Memorandum submitted by the Chief Minister,
Government of Gibraltar
A. THE CURRENT
1. The actual commencement of the current tension
between Gibraltar and the Spanish Government can be traced back
to a recent fishing dispute and its resolution. This has led to
Spanish reaction on a broad front, as follows:
(1) Measures at the border, leading to inordinate
(2) Accusations against Gibraltar of non-compliance
with EU directives.
(3) Accusations against Gibraltar of drug
smuggling, drug money laundering and all manner of serious criminal
behaviour and related accusations against Gibraltar's financial
(4) Accusations (persistently articulated
in the Spanish press by Spanish Ministers) that we are a "parasite"
(5) Threats to deny overflight rights over
Spanish airspace to civil airliners flying to Gibraltar.
(6) Threats (occasionally carried out) to
withhold recognition of driving licences issued in Gibraltar to
residents of Gibraltar.
(7) Threats to withhold recognition in Spain
of Companies incorporated in Gibraltar.
Each of these issues (including the fishing
dispute) is now considered separately and in detail. Although
the public articulation of these threats and accusations can be
traced in time to the resolution of the fishing dispute, they
are part of a wider political agenda as can be seen from the document
tabled by Sr Matutes in December 1997 by which he made the so-called
"Matutes Proposals" on sovereignty.
The Fishing Dispute
2. In 1991, the Gibraltar House of Assembly
passed the Nature Protection Ordinance which (amongst many other
nature protection measures both on land and sea) prohibited the
use of nets and sea bed raking methods of fishing in Gibraltar's
waters. Notwithstanding this, between 1991 and 1997, Spanish fishermen
continued to fish in Gibraltar waters in breach of this law. Prior
to 1997, the fishermen would stop fishing and leave Gibraltar
waters when asked to do so by the Gibraltar law enforcement agencies
thereby recognising their authority and British sovereignty, jurisdiction,
and control over the waters. There were very isolated cases of
arrest and prosecution.
3. In 1997, Spanish fishermen began to refuse
to leave when asked to do so by the Gibraltar authorities alleging
that they recognised neither the validity of Gibraltar's laws
nor the authority of Gibraltar enforcement agencies to enforce
them because they were Spanish waters. This defiance, which was
based on political argument, therefore raised the fundamental
issue of sovereignty, jurisdiction and control of Gibraltar's
waters. In addition, fishing was now taking place in more provocative
circumstances in terms of numbers, size and location of boats.
4. On 23 March 1998 and September 1998 I held
meetings with the representatives of the fishermen in an attempt
to persuade them to return to the status quo prior to 1997. The
Gibraltar Government's position throughout was not that Gibraltar
should now have zero tolerance policing of the Nature Protection
Ordinance (which had not been the case between 1991 and 1997)
but that both sides should return to the status quo that prevailed
between 1991 and 1997. On Gibraltar's part, this meant returning
to the pattern and style of enforcement of the Ordinance that
had enabled some fishing to take place (but without the law ceasing
to apply or its validity challenged). On the fishermen's part
it meant a return to recognition of Gibraltar's laws and our ability
to legislate for those waters as well as respect for the authority
of the Gibraltar law enforcement agencies, thereby ending defiance
of British sovereignty, jurisdiction and control over the waters.
This was to be manifested by unquestioning obedience to orders
to leave, whenever given, by the Gibraltar Police and other enforcement
agencies. These were the fundamental and politically most important
aspects of the matter for Gibraltar. The Gibraltar Government
made several public statements to this effect that this was its
position. For their part, the Spanish fishermen and their representatives
made statements to the effect that they were only fishermen interested
in earning a living and not concerned with sovereignty issues
and that they were willing to respect our authority in the waters.
5. In October 1998, there were a series of confrontations
in the waters around Gibraltar. There was widespread and persistent
incursions into British waters not just by Spanish fishermen but
by Spanish Guardia Civil and Customs boats and helicopters purporting
to "protect" them. The RGP and MoD in Gibraltar said
that they were unable to deal with these incursions because they
lacked appropriate resources, i.e., big enough boats. This situation
continued to the end of January 1999.
6. Discussion then ensued between HMG and the
Spanish Government culminating in what was described by HMG as
a verbal understanding that there should be a return to the more
harmonious situation that prevailed between 1991 and 1997. Although,
according to the British version, an attempt was made to particularise
the "enforcement pattern" between 1991 and 1997, at
no time was there any agreement to break Gibraltar's laws. On
the 6 October 1998 the FCO said in a press statement that there
was no question of the Foreign Secretary "making a deal"
on fisheries with Sr Matutes or imposing a solution on the Government
of Gibraltar. I attach as Appendix 1 hereto a copy of a letter
dated 5 November 1998 addressed to me by Joyce Quin which is self
explanatory. This letter was published with the Minister's approval.
7. For its part, the Spanish Government publicly
claimed an agreement to allow fishing and issued a note on the
3 November 1998 stating the terms upon which they claimed having
reached a "compromise, understanding or agreement" with
the United Kingdom on 5 October 1998. This note, and an English
translation, are attached as Appendix 2. This note stated inter
alia the terms upon which fishing, in what they described
as "the disputed waters", was allowed. This was
in contradiction to what the UK Government had itself publicly
stated was the verbal understanding reached between the two Foreign
Ministers. The Spanish Government was basically asserting that
Spanish fishermen could fish with impunity despite the existence
of the law of Gibraltar prohibiting such activity as if they were
(subject to certain limited and defined conditions) exempted from
the Nature Protection Ordinance.
8. Despite the clear contradictions between
the published British and Spanish versions of the "understanding"
and despite the fact that RGP and MoD assets in Gibraltar (none
of which are constitutionally available to the Gibraltar Government)
were being deployed against the Spanish fishermen, the Spaniards
persistently and aggressively blamed me for ignoring and for undermining
the "understanding" between London and Madrid.
9. The situation at sea continued to deteriorate
throughout most of December 1998 and January 1999 culminating
in the arrest of a Spanish fishing vessel on 27 January 1999 and
the seizure of its nets. Following this, the Spanish fishermen
carried out a blockade of the land frontier on the 28 January
resulting in a day long closure of the frontier and serious public
order incidents on both sides.
10. In a press statement issued on 29 January
1999 the FCO called for this problem to be resolved through local
dialogue. This is attached as Appendix 3. Given the obvious discrepancies
between London and Madrid's versions of their understanding, the
rapidly deteriorating law and order situation, the damage that
was being done to cross border relations and that the respective
aspirations of the Gibraltar Government and the Spanish fishermen
(as summarised at paragraph 4 above) appeared to be reconcilable
and compatible, the Gibraltar Government decided to act.
11. On 29 January 1999, the Gibraltar Government
took the initiative to revive discussions directly with the representatives
of the Spanish fishermen. The Government's objective was to unambiguously
agree what constituted, for both parties, a return to the status
quo between 1991 and 1997 and the implications of that. This was
achieved and a written understanding was reached on the 3 February
1999. A copy of it and an English translation is attached as Appendix
4. Both sides expressed satisfaction with the outcome. The UK
Government welcomed the understanding. Attached as Appendix 5
is a copy of an FCO press statement dated 3 February 1999 to that
effect. The Spanish Government, for its part, questioned the competence
of the Gibraltar Government to enter into any form of understanding
or agreement and regarded it as a provocative attempt to overrule
the agreement which they claimed had been reached by the two Foreign
Ministers in October 1998.
12. Following the announcement of the understanding
reached between the Gibraltar Government and the Spanish fishermen,
the Spanish Government amongst other measures, introduced restrictions
at the land frontier.
13. As a result of restrictions imposed by the
Spanish Government at the land frontier vehicles travelling from
Gibraltar into Spain have, since 29 January 1999, been subjected
to lengthy delays which persist, on average, of between one to
three hours. In their worst moments they have reached six hours.
14. These delays are artificially created and
are completely unnecessary. Up to 28 January 1999, the usual average
waiting time per vehicle leaving Gibraltar to enter Spain fluctuated
from 10 to 30 minutes depending only on volume of traffic. Occasionally
there were longer delays. After that date, the time range for
delays has been between 46 to 196 minutes (on occasions with maximum
peaks of five to six hours). The overall average per vehicle was
just under 1½ hours.
15. The movement of vehicular traffic has fallen
by around two-thirds, down from an average of 5,225 to 2,116 vehicles
per day. This dramatic fall from vehicular movement, which is
a result of the prolonged delays, makes the increase in waiting
time even more extraordinary. The average rate of flow has been
37 vehicles every half hour compared to a pre 29 January 1998
figure of 150.
16. The restrictions are also being applied
in a discriminatory manner. Between 1700 and 1800 hours, which
is the peak time when Spanish frontier workers are returning to
Spain, the Spanish authorities dramatically hasten the flow to
minimise the delay to Spanish workers. Appendix 6 contains detailed
statistics analysing the situation up to 21 March 1999.
17. One of the arguments deployed by the Spanish
Government at the start of the restrictions was that these measures
were necessary because of Gibraltar's non-membership of Schengen
and the Customs Union. None of these excessive frontier controls,
be they for vehicles or pedestrians, operate between the port
of Algeciras (which is an external frontier) and Morocco nor do
they operate at the border between Ceuta (Spanish territory) and
Morocco. Moreover, none of these controls are customary anywhere
in Europe, not even between an EU Member State and a non EU Member
State. It is therefore clear that Spain is using Gibraltar's non-membership
of Schengen and the Common Customs Union as a pretext to apply
politically motivated restrictions at the border. Statements by
Spanish Government Ministers make no attempt to conceal this fact.
The Gibraltar Government believes that this action by Spain constitutes
a flagrant and insufficiently challenged breach by her of her
EU obligations and Gibraltar's (and other EU nationals') right
to free movement of people within the community across what is
an internal EU border.
18. Suggestions that the position is now "much
better" because the queues are down to one and a half or
even one hour, are dangerous and misleading, for the following
(1) It ignores the fact that all degree of
unnecessary, artificially created delay is unacceptable. These
excessive delays are being caused, amongst other things, by a
reduction in the customs channels of the usual two (three at peak
times) channels, to one.
(2) It ignores the fact that the volume of
vehicular traffic into Gibraltar (and therefore out of Gibraltar)
is greatly reduced (currently 40 per cent of January levels) which
is, of course, the Spanish objective.
(3) It ignores the fact that the relevant
criteria is "flow rate" since this takes into account
fluctuations in volume. The Committee will be able to assess these
"flow rates" at Appendix 6.
(4) Risks allowing the Spaniards to interpret
such remarks as licence to establish the current thoroughly unacceptable
position as the new "norm" at the border.
19. Talk of the current position and the danger
of allowing it to become the new "norm" masks the fact
that even the pre-current tension regime at this border has always
been abnormal by any European standards. Spain has the obligation
to deploy sufficient resources at the border to enable her to
carry out frontiers controls without undue delay. Yet:
(1) There has always been a single immigration
officer (requiring a single file) for vehicular traffic;
(2) There is no red and green customs channel
system. Every car is subjected to examination.
20. It is unacceptable that Spain be allowed
to use the frontier as a political instrument. Spain has EU obligations
and we and others have EU rights of freedom of movement and economic
rights which are being interfered with. Both HMG and the EC Commission
must be much more vigorous and persistent in achieving enduring
and continuous Spanish compliance in this respect.
Accusations against Gibraltar of non-transposition
21. Initially, the Spanish Government linked
the frontier restrictions to the fishing dispute; then it attempted
to justify them by reference to allegations of non transposition
of EU Directives; when these were shown up to be false the pretext
became allegations in relation to money laundering and financial
22. The Spanish Foreign Minister has attempted
to justify the restrictions on the basis that Gibraltar has not
met its Community obligations. In a letter to the President of
the European Commission, the Spanish Foreign Minister complained
that a total of 66 EU Directives have not been implemented in
Gibraltar. This is not true.
23. On 11 February 1999 the UK Permanent Representative
to the European Union, Sir Stephen Wall, wrote to the European
Commission President's Chef de Cabinet (in response to the Spanish
Foreign Minister's letter to the President of the Commission)
pointing out that of the 66 measures alleged by Spain not to have
been implemented in Gibraltar.
Thirty-nine had in fact been implemented;
twelve were inapplicable because
of Gibraltar's legal status within the EU;
two do not require transposition
because Gibraltar is too small to have the kind of institutions
to which they apply;
three are listed twice in the Spanish
two appear not to exist;
leaving eight which were in the final
stages of transposition.
24. Of the eight (then) outstanding items four
(relating to aviation noise at the airport) have subsequently
been transposed. This is, in itself (and anecdotally in this context),
ironical because Spain systematically seeks Gibraltar's exclusion
from all aviation measures (see paragraph 98 below) and at the
very time that we were required to transpose these four aviation
noise directives, Gibraltar was excluded under pressure from Spain,
from a fifth aviation noise directive (the "Hush Kits Directive"
which is sister to one of the four).
25. The British Ambassador to Madrid, Sir Peter
Torrey wrote to the Spanish national newspaper, El Mundo, confirming
26. The Gibraltar Government welcomes and appreciates
HMG's robust defence of Gibraltar's fine record in this respect
but would wish it to be done on a more widespread and public European
basis (as Spain has done with the accusation) so that Gibraltar
is not unfairly tainted as "non complying" Europeans
in the minds of other Member States and European public opinion,
which is Spain's objective in this regard.
27. The reality of the matter is that Gibraltar's
EU directives transposition record is now very good. We devote
a massive (by reference to our size) amount of financial, administrative
and legislative resources to directives implementation. In his
letter of 11 February 1999 to the Commission, Sir Stephen Wall
"As the Commission is aware, Gibraltar has
made strenuous and successful efforts to catch up with a backlog
of implementation, which represents an enormous burden for Gibraltar's
tiny public administration . . . The facts speak for themselves."
28. In contrast, Spain's own implementation
record appears to be less good than Gibraltar's. According to
information provided by the EC Commission there are 25 infringement
proceedings pending against Spain for non implementation of EC
29. Even if the facts were as Spain alleges
(which is not the case) it is not open to Spain within the established
EC legal order to "take the law into her own hands"
and impose unilateral restrictions on Gibraltar in response to
alleged non implementation by Gibraltar of EU Directives. It is
trite that non compliance by one member state does not entitle
another also to withhold compliance in the same or any other area,
still less to impose restrictions by way of sanction. It is for
the EC Commission to bring about compliance by member states with
their obligations by initiation of infraction proceedings against
the Member State in question (in our case, the UK).
Accusations relating to drug smuggling, drugs
money laundering and all manner of serious criminality and accusations
against Gibraltar's financial services centre
30. Spain makes all manner of unfounded and
unsubstantiated allegations against Gibraltar in respect of these
matters with the objective of tarnishing Gibraltar's international
image and reputation, not just for general political purposes,
but also to undermine the credibility and therefore success of
our financial services centre.
31. Gibraltar law fully implements all EU directives
and UN Conventions on drugs money laundering. In addition Gibraltar
complies with FATF taskforce guidelines.
32. Furthermore, these laws are properly enforced.
In 1996 the Gibraltar Government established the Gibraltar Co-ordinating
Centre for Criminal Intelligence and Drugs to co-ordinate all
intelligence amongst local law enforcement agencies. In 1993 Gibraltar
established the Financial Intelligence Unit as the authority to
receive and handle all "suspicious transaction" disclosures
which are required to be made by local entities under the Drugs
Trafficking Offences Ordinance.
33. Like the UK (but unlike the rest of Europe)
our laws criminalise the laundering of the proceeds of all
crimes and not just drugs related crimes.
34. (1) The United States State Department
publishes annually a document called "International Narcotics
Control Strategy Report". That report assesses the performance
of all countries and territories in the international fight against
drug money laundering. It categorises all territories as being
(2) Gibraltar is categorised as a country
"of concern". Ironically, all of the UK, Spain, Jersey,
Guernsey, Isle of Man, Liechtenstein, Luxembourg and Switzerland
are categorised as countries of "Primary Concern".
(3) Attached to this Memorandum as Appendix
7 [not printed] is the relevant pages of that report, including
the country categorisations and the specific Section on Gibraltar.
All countries have their own specific section. After describing
the position in Gibraltar, the report says: "This further
underlines the commitment of Gibraltar to adhere to international
anti-money laundering standards."
(4) The whole of the Report, which is a large
document, is available on the internet at www.state.gov.
35. At the UK Overseas Territories Association
Conference that took place in London on 4 February 1998, Foreign
Secretary Robin Cook when, commenting on Gibraltar's regulatory
and legislative regime, said, "The Government of Gibraltar,
for example, has recently introduced money laundering legislation
to UK and EC standards. This has transformed Gibraltar's international
reputation. The highest standards of regulation are the best guarantee
for financial success and the biggest draw to investors".
36. As the Committee may be aware the Government
of Gibraltar has no constitutional responsibility for law enforcement
matters. In addition, the Financial Services Commission (which
regulates and supervises all aspects of Gibraltar's finance centre)
is appointed by the Foreign Secretary and accounts to the Governor.
37. Gibraltar cannot be expected to be the only
place in the world which is totally free of criminal activity
of this kind. There may therefore be isolated cases, as occurs
in the UK, Spain and everywhere else. However Gibraltar has all
the laws, structures and enforcement capability and the commitment
to use them effectively, which render absurd and false the Spanish,
politically motivated allegations. Even allowing for our smaller
size, there is proportionately much less incidence of drug related
crime in Gibraltar than in Spain and UK. Our commitment to play
our full part in international efforts against drugs is questioned
by nobody except Spain.
38. Spain also asserts that Gibraltar is a source
of physical drugs smuggling into Spain. This is wholly untrue.
In fact, the reverse is true. All drugs which are consumed in
Gibraltar enter Gibraltar from Spain. Nor is it true that Gibraltar
based boats are engaged in drugs trafficking. There are no smuggling
boats operating out of Gibraltar.
39. The Spanish Prime Minister's office has
recently sent Prime Minister Blair's office a dossier purporting
to demonstrate Spain's allegations in this respect. I have seen
this letter. It is riddled with inaccuracies and in no way supports
the Spanish allegations. A reply in this vein has been sent by
HMG to the Spanish Government. I have seen the reply, which has
been shown to me in confidence. However, given the publicity that
Spain has given to her false allegations, the damage that they
cause Gibraltar and the corroborative effect that the Spaniards
have sought to obtain from publicising the fact that she has submitted
evidence to HMG, it is essential to Gibraltar's interest that
HMG's reply and endorsement of Gibraltar's record be also given
the same degree of publicity. International opinion is entitled
to interpret (and will interpret) public silence on HMG's part
as confirmation of the Spanish accusations.
40. It is worthy of mention that while Spain
alleges tolerance of money laundering activity in Gibraltar the
only evidence cited are three cases which are currently the subject
of prosecution with the help of the Gibraltar authorities.
41. Our conviction that Spain's attacks against
our finance centre are unobjective and politically motivated are
supported by the following facts:
(a) Spain attacks only the Gibraltar finance
centre as if ours was the only one, or as if it were different
to others or as if Spain were more adversely affected by Gibraltar's
finance centre than by others. In fact, Gibraltar's finance centre
is small compared to most others; unlike others ours complies
with EU Directives in the area of financial services; unlike all
others Gibraltar regulates the offshore company and trust formation
and management industry; our money laundering regime is second
to none; many more companies incorporated in other jurisdictions
are used in Spain than companies incorporated in Gibraltar.
(b) If Spain's complaints were objective
she would pursue them against all finance centres and not just
(c) Spain has said that we can keep our finance
centre in the context of a settlement of her sovereignty dispute.
(d) Spain has sought permission from the
EU Commission to establish her own offshore financial services
centre in the Canary Islands.
42. One of the very few financial services directives
that Gibraltar has not yet transposed are the Fourth and Seventh
Company Law Directives. These directives require the publication
of financial balance sheets. The necessary preparations for their
transposition are at an advanced stage. We envisage transposition
within the next few months. However, as part of her campaign against
Gibraltar, Spain alleges that our failure to comply with these
directives makes ownership of these companies "opaque"
and therefore prone to use in connection with money laundering
and other nefarious activities by unidentifiable people. These
allegations are erroneous. First, the Fourth and Seventh Company
Law Directives do not require the public disclosure of
the ultimate beneficial owner of shares in a Company. Like UK
law (and the law in most other countries) Gibraltar law only requires
disclosure of the registered owner of shares. The use of nominees
is not peculiar to Gibraltar; second, the UK's other offshore
finance centres that are not subject to the Fourth and Seventh
Company Law Directives (Jersey, Guernsey, Isle of Man, Bermuda,
Cayman Islands, Turks and Caicos, British Virgin Islands) do not
require the publication of accounts. They are not thereby or therefore
centres of drugs money laundering. The publication or non-publication
of balance sheets is irrelevant (one way or the other) to the
question whether a territory lends itself, or is particularly
vulnerable to, money laundering.
43. Other Threats
Spain has also threatened to withhold Gibraltar
driving licences on the grounds that it does not recognise the
Gibraltar Government's right to issue licences. The Gibraltar
Government has issued driving licences which have enjoyed international
recognition for many decades. The Spanish Foreign Minister has
also stated that consideration is being given to prohibit civil
airliners travelling to and from Gibraltar airport from overflying
Spanish air space.
B. CO -OPERATION
44. Part of Spain's campaign against Gibraltar
is the lack of judicial and police co-operation in pursuing international
drug trafficking and money laundering. These allegations are wholly
45. Reference to the inability of the Spanish
Authorities to investigate Gibraltar registered companies or residents
of Gibraltar is totally inaccurate. If the Spanish Authorities
wished to carry out such investigations they would only need to
submit Judicial Requests to the competent Judicial Authorities
in Gibraltar which in turn would be fully processed and supported
by the Gibraltar Law Enforcement Agencies. This is no different
to the manner in which many such requests from other jurisdictions
are handled in Gibraltar. However, Spain refuses to recognise
the jurisdiction of the Gibraltar Supreme Court and insists in
submitting their judicial requests directly to the United Kingdom
in manner that, given that Gibraltar is a separate legal jurisdiction,
they are rendered invalid under the Laws of Gibraltar.
46. I have asserted that Spanish allegations
that Gibraltar law enforcement agencies do not co-operate with
them are untrue. This allegation only ever emerges in the context
of an intensification of Spain's political pressure on Gibraltar.
I attach at Appendix 11 [not printed] the following documents
which demonstrate the falsehood of the allegation:
(1) Copy of Article in Spanish carried in
May 1997 in the Spanish newspaper "Area". The headline
reads "Captain of the Guardia Civil confirms that they receive
daily collaboration from the Gibraltar police." The article
relates to drugs smuggling and contraband.
(2) Article in the Spanish Newspaper "Europa
Sur" carried on 13 August 1998. The headline reads "Osuna
highlights the collaboration of Gibraltar". Sr Osuna is the
Spanish central governments's representative in the CADIZ province.
A loose English translation is also attached.
(3) Copy of a letter dated 29 January 1997
addressed by the head of the "Servicio de Vigilancia Aduanera"
(Spanish Customs) to the Commissioner of the Royal Gibraltar Police.
The letter reads, in translation, as follows:
It is my pleasure to convey to you my strongest
gratitude, in my name and in that of my colleagues, on the occasion
of the arrests effected of the vessels and, given that without
your collaboration said operations would not have been possible.
At the same time I would like you to pass
these on to your officials, and in particular [three named officers]
who are the ones who, together with my officers in the Provincial
headquarters of Algeciras, do an inestimable job in the fight
against drug trafficking.
Finally, I hope that said co-operation continues
at the highest level of efficiency and collaboration."
The names of the vessels and of the officers
have been deleted for security reasons.
47. Furthermore, Gibraltar has applied to join
the Egmont Group which is an international organisation of countries
and dependent territories dedicated to co-operation in the fight
against drug trafficking and money laundering. Spain has objected
to Gibraltar joining this group (as many other dependent territories
48. Spain's refusal to recognise the jurisdiction
of Gibraltar's Courts has affected, indeed undermined, the efforts
of the Gibraltar law enforcement agencies to successfully prosecute
drug and other criminal cases where the evidence of Spanish law
enforcement officers has been required. In one case, a Gibraltar
request in 1995 to extradite a British subject held in a Spanish
prison, who was wanted in Gibraltar in relation to serious drug
offences, was refused. It was only after intensive representations
that the individual was eventually extradited not to Gibraltar,
but to the UK. The Attorney-General has expressed concern that
he has not been able to prosecute cases involving confiscation
of assets because the substantive offences from which these assets
derive have usually been committed in Spain and the Spanish authorities
do not even reply to his requests for evidence. This lack of formal
co-operation and recognition from Spain is an important factor
inhibiting the fight against drug-trafficking in the area and
clearly demonstrates the reverse of Spain's accusations against
49. The 1968 Brussels and 1971 Lugano Conventions
on the enforcement of Court judgments throughout Europe were extended
to Gibraltar with effect from the 5 November 1998. This followed
a declaration by the UK on 31 July 1998 before the Swiss depository
authorities.The Supreme Court of Gibraltar and Her Majesty's Attorney-General
in Gibraltar were nominated as the competent authorities respectively.
The extension of these Conventions to Gibraltar were of commercial
and jurisdictional significance and contribute to the upgrading
of Gibraltar's legal and administrative infrastructure which will
help develop Gibraltar as an attractive location for foreign investment
and business management. On the 1 October 1998, Spain lodged an
objection with the Swiss authorities stating that the UK was not
entitled to extend the Lugano Convention to Gibraltar unilaterally
without the consent of the other contracting states and that this
was a breach of the Convention and international law. The UK has
explained that the extension of the Conventions is governed by
general international law under the 1969 Vienna Convention and
that their extension to Gibraltar is correct. The UK has rejected
Spain's arguments. The Gibraltar Government is not aware whether
this rejection has been formally notified to the Swiss depository
50. The 1965 Hague Convention on the Service
Abroad of Judicial Documents and Extra-Judicial Documents in Civil
and Commercial Matters was extended to Gibraltar in 1970. The
Gibraltar Registrar of the Supreme Court was designated by the
UK as the competent authority for Gibraltar. The Hague Convention
was subsequently ratified by Spain in 1987 without reservation
or declaration relating to Gibraltar. On 1 September 1997, the
Spanish Government delivered a Note Verbale to the Dutch depository
authorities stating that Spain did not recognise the Supreme Court
of Gibraltar as an authority and consequently any documents submitted
by that body would be considered null and non-existent. The UK
responded by lodging a Note with the Dutch authorities and by
sending a further Note to Spain, both dated 30 December 1997,
making it clear that it was for the contracting State alone to
determine the extent of competence under the Convention. The UK
has reassured the Gibraltar Government that it will continue to
dispute any Spanish assertion challenging the competence of the
Supreme Court of Gibraltar and that the UK does not accept the
validity of the Spanish declaration.
51. Accordingly, to the extent that Spain does
not enjoy from Gibraltar the same degree of co-operation as other
countries habitually obtain from us, this reflects, not any lack
of procedures or willingness on Gibraltar's part, but Spain's
own refusal to recognise and inter-act with Gibraltar's police
and judicial authorities, an attitude in which Spain persists
in priority to co-operation in Drug Smuggling and Money Laundering
(about which she then criticises Gibraltar).
C. "THE MATUTES
52. At the talks held in London on 10 December
1997 between the Foreign Secretary Robin Cook and the Spanish
Foreign Minister, Sr Matutes under the Brussels Declaration of
1987, Sr Matutes tabled (in writing) the so-called "Matutes
Proposals" on the future sovereignty and status of Gibraltar.
53. The Matutes Proposals (which did not vary
very substantially from similar proposals tabled in 1985 by the
then Spanish Foreign Minister, Sr Moran) consist of three propositions:
(1) An autonomous status for Gibraltar similar
to the Spanish regional autonomies.
(2) The option for the people of Gibraltar
to acquire Spanish nationality or to enjoy dual nationality.
(3) A transitional period of jointly exercised
sovereignty (by UK and Spain) at the end of which Sovereignty
of Gibraltar would be fully and definitively transferred to Spain.
54. The proposals are wholly unacceptable to
the people of Gibraltar since they are predicated on immediate
joint sovereignty and inevitable full Spanish Sovereignty. The
second proposition seeks to differentiate between the people and
the territory, which is also unacceptable. The people of Gibraltar,
like all other colonial peoples before them, have rights, in relation
to and in connection with, the territory of Gibraltar which is
our homeland. Furthermore, the proposals completely ignore and
override the right of the people of Gibraltar to decolonisation
by the application of the principle of self determination.
55. The British Government's position on 10
December 1997 in response to the proposals was that they could
remain on the table but given HMG's obligation to respect the
wishes of the people of Gibraltar, HMG could not contemplate change
without the consent of the people of Gibraltar.
56. Since 10 December 1997 HMG position has,
I believe, been to say that the proposals are being considered
and a response would be given at the appropriate time (i.e., next
Brussels Agreement talksnow scheduled for sometime after
PM's bilateral summit with Sr Aznar in April).
57. On 15 January 1998 I wrote to the Foreign
Secretary thanking him for his robust commitment to respect the
wishes of the people of Gibraltar on the question of sovereignty
and urging him to reject the Matutes proposals which were completely
unacceptable to the people of Gibraltar. I expressed to the Foreign
Secretary the view that leaving the proposals on the table unrejected
would send Spain the erroneous signal that there is objective
merit in them, still less prospect of success if they should persevere
with the proposals. I also expressed my view that failure to reject
the proposals will keep Spanish expectations at a level that will
not in fact facilitate the management of this problem, still less
the process of searching for a viable and constructive way forward.
I wrote again on 18 December 1998 to the Minister of State at
the FCO, Joyce Quin, urging a response to the proposals in the
same terms as the Moran proposals (of 1985) were rejected by HMG
58. On 17 December 1998 the House of Assembly
unanimously passed a motion calling on HMG to reject the Matutes
59. A public petition signed by 12,499 people
calling for the rejection of the Matutes Proposals was handed
in at No 10 Downing Street on 10 December 1998.
60. The Matutes Proposals have not yet been
rejected by HMG.
61. At the time of presenting his proposals
in December 1997, Senor Matutes recognised that Spain did not
want a solution to the problem of the sovereignty dispute which
was imposed on the people of Gibraltar. That seemed to be a most
welcome acknowledgement that the principle of democratic consent
was paramount. What is disappointing is that having declared himself
in favour of democratic consent, Senor Matutes does not then accept
the fact that the proposals are rejected by the people of Gibraltar.
Consent must be freely given. Adherence to the principle of consent
must mean acceptance of the democratic will, whatever the outcome.
I believe that in re-tabling these proposals, (which had been
rejected by the previous British Government) the Spanish Government
was seeking "a second bite at the cherry" with the new
Government in the UK.
62. When Sr Matutes tabled his proposals on
10 December 1997 he attached to them a clear "health warning".
In the same document Sr Matutes said that the new situation brought
about by a solution to the sovereignty issue would see an end
to the current tensions which are the inevitable and direct consequences
of Spain's permanent sovereignty claim. He also said that these
political tensions evidently prevent Gibraltar from contemplating
and planning a prosperous future on account of the lack of support
and co-operation, both at a national and European level, which
in other circumstances would be available from Spain.
Sr Matutes added that in the event of a negative
response to his proposals, or an indefinite blockage of them,
the status quo would inevitably persist, which does not augur
well either for Gibraltar or for Anglo-Spanish relations. Spain,
he said, would never abandon its sovereignty claim nor its efforts
to recover it, which would continue to manifest itself, as follows:
(1) Spain would be obliged to continue to
impede Gibraltar from living and prospering "at Spain's expense"
and especially at the expense of the neighbouring Spanish region.
(2) Spain would remain vigilant to counter-act
any move to decolonise Gibraltar; this would be especially intense
in the ambit of the European Union.
(3) Spain would deny recognition, in a European
Union context of identity cards, passports and driving licences
issued in Gibraltar, which he said could result in problems to
Gibraltarians in the exercise of their right to free movement.
(4) Spain would oppose any modification of
Gibraltar's current constitutional status that was contrary to
the course established by the Brussels Agreement.
63. Sr Matutes's proposals were presented with
a warning that if Gibraltar did not accept them, "the screws
would be tightened" against Gibraltar. Indeed, when presenting
the proposals to the Foreign Affairs Committee of the Congress
of Deputies on 18 February 1998, Sr Matutes warned that the Spanish
offer was not indefinite and that if there was deadlock in the
negotiations, Spain would be in a position to "carry to extremes"
controls on Gibraltar. He was quoted as saying "we are not
at the stage of applying these restrictions but of demonstrating
our good faith and explaining the status that we are offering
to the Gibraltarians".
64. Following a meeting held on 24 November
1998 in Madrid between the Spanish Foreign Minister and representatives
of the political parities represented in the Spanish Congress,
it was revealed that the Spanish Government was considering implementing
"Plan B" which was aimed at isolating Gibraltar. The
Spanish Foreign Minister stated that the diplomatic process had
been exhausted and that "Plan B" would involve a series
of restrictions at the Gibraltar frontier and, if this did not
succeed in pressuring the people of Gibraltar to negotiate over
the Matutes proposals, it would be followed by further measures
to cut off Gibraltar.
D. DIALOGUE RELATIONS
65. It is the policy of the Gibraltar Government
to seek dialogue with Spain, at all its political and administrative
levels. Such dialogue would serve to explore ways of putting relations
between Spain and Gibraltar on a more constructive footing by
seeking confidence building and trust between the parties leading
to a process of mutual co-operation on a broad range of issues.
66. This has led to frequent dialogue with local
Governments in adjoining Spanish municipalities and several meetings
with the Andalucian regional Government.
67. In December 1998 the Gibraltar Government
signed technical co-operation agreements with the nearby Spanish
municipality of Los Barrios on the areas of economic co-operation,
tourism and education and culture.
68. Although the Gibraltar Government would
wish to participate in meaningful and constructive dialogue with
the Spanish Central Government, it has not yet been possible to
69. The Gibraltar Government is not willing
to enter into negotiations on the issue of sovereignty, nor to
enter into discussions on the basis of proposals (such as the
Matutes Proposals) which are predicated on the transfer of sovereignty
to Spain, however much that eventuality may be deferred.
70. Furthermore, the Gibraltar Government wishes
to participate in dialogue on a basis that is not exclusively
bilateral between London and Madrid, but rather allows the people
of Gibraltar to participate with their own voice in the form of
their elected Government who could thus speak for and represent
the people of Gibraltar. Bilateral dialogue between the UK and
Spanish Governments recognises and concedes the fundamental Spanish
position that Gibraltar is a bilateral matter between the UK and
Spain in which the people of Gibraltar have no rights and in respect
of which the people of Gibraltar's wishes are not primordial.
71. The fact that only two of the parties (the
UK and Spain) are sovereign independent states does not necessitate
the denial of a separate voice to the people of Gibraltar at talks
72. The Government of Gibraltar seeks to engage
Spain in open-agenda dialogue to establish good, constructive,
friendly, relations with Spain and to maximise the possibilities
for co-operation with Spain in all areas. However, Gibraltar is
not willing to do so on terms that requires us to prejudice or
concede our British Sovereignty, nor that requires us to accept
Spanish Sovereignty over Gibraltar.
73. Spain's sovereignty claim to Gibraltar does
not (and should not be allowed to) operate to deny Gibraltar the
right to decolonisation, which is the inalianable right of all
74. The United Nations recognises only the following
four methods of decolonisation:
(2) Free association with an independent
(3) Integration with an independent state.
(4) A status that suits the circumstances
of a territory and is freely chosen by its people (the so-called
75. HMG rejects Independence as an option for
Gibraltar because it alleges that it is bound by the Treaty of
Utrecht (1713) to offer sovereignty to Spain in the event of Britain
wishing to alienate it. The people of Gibraltar do not seek independence
from Britain. However, we reject that the Treaty of Utrecht has
this effect, for the following reasons:
(1) It is trite international law that when
a bilateral treaty is incompatible or inconsistent with the Charter
of the United Nations, the latter prevails. To the extent that
it "curtails" (as alleged by the UK) and denies (as
alleged by Spain) the Gibraltarian's right to self determination,
the Treaty of Utrecht is incompatible with the Charter of the
(2) It is the recently pronounced doctrine
of the UN that in the process of decolonisation there is only
one applicable principle and that is the principle of self determination.
(3) All the other provisions of the Treaty
of Utrecht have fallen into disuse. Indeed, Spain herself has
historically renounced the Treaty by subjecting Gibraltar to frequent
military sieges and attacks in an attempt to recapture Gibraltar
by military force.
(4) Although Spain now asserts that she recognises
Britain's title under the Treaty of Utrecht to part of
Gibraltar, she nevertheless maintains her claim to the return
of Sovereignty, which by that same treaty she ceded to Britain
(5) When Utrecht was signed, the principles
of democracy, human rights, self-determination, etc., did not
exist. It is democratically incongruous to rely on such a treaty
to deny the right of self determination to a colonial people in
the 20th (now nearly 21st) century.
(6) The Government of Gibraltar would be
content to see adjudicated in an international court of law the
issue whether the Treaty of Utrecht is valid to curtail the Gibraltarians'
right to decolonisation by the application of the principle of
76. There is no relationship between the Treaty
of Utrecht and international instruments relating to the EU. Article
227(4) of the Treaty of Rome provides that:
"The provisions of the Treaty shall apply
to the European Territories for whose external relations a Member
State is responsible".
The UK is responsible for our external affairs
by virtue of the fact that we are her overseas territory (previously
colony and later dependent territory) and not by virtue
of the Treaty of Utrecht. The UK is equally responsible for the
external affairs of its other 12 overseas territories who are
not the subject of such a Treaty.
77. Given that Gibraltar does not seek independence
from Britain the issue is on our interpretation of the Treaty
of Utrecht (in the practice, though not in the theory) academic.
Gibraltar does not wish Britain to alienate Sovereignty of Gibraltar
given that we wish to maintain British Sovereignty. However, Spain
interprets "sovereignty" in the context of Utrecht much
more widely to include constitutional self government. Accordingly,
Spain regards any transfer of powers from UK (as colonial power)
to Gibraltar as "alienation of Sovereignty". The Gibraltar
Government rejects this view, which it would be content to see
tested in an international court of law.
78. The second method of decolonisation acceptable
to the UN (see paragraph 74 above) is free association with an
independent state provided that the colonial territory
is free to disassociate at any later date. The British Government
therefore purports to reject this option as well on the grounds
that, by virtue of the subsequent disassociation mechanism, it
could result in independence.
79. The third option is integration with an
independent state. Britain first rejected this option for Gibraltar
in 1976 and has maintained that refusal ever since. The recent
White Paper on overseas territories says that HMG has concluded
that neither integration into the UK nor Crown Dependency status
"offer more appropriate alternatives to the present arrangements".
This denial of the integration option may be legitimate in respect
of territories to whom independence is available. It is less obviously
so in the case of Gibraltar to whom Britain herself denies this
option. The Gibraltar Government regrets that the White Paper
appears to close the door on this option.
80. HMG's stated position is that Gibraltar
does have the right to self determination but that it is "curtailed"
by the Treaty of Utrecht. This must mean something. It cannot
mean that we have no right to self determination at all.
81. Since Britain herself denies us the first
three of the four UN options (independence, free association and
integration), this only leaves the fourth UN option. If Britain
denies us the fourth option as well, she is in effect denying
altogether the right of self determination/decolonisation of the
people of Gibraltar. It would then be incorrect to say (as Britain
does) that we do have the right to self determination but that
this is "curtailed" by Utrecht. The position would then
be that Gibraltar was obliged to remain a colony indefinitely
until we were willing to negotiate surrender of our sovereignty
to Spain. If that is HMG's position it should say so clearly and
82. Although HMG's position is that constitutional
reform for Gibraltar is formally a matter for the UK and
Gibraltar, HMG has (of late) taken and articulated the view that
there is "a Spanish Dimension". It has not been plainly
spelt out what this means. The concern in Gibraltar is that the
so-called "Spanish dimension" is euphemism for the constant
threat from Spain of the adverse consequences which would follow
were the UK to agree to constitutional change for Gibraltar, particularly
if that were to result in a greater measure of self-government,
and that accordingly Britain will, in practice, not agree to meaningful
constitutional advancement to which Spain would object.
83. The Gibraltar Government's policy is, by
means of the UN's "fourth option" for decolonisation,
to seek the effective decolonisation of Gibraltar, by means of
the modernisation of Gibraltar's bilateral constitutional relationship
with the UK.
84. Such constitutional modernisation would
leave Gibraltar under British Sovereignty and as part of HM's
dominions, with a close political and constitutional relationship
with the UK, which relationship would not be colonial in nature.
This new constitutional relationship, when accepted by the people
of Gibraltar in referendum (as all constitutional change must
be) would complete the decolonisation of Gibraltar by the exercise
of the right to self determination, and without breaching the
Treaty of Utrecht, since British Sovereignty would continue. "British
Sovereignty" for the purpose of Utrecht is not synonymous
with colonial status.
85. Although the Gibraltar Government has submitted
to HMG detailed and specific ideas for constitutional modernisation,
no proposals have yet been formally tabled. The next stage as
far as the Gibraltar Government is concerned is to establish a
Select Committee of the House of Assembly to consider constitutional
modernisation and arrive at consensus proposals to put formally
86. In January 1998 the Gibraltar Government
and HMG initiated exploratory discussions to assess the extent
of common ground that might exist in relation to the Gibraltar
Government's detailed ideas. These preliminary discussions have
continued throughout 1998. The so-called "Spanish dimension"
has figured significantly during those discussions. The Gibraltar
Government seriously doubts HMG's willingness to allow significant
and meaningful change to the Gibraltar Constitution such that
would enable Gibraltar to take the view that we had "decolonised",
or at all. HMG has so far expressed a willingness in principle
to look at "minor amendments" to the 1969 Constitution.
87. The Gibraltar Government will nevertheless
proceed with its policy in this regard. All other decolonisation
options have been ruled out by the UK. If it is, in fact, HMG's
position that the decolonisation of Gibraltar by this last remaining
option (constitutional modernisation) is not available to Gibraltar
either, unless Spain consents, I believe that HMG has a moral
and political obligation to say so clearly and unambiguously directly
to the people of Gibraltar so that they know where they stand.
The logical consequence of this being so would be that, as far
as HMG is concerned, the people of Gibraltar's right to self determination
is limited to not being handed over to Spain against their wishes
and in the meantime to remain a colony. If that is so that should
be clearly stated as well. The choice between remaining a colony
and not being handed over to Spain does not constitute self determination.
88. In its proposals for constitutional development,
the Gibraltar Government seeks to consolidate the many changes
that have taken place de facto since the last Constitution
was enacted in 1969. That Constitution pre dated membership of
the European Union and the Government's proposals take account
of the changing nature of the relationship between the UK and
Gibraltar flowing from the rights and obligations which arise
from EU Membership whilst preserving Gibraltar's autonomy. The
Gibraltar Government recognises that the UK has a legitimate interest
in the conduct of Gibraltar's affairs and that there should be
last resort provisions to enable the UK Government to protect
those interests. At the same time, the existing residual colonial
features of the present Constitution would be removed, effectively
terminating Gibraltar's colonial status.
89. The importance to Gibraltar of meaningful
constitutional modernisation is not limited to our natural
desire to evolve away from a colonial status while preserving
British Sovereignty and our close links with the UK. Spain deploys
internationally to her advantage the fact that we are still a
90. In presenting his proposals in December
1997 (the Matutes Proposals) Senor Matutes specifically pointed
out that his "autonomy within Spain" proposals were
generous because under the Spanish Constitution autonomous powers
were cast in law and his offer therefore amounted to a legally
more ample autonomy than our current colonial constitution. He
said that our 1969 Constitution establishes a "typically
colonial regime, in which, over and above the local Government,
there exists a Governor representing the British Crown who preserves
ample discretionary powers to impose legislation or to veto actions
approved by the Gibraltar legislative assembly".
91. Sr Matutes went on to add that "By
contrast in the Spanish system there exists an authentic sharing
of power between the State and the autonomies: the competences
of each are expressly established by the law and any conflict
between them is dealt with under law, being decided by the Constitutional
92. Sr Matutes therefore described his offer
of a Spanish autonomy status for Gibraltar as representing generous
and "undoubtable advantages" as compared to our current
93. We do not believe that Sr Matutes' offer
is generous. It is important for Gibraltar that our Constitutional
relationship with the UK should not be such that Sr Matutes can
hold up to the outside world his own offer as generous by comparison.
F. EUROPEAN UNION
94. Gibraltar is not part of metropolitan UK
for EU purposes. Article 227(4) of the Treaty of Rome stipulates
"The provisions of this Treaty shall apply
to the European territories for whose external relations a Member
State is responsible."
Accordingly the Treaty of Rome (and consequently
all primary EU law) applies to Gibraltar by virtue of its
constitutional relationship with the UK. Clearly, this does not
make Gibraltar a separate "member state" of the EU.
The UK is the member state responsible for Gibraltar's compliance
with its EU obligations. But the Gibraltar Constitution remains
valid and effective in the context of Gibraltar's status within
Accordingly Gibraltar remains a separate (from
the UK) jurisdiction with its own legislature, government, public
administration and judiciary on the terms set out in the Constitution
and accepted practice. Gibraltar has its own European Communities
Ordinance and is, in the first instance, responsible for giving
effect in Gibraltar to EU legislation, including transposition
of EU directives into Gibraltar law.
95. When Spain joined the EC it was wrongly
assumed that this would require her to modify her attitude to
Gibraltar to make it communautaire. In practice the opposite has
occurred. Spain is now using the EU as a platform and forum to
pursue her sovereignty claim over Gibraltar, to attempt to negate
our Constitutional autonomy (to which she has always objected)
and to marginalise Gibraltar as far as possible from the EU.
96. This she does by constantly raising Gibraltar
as an issue in EU business. These issues fall broadly into three
(1) The exclusion of Gibraltar altogether
from EU measures.
(2) Non-recognition issues.
(3) The so-called "competent authority"
Each of these is dealt with separately in the
next following paragraphs.
97. Exclusion of Gibraltar
(a) Aviation measures
97.1 Spain first intervened in the EU over Gibraltar
in 1987 when she threatened the use of her veto to block the first
measures under the EC Air Liberalisation Regime. In order to overcome
Spain's veto the UK Government negotiated a bilateral Airport
Agreement with Spain in 1987 for the joint use of Gibraltar Airport.
That Agreement was not implemented principally because of Gibraltar's
concern that Clause 1 of the Agreement infringed British sovereignty
over the airport effectively giving Spain joint control. Gibraltar
has never objected to the use of Gibraltar airport by any international
airline and would greatly welcome normal commercial development.
Gibraltar's concern over the Agreement was increased because of
the differing interpretations of that Agreement by the UK and
Spain. The UK stated that Spain would only have joint use and
would be consulted on working arrangements at the airport. Spain
argued that under the Agreement she would have joint control and
would exercise the right to decide on flight authorisations. The
UK succumbed to the Spanish veto and the 1987 Air Liberalisation
Directive was agreed with the suspension of its application to
Gibraltar airport unless and until Gibraltar accepted the Airport
Agreement. The UK considered that its wider national interest
in this field could not be sacrificed because of Gibraltar.
97.2 In the event, the EU Third Air Liberalisation
package which was introduced in 1993 effectively rendered the
bilateral Airport Agreement redundant because the 1993 measures
removed governmental competence in route authorisation matters.
Notwithstanding this, Spain insists that there can be no progress
nor review of the position until the 1987 Agreement is first implemented
as originally agreed.
97.3 The suspension of Gibraltar airport from
air liberalisation measures is discriminatory, removes an acquired
right enjoyed by Gibraltar under the 1983 Directives and imposes
an unreasonable precondition on Gibraltar's rights to benefit
from Community measures aimed at improving intra Community communications.
97.4 Initially this position was limited to
so-called "access" measures, i.e., the operation of
air services to Gibraltar airport. However, since 1995 Spain has
sought Gibraltar's systematic exclusion from all directives and
regulations howsoever related to the airport or aviation (i.e.,
not just "access" measures).
97.5 Certain other aviation measures are currently
the subject of impasse because Spain demands Gibraltar's exclusion.
The Aviation Statistics Regulation
which has been blocked in the Council since 1996.
Proposal to amend the Denied Boarding
HMG has stated that she will not agree to Gibraltar's
exclusion from these measures.
97.6 The Gibraltar Government's position on
these issues, put forcefully and repeatedly to HMG, in writing
and orally at numerous meetings, is that HMG should not agree
to the exclusion of Gibraltar from any aviation measure (save
access measures, for historical consistencebut not because
that is justified either).
97.7 HMG's position, as put in writing to the
Gibraltar Government, is that HMG "will continue to take
forward EU business on a case by case basis, we (SIC) will not
accede to a policy, such as the one that Spain is now proposing,
that seeks systematically to suspend Gibraltar from all future
EC aviation measures"; and
"We support Gibraltar's rights to participate
in all EC aviation measures. However, there will be cases when
the interests of Gibraltar are outweighed by the interests of
the UK or the EU as a whole. We have to determine the best course
of action depending on the nature and circumstances of each case
as it arises."
97.8 The Government of Gibraltar is not content
with this approach. This should not be treated as a matter of
balancing the respective "interests" of (1) EU/UK and
(2) Gibraltar, but as a matter of Gibraltar's right to be included
in all community measures.
Gibraltar has been excluded from all the following
"non access" aviation measures at Spain's insistence.
EC Regulation 95/93 on common rules
for the allocation of slots at community airports.
EC Directive 96/67 on access to the
groundhandling market at Community airports.
EC Directive on airport charges.
EC Directive on "hush-kits"
[a noise directive].
Needless to say, even though Gibraltar is sometimes
excluded under pressure from Spain, we are not given the option
to be excluded from onerous directives when we consider that a
balance of our interests so indicates.
97.9 One aviation measure from which Spain sought
Gibraltar's exclusion is the Ramp Checks Directive (requiring
safety checks on non-EU airplanes using community airports). On
this occasion (in December 1998) Dr John Reid, Minister of Transport
at the DETR, stood firm and refused to accept Spain's demand for
Gibraltar's exclusion. As a result agreement on the directive
was not possible and the proposal has expired for the entire EU.
The Government of Gibraltar believes that this is the correct
approach based on Gibraltar's EU rights.
(b) External Frontiers Convention
97.10 The other issue on which Spain seeks Gibraltar's
outright exclusion is external frontiers. Indeed, the External
Frontiers Convention has been blocked since 1990 due to this very
fact. Spain contends that the EU's external Southern border should
be the Gibraltar/Spain border, therefore leaving the territory
of Gibraltar outside the EU's external frontiers. This would be
a serious blow to Gibraltar since it would amount to real physical
marginalisation of Gibraltar from the EU. Although the UK presently
says that she remains uninterested in participating in external
borders issues, this, given the effective veto obtained by Spain
at Amsterdam, remains a serious threat when and if the UK decides
98. Non Recognition issues
98.1 ID Cards. Spain refuses to recognise
Gibraltar ID cards as valid travel documents. Gibraltar has operated
an identity card system since 1943. When the EU introduced its
common format requirement for ID cards, Gibraltar modified its
own cards to bring them into line with EU requirements. On 15
May 1995, the United Kingdom Government informed the Commission
and the other Member States that Gibraltar's identity card was
to be considered as valid under the terms of the EU Directives
relating to the right to travel and to reside of workers, self-employed
persons, tourists, retired persons, economically inactive persons
and students. The Commission accepted the validity of the Gibraltar
identity card and so informed all Member States. Spain refused
to accept the use of the Gibraltar card and requested other Member
States to follow. Spain argues that Gibraltar does not have the
competence to issue such documents. HMG has, from the outset rejected
this view. The matter was taken up by the UK Government with the
EC Commission on 9 October 1995. Since then, the matter has been
referred to the EU Infraction Chefs Committee but no decision
appears to have been taken to address the complaint. It should
be noted that Spanish identity cards are recognised by the Gibraltar
authorities as valid travel documents to enter and leave Gibraltar.
98.2 Passports. Spain has, in the past
threatened to withhold recognition of British passports issued
in Gibraltar by HE the Governor on behalf of Her Majesty the Queen
(as has always been done by Governors in all Dependent Territories).
The threat was carried out in a number of cases.
98.3 Driving Licences. More recently
Spain has threatened to withhold (and in a limited number of cases
has in fact denied), recognition of driving licences issued in
98.4 Telephone numbering plan and mobile
roaming. Since the introduction of international direct dialling
in the late 1970's, Gibraltar has had its own international area
code (350) that is in use for all international telephone traffic
to Gibraltar except from Spain. This reflects Spain's refusal
to recognise Gibraltar's IDD code. When direct dialling telephone
links were restored with Spain, an arrangement was entered into
whereby telephone traffic from Spain accessed Gibraltar via the
internal Spanish area code for the adjoining Spanish province
of Cadiz (956) extended by a further digit (7). This in effect
made Gibraltar's telephone numbering plan part of Spain's. This
arrangement provides a total maximum capacity of 30,000 numbers.
Gibraltar has almost exhausted these numbers and is unable to
increase it because the Spanish operator will neither recognise
Gibraltar's international area code (which would couple our numbering
plan from Spain's) nor allocate to Gibraltar the additional numbers
that we require. The (350) code is recognised by every country
in the world except Spain. This position will physically prevent
Gibraltar from complying with EC telephone liberalisation directives.
98.5 The Spanish operator, Telefonica has also
refused to grant roaming facilities for Gibraltar's mobile phone
network. Telefonica have admitted that they are acting on instructions
from the Spanish Government. These discriminatory measures have
been the subject of a complaint to the European Commission by
Gibraltar's own telecommunication operators. The Commission has
taken up the matter with the Spanish Government who have replied
that they will not recognise Gibraltar's code nor permit her operators
to connect directly to the Gibraltar mobile phone operator to
permit roaming in Spain for Gibraltar subscribers.
98.6 Shipping Registry. Gibraltar's shipping
register was designated as a Category 1 Register by Order in Council
i.e., The Merchant Shipping (Categorisation of Registries of Overseas
Territories) (Gibraltar) Order 1996. Gibraltar has invested heavily
in upgrading the Register in legislating to international standards,
and in investing on staff and facilities to market the Register's
advantages internationally. The development of the Register is
crucial to the overall development of Gibraltar's Port and facilities.
A leading international company was about to
flag its ship into the Gibraltar register when its Spanish port
agent was told by the Spanish Maritime Authorities "that
as far as they are concerned the Gibraltar Registry does not exist
for Spain and that they would not grant any permission for moving
cargoes between two Spanish ports on a Gibraltar registered vessel".
As a result of this the ship-owner in question was dissuaded from
registering in Gibraltar.
Under Article 4 of the Annex attached to the
European Commission's State aid guidelines for the maritime transport
sector (Document 97/C205/05), which annex defines "Member
State Shipping registers" it states that "in the case
of Gibraltar, the Treaty applies fully and, although the territory
is not considered part of the UK, the Gibraltar register is, for
the purposes of these guidelines, considered to be a Member States'
register". Attached at Annex 10.
Representations were made to HMG in February
1998 explaining that the Spanish action was seriously detrimental
to the commercial prospects for Gibraltar's British Category 1
Register. It also represented a gratuitous breach of Spain's EU
obligations towards Gibraltar and of its rights. Finally it represented
a bare faced challenge by Spain to British jurisdiction in, and
therefore sovereignty of, Gibraltar. HMG was asked to obtain formal
assurances from Spain that Spain would not withhold recognition
of our Register, nor interfere with ships registered on it.
By November 1998, there were further reports
of difficulties being experienced by ship-owners in Greece and
Italy where the Port Authorities raised doubts about the status
of Gibraltar's ship registry. The Gibraltar Government asked HMG
to take steps to ensure that all EU Member States were formally
reminded about the status of the Gibraltar Registry and that confirmation
was sought and obtained on recognition. As the UK DETR has confirmed,
the Gibraltar Registry is properly constituted under UK law and
operates in accordance with international conventions.
99. The competent authority issue
99.1 Since Gibraltar entered the EC (with UK
in 1973) the inter relationship of our EC Status on the one hand,
and our own Constitution on the other hand has resulted in a situation
whereby the practical implementation and administration of an
EU measure in Gibraltar has been done by Gibraltar's own domestic
constitutional, competent authority or contact point (as the case
99.2 Spain is now seeking to prevent
this by insisting that Gibraltar should become the political and
administrative responsibility of the appropriate UK domestic competent
99.3 This is not acceptable to the Government
of Gibraltar since it would result in the abrogation of our constitutional
autonomy and in the very substantial erosion of our administrative
and jurisdictional competence. This would, in practice, amount
to administrative integration into the UK, without political integration,
and would thus be constitutionally retrograde for Gibraltar. This
is Spain's objective since she has never recognised, and has always
sought to reverse our Constitutional autonomy.
99.4 It is essential that the UK should retain
and exercise its right to continue to designate the appropriate
competent authority in Gibraltar for the implementation of EU
99.5 This of course does not raise any issue
of international or diplomatic representation of Gibraltar which
is, of course, done by the UK.
99.6 In this connection please see the following
paragraph in HMG's internal document at Annex 8 (referred to in
this Memorandum at paragraph 100.7):
"competent authorities: where
competent authorities are not named in the text itself, it is
necessary to ensure that more than one authority is acceptablei.e.,
that any reference is in the plural where the context demands
this. If competent authorities are actually listed, the relevant
Gibraltar authority (where applicable) should be named alongside
the main UK authority."
99.7 Financial Services/Financial Services
Commission. Having transposed all EU legislation on insurance
and satisfied the UK supervisory authorities that Gibraltar's
standards of supervision matched those of the UK, it was agreed
in June 1997 that Gibraltar was authorised to issue insurance
licences for business throughout the EU, commonly known as insurance
passporting. The UK Government confirmed that insurance companies
with head offices in Gibraltar and with authorisation from Gibraltar
would be able to operate both in the UK and in all other Member
States. The UK Government further confirmed that if any Member
State were to challenge this right Gibraltar would be able to
count on the UK Government's support. UK Rep Brussels wrote to
the European Commission to notify the decision taken and to put
the Commission on notice that the UK expected the Commission to
support fully the right of Gibraltar insurers to do business in
other EEA States. A number of Member States refused to accept
that the UK notification was valid. This is largely the result
of Spain's lobbying. This has severely affected Gibraltar's ability
to develop the insurance market. The UK Government lobbied Member
States to reinforce the validity of Gibraltar issued licences.
In an attempt to resolve this blockage, Gibraltar agreed that
a post-box mechanism (whereby communications were sent to Gibraltar
via the UK) could be used to overcome concerns in other Member
States. This alternative solution has to date not been cleared
in Whitehall because of inter departmental differences as to which
department would assume responsibility for the post-box.
Gibraltar also has completed transposition of
all EU banking legislation but is still awaiting confirmation
from the UK that it will be authorised to issue banking licences
for passporting into the EU.
99.8 European Company Statute Regulation.
There is currently a proposal for a Regulation to establish the
European Company Statute. This provides for the registration of
a common European company and for communications between the different
competent European registries to communicate and exchange information.
Spain has objected to the nomination of Gibraltar's companies
registry as a competent authority for such purposes. Negotiations
are on going and consideration is being given to a post-box formula
on a similar basis to that which has been proposed for insurance
99.9 Winding up Directive. Spain has
objected to Gibraltar's inclusion in the scope of a proposed 1985
EU Directive concerning the re-organisation and winding up of
credit institutions. This directive is based on the principle
of mutual recognition of administrative and judicial decisions
adopted, on the basis of domestic legislation, by the courts of
every Member State. The UK has, for the purposes of the directive
designated the insolvency laws and courts of England and Wales,
Scotland, Northern Ireland and Gibraltar. Spain does not consider
that it has to recognise, by means of a directive, the decisions
of a Gibraltar Court applying measures which are specific to Gibraltar.
Spain has sought the exclusion of Gibraltar's
courts from this directive on the basis that she does not wish
to recognise the insolvency and company re-organisation decisions
of the Supreme Court of Gibraltar.
99.10 Justice and Home Affairs (Third Pillar).
Co-operation between EU Member States in matters of justice and
home affairs have been dealt with under the Third Pillar of the
EU Treaty as intergovernmental agreements. This therefore requires
unanimity among Member States. Several Third Pillar instruments
were negotiated throughout 1997 and 1998 including the European
Judicial Network, the EURODAC Convention and the Driving Disqualification
Convention. Spain adopted the position that it would not agree
to any of these measures if Gibraltar's authorities were designated
as competent authorities, insisting that Gibraltar could only
participate through the UK's metropolitan domestic authorities.
The Gibraltar Government requested the UK Government to insist
on the UK's right as the Member State to designate the relevant
authority in Gibraltar. The UK position in December 1997 in relation
to EU Justice and Home Affairs measures then under discussion
was that the UK:
cannot accept anything which stops
the UK from designating Gibraltar as a contact point if it chooses
to do so, or which would allow Spain plausibly so to argue after
cannot accept anything which forces
the UK explicitly to recognise and thereafter to some degree to
acquiesce in Spain's refusal to deal with Gibraltar;
can accept something which implicitly
accepts that one Member State does not have to deal through a
given contact point in another Member State.
This was subsequently modified in February 1998
the territorial scope of a Third
Pillar instrument should include Gibraltar unless there are good
reasons for not doing so;
the UK should retain and exercise
its right to designate the appropriate competent authority in
Gibraltar if it wishes to do so.
the UK can accept implicitly that
one Member State does not have to deal through a given contact
point in another Member State.
By May 1998, this position had been abandoned
by HMG on the grounds that the three measures could not remain
blocked indefinitely and that there was pressure from other Member
States to facilitate the lifting of Spain's veto. The language
agreed by HMG over the EURODAC and Driving Disqualification Conventions
required the UK to nominate competent authorities/contact points
only in the UK and positively disallowed the UK's right
to nominate a competent authority in Gibraltar. It was in the
light of this extraordinary concession that Gibraltar was obliged
to opt to be excluded from the measures rather than be forced
to participate through the UK's domestic authorities and thereby
surrender its jurisdictional status and administrative autonomy
and allow Spain to make deep inroads into our Constitution.
99.11 The UK's position in relation to these EU
HMG has recognised the existence of all the
above mentioned threats to Gibraltar's position. Attached to this
Memorandum, as Appendix 8, is a "checklist of Gibraltar pitfalls
in EU business" circulated by the Cabinet Office to all UK
departments in March 1997. This confirms all the issues dealt
with in this part of this Memorandum.
In particular, it identifies Spain's challenge
to Gibraltar's separate juridical personality and our right to
provide Gibraltar's competent authority in relation to the application
in Gibraltar of EU measures.
I would particularly refer the Committees attention
to this document. Although this document is not classified, I
believe that it would be appropriate for the Committee to treat
100. Amongst the many threats to Gibraltar contained
in the document setting out the Matutes proposals is the threat
to ensure that EU directives relating to financial services are
strictly applied in Gibraltar.
101. This does not in fact represent a threat.
Three years ago the Gibraltar Government made it clear that its
policy was to reposition Gibraltar as a fully compliant finance
centre within the EU. To this end, during the last few years,
Gibraltar has transposed almost all applicable directives, including
those relating to insurance, banking and investment services.
Even though EU directives do not require it, we have also regulated
the company and trust formation and management business. No other
offshore finance centre has yet done so.
102. Consequently Gibraltar fully intends to
comply with all EU legal requirements in relation to financial
services. As stated earlier in this Memorandum, the only significant
financial services directives remaining to be transposed are the
Fourth and Seventh Company Law Directives.
103. Nevertheless Gibraltar's EU status does
present challenges to its finance centre. These comprise mainly
(1) the proposal for a directive on taxation on savings and (2)
the Tax Code relating to so called "harmful taxation competition".
104. The proposed directive on taxation on savings,
as the draft currently stands, would require banks, in respect
of depositors who are resident in an EU member state, either to
deduct tax from interest paid (currently the rate of 20 per cent
is mooted) OR alternatively to inform that tax authorities
of the member state in which the depositor is resident of the
fact that interest has been paid to him. This proposal will significantly
prejudice Gibraltar's offshore banking sector which is currently
an important part of our finance centre and a significant employer.
Gibraltar Government requested HMG to exclude Gibraltar from this
directive, given the potentially very serious effect of it on
our economy. HMG declined to do so.
105. Many of Gibraltar's finance centre products
(and indeed non finance centre related inward investment incentive
schemes) are incompatible with the Tax Code on Harmful Tax Competition.
The effect of this Code (especially when, but regardless of being,
added to the effects of the proposed directive on taxation of
savings and the Fourth and Seventh Company Law Directives) would
have several adverse consequences to the Gibraltar finance centre
as currently constituted.
106. The Tax Code is a voluntary political agreement
and is not legally binding. The Gibraltar Government requested
HMG to exclude Gibraltar from its scope given that it did not
constitute an international legal obligation. Taxation is constitutionally
a matter for the Government of Gibraltar which does not wish to
be included in this "non-binding political agreement".
HMG declined to exclude Gibraltar.
107. Given that the Code does not constitute
an international legal obligation, and given the position under
the Constitution, and further than the Code is voluntary, the
Gibraltar Government will not implement or comply with it. However,
the Gibraltar Government has indicated to HMG that given that
the Code, in any case, reflects a wider agenda towards which the
international community is inexorably moving (vide the parallel
OECD and G7 initiatives), the Gibraltar Government will, in manner
and in a timescale compatible with the economic interests of Gibraltar,
move towards repositioning our finance centre so in the medium
to long term it will, in fact, not offend the Tax Code (and other
similar international, non-EU initiatives).
H. SCHENGEN ISSUES
108. In my statement to the Committee on 5 November
1997 I pointed out the dangers to Gibraltar should Britain decide
to opt into any of the existing Schengen acquis measures,
following the fact that, on the night of the Amsterdam Treaty,
Spain effectively obtained a veto by requiring the unanimous consent
of the other member states to UK opt-in.
109. At paragraph 18(3) of my statement I asked
the Committee to remain vigilant and to press HMG for commitments
"If, in the event that at some future date
HMG decides that UK wishes to take part in the Schengen arrangements
and if, upon so applying to do, Spain seeks to apply a veto to
UK participation, unless UK agrees to exclude Gibraltar from participation,
that HMG does not agree to such a course of action."
110. HMG is currently considering which parts
of the exiting Schengen acquis it wishes to participate in. HMG
has indicated that it is not currently interested in participating
in those parts of the existing Schengen Acquis which relate to
111. The Gibraltar Government has informed HMG
that Gibraltar wishes to participate in all parts of the Schengen
acquis in which the UK participates. We have informed HMG that
exclusion of Gibraltar from any part of the Schengen acquis which
UK participates in will isolate Gibraltar in the EU. I attach
to this Memorandum, as Appendix 9 copies of letters dated 27 November
1998 and 23 February 1999 addressed by the Gibraltar Government
to the FCO.
112. In this respect I am reassured by the statement
made in the House of Commons on 16 March 1999 by the Foreign Secretary,
Robin Cook in answer to questions from Mr Michael Howard. Asked
by the latter whether he would assure "the House that the
Government's application to sign up to Schengen will include Gibraltar
and that they will not make any concessions on Gibraltar in order
to overcome Spain's veto", the Foreign Secretary answered
"There is no intention of making any concessions
on Gibraltar in relation either to this issue or to any other."
I. ISSUES RELATING
TITLE IIIA TEC RELATING
113. At paragraph 18(4) of my statement dated
5 November 1997 to the Committee I asked that the Committee to
remain vigilant and to press HMG for commitments, inter alia on
the following matters:
"Although we are assured that she would
not be entitled to do so, that should Spain attempt to exclude
Gibraltar from other measures to be drawn up under the new Title
IIIA of the Treaty in the field of visas, asylum, immigration
and other policies related to free movement of persons, which
include external border controls and police and judicial co-operation,
HMG will ensure that Spain's attempt would not succeed."
114. During your recent visit to Gibraltar the
Committee asked me to comment on the assurances that I have received
in this regard.
115. As members of the Committee will know,
Title IIIA to the Treaty Establishing the Community is part of
the First Pillar. We have frequently been told that Gibraltar
has an entitlement to participate in First Pillar measures, with
the UK, pursuant to Article 227(4) of the Treaty (quoted earlier
in this Memorandum at paragraph 76). Spain has no right to insist
on Gibraltar's exclusion, given that First Pillar measures are
community acts. This is in contrast to Third Pillar measures which
are inter governmental agreements. It appears that Spain is not
bound to agree to intergovernmental measures on terms with which
she does not agree.
116. The reason why I requested the Committee's
vigilance not withstanding our treaty right to participate in
the First Pillar measures under the new Title IIIA is that there
is a precedent for HMG's gratuitous exclusion of Gibraltar from
the application of a First Pillar measure, namely the Air Liberalisation
Directives. Notwithstanding therefore that Spain has no legal
entitlement to exclude Gibraltar, HMG may nevertheless agree to
do so (as occurred with the Air Liberalisation Directives) to
unblock internal EC negotiations on the measure. It is vital to
Gibraltar's EC rights and interests that this does not occur.
117. The agreed record of a meeting that took
place on 7 June 1997 between me and the Head of the European Union
Department of the FCO contains the clear statement that:
"all measures under the First Pillar applied
to Gibraltar. Those under the Third Pillar would only apply if
the UK agreed to under intergovernmental arrangements."
118. This position is corroborated by several
statements made by Ministers subsequent to the signing of the
Treaty of Amsterdam in June 1997.
119. In a letter to me dated 27 August 1997
Doug Henderson (then Minister of State at the Foreign and Commonwealth
"You raised the possibility of the UK participating
in future measures on frontiers adopted under Title IIIA of the
draft Treaty of Amsterdam. If those measures are proposals to
build on the Schengen acquis, UK participation is governed by
Article D of the Schengen Protocol. If they are unrelated to the
Schengen acquis the procedure in Article 3 of Protocol Y applies.
If the UK does not participate initially but wishes to do so later
this is not subject to unanimous decision, but to the procedure
in Article 5a.3 of the flexibility provisions. This procedure
requires the Commission to decide on the UK's request to participate."
120. In the debate in the House of Commons on
the European Communities (Amendment) Bill Doug Henderson said,
on 15 January 1998 (at col. 566), as follows:
"The answer is that, where a measure is
introduced under the European Community Treatyin other
words, a first pillar measureGibraltar is included by virtue
of Article 227, paragraph 4 of the Treaty . . . "
J. EUROVOTE ISSUE
121. The European Court of Human Rights has
ruled that the UK is in violation of Article 3 of the European
Convention of Human Rights as a result of having failed to make
provision to enfranchise the people of Gibraltar to elections
for the European Parliament.
122. In Annex II of the EC Act of Direct Elections
of 1976 (an EC agreement between the member states) the UK had
said that in respect of the UK the act would apply only to the
UK (i.e., not Gibraltar). Consequently the subsequent UK Act of
parliament establishing elections for MEPs in the UK did not make
provision for Gibraltar.
123. HMG believes that it cannot comply with
the ruling without obtaining an amendment to the 1976 Act/Treaty.
I believe that HMG has given notice in the Council seeking such
124. Gibraltar naturally expects that the violation
will be rectified as soon as possible. This will require the enfranchisement
of the people of Gibraltar in the territory of Gibraltar by including
the territory and consequently (the qualifying) Gibraltar electorate
in one of the new UK Regional Constituencies.