Why Gibraltar is the last big unresolved problem of Brexit

Henry Foy

Financial Times

April 12. 2024

On the rocks

On the tip of Spain lies the last unresolved question after Brexit: Gibraltar.

Today, representatives from the UK, Spain, the European Commission and Gibraltar meet with hopes high they can finally broker a deal over the British territory’s relationship with the EU, writes Andy Bounds.

Context: Gibraltar is a sovereign British territory but claimed by Spain. For eight years the two countries have been negotiating how to create a friction-free border, while acknowledging the post-Brexit reality that the UK has left the EU’s single market and its free circulation of goods and people.

“This is an important opportunity to advance matters towards completion of a treaty deal,” said Fabian Picardo, Gibraltar’s chief minister, ahead of the meeting. “We are approaching this meeting constructively and with the desire to advance matters, insofar as we can do so safely and securely and without compromising any aspect of our sacrosanct sovereignty, jurisdiction and control.”

All sides say they are optimistic they can make progress in talks, which aside from Picardo will involve UK foreign secretary Lord David Cameron, Spanish foreign minister José Manuel Albares and Maroš Šefčovič, vice-president of the European Commission.

People briefed on the talks say they are not expecting an agreement but to make progress towards a solution.

A deal is in the interest of all sides. More than 15,000 workers cross the border daily to reach Gibraltar from one of Spain’s most impoverished regions.

And the 34,000 residents of the Rock rely on imports of food, medicines and other vital supplies from Spain.

The Spanish crown ceded the territory to the UK in 1713 but now claims it back, while the overwhelming majority of its occupants favour British rule.

The main problem is Gibraltar’s airport and its incorporated air force base. If people are to be able to cross from Gibraltar into Spain and thus the EU without checks, Brussels insists it must check passports at the territory’s airport.

But the UK has resisted the presence of Spanish border guards on its territory on sovereignty grounds. A possible compromise would be to use staff from Frontex, the EU border agency, but it remains sensitive.

Chart du jour: Expectations

The European Central Bank yesterday kept interest rates at an all-time high, signalling it would consider cutting in June. But markets are reacting to higher US inflation.

The new normal

The sun is out, gas prices are down and the EU’s energy commissioner has said that the bloc no longer needs its emergency energy regulations, writes Alice Hancock.

Context: In 2022 gas prices in Europe hit record highs of around €300 per megawatt hour, after Russia steadily turned off the taps to the pipes that had supplied more than 40 per cent of the bloc’s gas.

In response, EU energy ministers agreed to a series of crisis measures including reducing demand, sharing gas among member states and a highly contested gas price cap, which has never been used.

The laws were initially designed to last 12 months, but several have been extended to the end of this year.

Beyond that, the time has come “to let these emergency measures expire”, energy commissioner Kadri Simson told the FT, even though the EU is more than ever exposed to highly volatile markets for shipped gas.

“Many new pieces of legislation will help us to stabilise energy markets,” she said, pointing to two approved by the European parliament yesterday, that will regulate the bloc’s electricity market and its hydrogen and gas supplies.

The electricity market reform would, in particular, “give a boost to renewables” by giving them a “long term perspective” of the kind of revenues developers could expect, she said.

The Estonian politician, who does not plan to run in this June’s EU elections , said that the next energy commissioner had two challenges waiting in the in-tray.

One, to respect the bloc’s climate targets and “to enable this process that energy sector will be largely decarbonised”.

And second, to vastly scale up energy infrastructure — and funding for it. The dedicated Connecting Europe Facility’s energy fund currently amounts to €7bn, “not even enough to upgrade our electricity infrastructure”, she noted.

Far from it: recent estimates have put the bill at €800bn.