a low point in this respect in the early 1990s, the Rock has made an effort to put its house in order. However, the Spanish argument that effective border controls are needed to prevent contraband entering the rest of the Union still holds some water.

Gibraltar does indeed appear to be an attractive place to do business. The Rock applies no capital gains tax, sales tax, VAT, inheritance tax or wealth tax. The main levies imposed are income, corporation and withholding tax, although non-Gibraltarians can apply for exemptions from or reductions to these charges.

The Rock was also one of the first territories to introduce the idea of 'exempt companies'. Under this scheme, businesses can apply to buy what are known as tax exemption certificates. These documents are valid for 25 years, during which time the company has to pay a small administrative fee every year but is exempt from all other taxes.

The Rock is also hoping to develop its tourism industry. Despite its small surface area, the Gibraltar authorities feel it has enough attractions to lure pleasure-seeking tourists.

But for the industry to really flourish, the whole question of delays and inadequate infrastructure at the border needs to be resolved. At present, people entering the territory on foot still face the disconcerting experience of having to walk across Gibraltar airport's runway in order to reach the Rock's only city.

But many critics argue that the Rock's political status will probably always remain precarious. It is simply too small a fish to risk opening up a serious internal EU rift over.

“Unfortunately, apathy is not a hangable offence under EC law and Gibraltar is not a big enough issue to rock the boat over,” said one expert.