Select Committee on Foreign Affairs Minutes of Evidence

Examination of Witness (Questions 80-91)



  80. May I put another alternative to you, which I know has already been rejected by the Foreign Office in the past and that is doing what the French do with their former colonies and what the Spanish do with Teneriffe and Ceuta and Melilla and that is to make Gibraltar part of mainland Britain with its own Member of Parliament here, with all the laws we enjoy here being extended to Gibraltar, in other words making it exactly the same as mainland Great Britain?

  (Mr Hain) The difference between Ceuta, for example, which was passed formally to Spain under the Treaty of Lisbon in 1688, and Gibraltar which was a subject of a Treaty of Utrecht in 1713 is that in that Treaty it was jointly agreed between Spain and Britain that sovereignty would be vested with Britain unless Britain relinquished that fully, in which case Spain would have first refusal on it. That is what the difference is. That is one of the reasons why we are grappling with an entirely different situation. I can say as a matter of policy in addition, even if that were not the case, that it is not this Government's policy to integrate Gibraltar with the rest of the United Kingdom. It is not and nor will it be.

  81. Why not?

  (Mr Hain) For the Treaty reasons I have given, that is not possible. Secondly, in modern Europe, to have a territory off the Spanish mainland, indeed linked to the Spanish mainland, some 1,800 miles from Britain somehow integrated into mainland Britain is not what the modern Europe is about. The modern Europe and Gibraltar's place in it could be about an open border, people going freely across that border, Gibraltar's businesses probably being the financial hub of the entire region, prospering in the entire region, Schengen arrangements, Common Customs Union arrangements and all the rest of it. Modern Europe and certainly this British Government are not about seeking to bring a territory into the United Kingdom's ambit. That is not really where we are and I am really surprised that this is suggested.

Mr Pope

  82. I am taken with this idea of comparison with Northern Ireland and the peace process and the run-up to the Good Friday agreement. It does strike me though that one of the differences is that no matter how unreasonable the different factions were in Northern Ireland they did all participate in the process. It seems to me that the Government of Gibraltar is being intransigent in not participating in the Brussels process, not exercising its voice. We have heard from the Chief Minister that he thinks they would be better of being represented by an empty chair. Do you think that is in Gibraltar's interests?

  (Mr Hain) I do not; I really do not. Those discussions would be enormously enhanced in their quality and in their credibility if the voice of Gibraltar were heard at them. We could have a better outcome, we could have better quality discussion on a lot of the detail. It stands to reason that the elected representative of the people of Gibraltar is better able to express the voice of Gibraltar than a British Minister or a Spanish Minister. As you suggest, the comparison with Northern Ireland is instructive in that we have the same experience of Unionists refusing to talk to Nationalists, the same bitter enmity between those different groups as you now find between Gibraltarians and the Spanish, politically at least. We overcame it in that respect and we could overcome it in this respect as well with a bit of flexibility, a bit of modern thinking instead of sticking to past positions which get the people of Gibraltar nowhere very fast indeed.

  83. I certainly agree with the assertion that the status quo is not really sustainable in the long term. I also strongly believe that the status quo is not in the UK's interests. I really do not think it is in Gibraltar's interests. Presumably what is on offer here through the talks is a much more stable and secure future for Gibraltar than we have seen over the last ten years.

  (Mr Hain) I absolutely agree with that. The prize for Gibraltar is the sovereignty issue no longer impeding the proper development of Gibraltar economically, socially, in terms of human rights, democratically and in every other way. The prize is good relations with Spain. The prize is access to the Spanish market, to the European market as a whole. The prize is the European Union's institutions supporting Gibraltar instead of Gibraltar seen as being caught in a dispute which stopped progress on matters like air safety and so on. That is a fantastic prize and it ought to be seized.

  84. A final question on a separate issue and that is tax. Last year OECD named Gibraltar as one of 35 tax havens which need to improve transparency with overseas investigators. We are aware of the longstanding allegations from the Government of Spain that Gibraltar engages in economic and fiscal dumping. I just wanted to know whether the UK can do something about that and if it can, will it?

  (Mr Hain) Gibraltar is involved in court action against the Commission, the Court of First Instance, at the present time as a result of actions which have been brought by the Commission for harmful state aids. This is another instance where if we had been able to negotiate a different situation and Gibraltarian compatibility and with EU codes in respect to taxation and other matters, then we could have got a lot more assistance from the European Union and from the European Commission for Gibraltar, instead of the Commission feeling it was obliged to take action for what it regards as unfair tax practices and harmful state aids. Yes, that prospect could be a great prize for Gibraltar too.

Ms Stuart

  85. In your opening remark you made the historic reference, that we are dealing here with an historic problem which has its roots 300 years ago. It is also becoming quite clear to many of us that there are very entrenched positions on both sides, some justifiable, some unjustifiable. You also made reference to possibly needing some kind of new thinking. May I fly a kite with you? If Spain is in some areas as intransigent as it seems to be, like not producing evidence on smuggling, what would you say to a suggestion that we say to them that there are some comparisons to be made between the position of Gibraltar and Britain and to some of the territories in Morocco, despite the fact there are historic differences? Why do Spain, Morocco, Britain and Gibraltar not sit round the table and talk about territories as a way of breaking the deadlock?

  (Mr Hain) I have enough problems on my patch.

  86. It would make it very easy.

  (Mr Hain) Gibraltar, issues in Europe, Afghanistan, sanctions busting in Angola and Sierra Leone let alone dealing with the problem of Ceuta. I will not take that on board frankly. I am not seeking to defend the situation either. I am seeking to modernise the whole of the world frankly, which is a longstanding ambition of mine which I am sure will have the unanimous backing of the Committee. On the narrow issue of smuggling, if I may be so bold as to suggest it, I think there might be a case for inviting my Spanish counterpart and hearing his argument on all these matters. Perhaps it would improve understanding on it. Yes, there are bitterly entrenched positions, a lot of them totally unjustifiable, but it is the job of Government and the duty of a responsible Minister to seek to overcome them. I do not need this. The Foreign Secretary does not need this. We could continue with the status quo, continue getting weekly phonecalls from Gibraltar about this complaint or that complaint, continue to be appalled about border delays, continue to be irritated by EU business being hampered by the dispute between us and Spain. The duty of this Government is to try to resolve it. That is what we are honestly trying to do. If we are unable to do it, at least we shall have tried.

Sir John Stanley

  87. On more than one occasion you have asserted that the status quo is not sustainable. Why do you believe that is the case?

  (Mr Hain) For reasons I have given, because of the aggravation facing Gibraltar, because of the stance of the European Union which wants to see the interests of all Europe's citizens on matters like air safety, including flights to Gibraltar enhanced, our safety and security enhanced, matters like this. All sorts of issues are actually impeded by the dispute which continues to exist between London and Madrid over Gibraltar and including Gibraltar. We ought to try to resolve this triangular dispute. It is not sustainable, it is not sustainable at all. If we walked away from our duties here, life would become worse for the people of Gibraltar. It would not become better. We are trying to make it better. I cannot for the life of me understand why we are criticised for trying to give the people of Gibraltar a better life.

  88. May I put to you another view for your response? The present situation has been sustained over a long period. The reason why the aggravation to which you referred continues is because this present Government, any more than the previous Conservative Government, is not prepared to stand up straight and to use its legal powers which it has as a member of the European Union to enforce compliance by the Spanish Government with its legal obligations towards Gibraltar in relation to free movement of people, free movement of goods and the economic union. Is it not about time that this Government, as the previous Government in my view should have done, takes its position that it is not prepared to tolerate another Member State of the European Union engaging in economic sanctions against a British dependency?

  (Mr Hain) First of all, I find the sanctions, as you describe them—your words, not mine—as being just as objectionable as you do. Why have successive governments not done that, including your own? Why have we not done that? If it were so easy, we could just have gone to the courts. It's not so easy. Take the question of telephones, for example. The Chief Minister asserted that this could be resolved by court action. I am not sure that it could. Gibraltar does not put VAT on its telephones. The Spanish continuously complain that if they ceded all of Gibraltar's rights over telephones—and we put Gibraltar's case very strongly directly over the negotiating table—in effect they would be setting up a telephone tax haven as it were to take over and compete unfairly with their own telephone operators. There are all sorts of issues like that which are not as simple as they sound and not capable necessarily of being resolved by court action. There is an additional argument here, which is that these things are not best sorted out by lawyers, with all due respect to lawyers, and my own boss is a lawyer, as is the Chief Minister, as is the Chairman, so I am treading on difficult ground here. I do not think they are best sorted out by lawyers or judges in courts. They are best sorted out by political discussion and negotiation and agreement. You are dealing with historically fiercely entrenched views, like you were in Northern Ireland and you solve them by talking.

  89. You have made a lot of parallels with Northern Ireland and we are all wise in this business to be fairly distrustful of parallels because every situation is different, but as you put one parallel on the table, may I offer another one for consideration? The Falklands. We have probably the best relations with Argentina in relation to the Falklands now because following the failure of the previous Government's diplomatic policy towards the Falklands we proceeded with Argentina on the basis that sovereignty was off the table and that we would talk about anything with Argentina but we would not talk about the sovereignty of the Falklands. May I ask you, before deciding to go down the present path, whether the Government gave serious consideration to saying that the Brussels process initiated by the previous Conservative Government was fundamentally misconceived and we should proceed in our dialogue with Spain on the clear understanding that sovereignty is off the table?

  (Mr Hain) One of the many differences involved, apart from the fact that the Argentinians actually invaded the Falklands, one of the very many differences involved, is that Gibraltar and Britain and Spain are part of the European Union and that imposes quite different obligations on us all, a quite different approach to life and even the Conservative Government, our predecessors, even the Chief Minister, as he told you only a little while ago and as he has consistently said publicly, agree that sovereignty will be on the table. I do not think anybody disputes that. Spain would not come to the discussions unless it could at least raise its sovereignty issues. May I just clarify one other benefit of the Brussels process, since I am reminded of it. The reason that the Chief Minister was able to meet Carlos Bastarreche the very senior official in the Spanish Foreign Office was because I set it up as a result of the Brussels process meetings. I said I thought it was important for them to talk to each other. That meeting followed directly. I phoned the Chief Minister and I phoned Carlos Bastarreche and I got them talking to each other. That meeting was a very productive one. It lasted many hours. There was no agreement, but you would not expect there to be. It started dialogue. The next stage of that dialogue could be another meeting with him or it could be a meeting at a higher ministerial level; another product, another win for Gibraltar out of the Brussels process. Dialogue wins over a war of words or over all the other aggressive actions we have seen in this context.


  90. In our sixth report in the session 2000-2001 we urged the Government to rebut, refute inaccuracies of fact in relation to Gibraltar put forward by the Spanish Government. We know a number of those have related to smuggling, you have received no evidence; we know a number of those relate to financial controls. Can you give examples as this Committee sought, where the Government has stood up for Gibraltar and refuted inaccurate statements made by the Spanish Government?

  (Mr Hain) I did so only in the House on 7 November when I complained about border delays and about the denial of telephone access. I have done so publicly in Gibraltar.

  91. And smuggling?

  (Mr Hain) We had a very intense conversation with the Spanish about smuggling and we have said we object to the imposition of border controls as a result of allegations they make about smuggling. They come back to us equally fiercely and we shall continue to put that argument. I have seen no evidence of smuggling.

  Chairman: We have had two robust statements today. We thank you very much indeed for clarifying the position.

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