Brexit and Gibraltar

One of the best tweets occasioned by Brexit was sent not long after the polls closed on the day of the referendum:

The speed of the count was not the only impressive electoral feat of the Gibraltar vote that night. Ninety-six percent of those who voted in Gibraltar wanted the UK to remain in the EU. This was by far the highest support for EU membership in any area that voted in the referendum.

But what are the consequences for Gibraltar of that referendum’s overall vote for Brexit? Has the vote for Leave placed the Rock in a hard place?

Gibraltar is an “overseas territory” of the UK of about two and half square miles. It has no natural resources and until fairly recently did not even have a secure supply of drinking water. The population is just over 30,ooo. The UK is still responsible for Gibraltar’s external relations and defence but little else: the territory has its own government, its own tax system, its own currency and its own legal system.

But the territory has a gross domestic product of about £1.5bn. In terms of GDP per head, Gibraltar is one of the most affluent places in the world. And that is primarily because of its relationship with the UK and the EU and a thriving services sector linked to the European single market. Brexit puts all this at risk, as last week’s House of Lords report sets out.

When the UK joined the EU in 1973, Gibraltar became part of the Union. From 2006, after a court case, Gibraltarians got to vote for the European parliament (as part of the south-west England constituency). And so, as EU citizens, they got to vote in the referendum. As an overseas territory Gibraltar is classified differently from the UK “Crown Dependencies” of Jersey, Guernsey and the Isle of Man, which have never been members of the EU and so did not vote in the referendum.

Gibraltar has developed a distinct and complex relationship with the EU. It is part of the single market, and it gives effect to the freedom of movement of people, services and capital. Some 60 per cent of its law is based on EU law, and the government is proud of its record of being up-to-date with implementation of Union laws. Few if any other members of the EU are as conscientious as Gibraltar when it comes to taking EU law seriously.

But Gibraltar is not a participant in the common commercial policy (the customs union), the common agricultural policy or the common fisheries policy. There is no EU obligation to levy VAT. There is no freedom of movement of goods. And, like the UK, Gibraltar is not part of the Schengen area for “borderless” movement of people nor part of the eurozone. Gibraltarians are good Europeans but on their own terms.

At the referendum there are two broad but interlinked reasons why Gibraltar was so emphatic in its support for UK membership of the EU, and these reasons in turn indicate the two broad but interlinked problems that Brexit now presents for the territory.

The first reason is that the highly successful Gibraltarian economic model is highly dependent on EU membership. Although 90 per cent of the territory’s trade in financial services is (nominally) with the UK, these services — notably insurance and online gambling – are in turn reliant on Britain having access to the single market. The majority of the workforce that produces these services daily cross the border from Spain (when Spain lets them). The economy of Gibraltar is an exemplar of EU cross-border economics, both in terms of inputs and outputs. Gibraltar is rich because its relationship with the EU and UK make it so.

The second reason is the country across the border: Spain. Gibraltar was a Spanish possession for the 250 or so years between 1462 and 1704. The territory was formally ceded to the British in 1713. Spain considers it as Spanish even though for most of Gibraltar’s history it has been either Moorish or British.

One primary aim of Spanish foreign policy is to regain at least some element of sovereignty over the territory of Gibraltar, if not complete sovereignty then joint sovereignty. And without exaggeration, the means by which it wants to obtain that policy goal has often been by intimidation. This was especially the case for the five years after 2010. In 2014, the normally restrained House of Commons foreign affairs committee reported that the “behaviour of Spain toward Gibraltar was unacceptable” and amounted to “a campaign of harassment and intimidation”.

The documented detail in that report was extraordinary, especially when one considers that Spain and the UK are (supposedly) close EU and Nato allies. Gibraltar was subject to ongoing coercion and interference by land, sea and air. The land border could be subject to sudden delays of up to six hours; the territorial waters saw regular violations of sovereignty by Spanish police and other vessels; and the Spanish government reneged on its previous agreement about Gibraltar’s airport and actively obstructed the territory’s attempts to be part of the EU aerospace regime.

So frequent and troublesome were the Spanish threats to Gibraltar that between 2010 and 2014 the Spanish ambassador in London was summoned so regularly to the UK foreign office that only the Syrian ambassador was summoned more often. As such a diplomatic summons is drastic in any circumstances, for it to happen routinely with a fellow EU member state was remarkable. No other EU ambassador was summoned once in the same period.

To an outsider, this Spanish aggression toward Gibraltar looks not only spiteful and petty but also counter-productive. Gibraltar is essential to the adjacent Spanish economy of Andalucia, and the territory accounts for about a quarter of Andalucia’s GDP. The vast majority of the thousands of cross-border workers are from the local Spanish region. So when Spain hurts Gibraltar, it also hurts a part of itself that otherwise has an unemployment rate of 35 per cent. But the Madrid politicians seem not to care.

More recently, however, with the new Spanish foreign minister Alfonso Dastis (a former diplomat), Spanish policy seems to have become more conciliatory. But only last year his predecessor said that in the event of a vote for Brexit, the Spanish government would re-assert its sovereignty demands the “next day”. There is no inherent reason why Spanish policy cannot take an intimidation turn again. There just has to be a change of whim in Madrid.

And this is the importance of the EU for Gibraltar. Although Spain from time to time was able to use the EU institutions to advance its claims on the territory, in general the EU has provided the means by which Gibraltar could check Spain. Before Spain joined the EU’s predecessor in 1985 there had been a hard border; since 1985 there has been (on the whole) a collaborative and free-flowing border to the mutual benefit of Gibraltar and the adjacent Spanish region, made possible by the EU and its institutions.

In 2013-2015, for example, it was the three formal visits by the European Commission that ensured the excessive delays at the Spanish border were brought to an end. The Gibraltarians also have the last resort of taking enforcement action against Spain at the European Court of Justice to allow the free movement of EU people over the border. Again and again, EU law and policy provided Gibraltar with a legitimate basis for checking intimidating Spanish practices.

Brexit, therefore, does not so much create new problems for Gibraltar as remove the way older problems were being solved. (This is comparable, of course, to how mutual EU membership of both the UK and the Republic of Ireland proved convenient get-arounds for knotty border issues in respect of Northern Ireland.) With the European Commission and the European Court of Justice out of the way, there may soon be no practical ways to address a return by Spain to intimidation and obstruction.

The Gibraltarian government is seeking to be upbeat about Brexit. The chief minister makes the valid point that, the occasional Spanish intimidation aside, the territory shows how a free-flowing border can bring prosperity even when there is no common commercial policy. And the UK in turn has stated that it will ensure Gibraltar’s continued access to the UK market when the EU relationship is removed between Britain and its overseas territory.

For the tourist, Gibraltar’s elaborate attachments to the UK – from Winston Churchill Avenue to the copycat police helmets – can make it seem like a Britain in miniature. But the post-1985 history of Gibraltar shows that economic interdependence and a collaborative border can (generally) be possible without a customs union. It also show that there will be many new and revived inconveniences once there is no longer access to EU law and institutions. In this way, Gibraltar is also perhaps an example of Brexit in miniature.