Select Committee on Foreign Affairs Eleventh Report



(a)  We conclude that Britain's negotiating position with Spain could not have been prejudiced by the British Government disclosing on, or shortly after, the relaunching of the Brussels Process in July 2001 that joint sovereignty over Gibraltar was under discussion as the Spanish Government was already fully involved in those discussions. We further conclude that the refusal of Ministers to make such a disclosure represented a serious failure in their accountability obligations to this Committee and to Parliament (paragraph 13).

(b)  We conclude that it will be a long time, if ever, before any agreement based on the principles outlined by the Foreign Secretary to the House on 12 July 2002—including joint sovereignty—can be made acceptable to the people or to the Government of Gibraltar (paragraph 17).

(c)  We reject the Foreign Secretary's view that it is "eccentric" for the Government of Gibraltar to hold its own referendum. We consider that in British Overseas Territories it is of great importance that democratic expressions of view should take place when territories themselves so determine. We recommend that the British Government take full account of the views of the people of Gibraltar as expressed in the referendum held on 7 November (paragraph 24).

(d)  We conclude that, without a prolonged period of wooing the people of Gibraltar, it was surely unrealistic of Spain to expect any change on their part (paragraph 27).

(e)  We conclude that the Government was wrong to negotiate joint sovereignty, when it must have known that there was no prospect whatsoever that any agreement on the future of Gibraltar which included joint sovereignty could be made acceptable to the people of Gibraltar, and when the outcome is likely to be the worst of all worlds—the dashing of raised expectations in Spain, and a complete loss of trust in the British Government by the people of Gibraltar (paragraph 31).

(f)  We recommend that the Government in its response to this Report explain whether previous Governments had, as it appears from the evidence, made a commitment to the Gibraltar Government to seek the Chief Minister's specific endorsement before entering into any new arrangements affecting Gibraltar at the Brussels Process talks, and, if this is indeed the case, why the current Government decided not to renew that commitment (paragraph 39).

(g)  We conclude that it was politically impossible for the Gibraltar Government to participate in the Brussels Process talks without also having the power to limit the outcome of those talks (paragraph 41).

(h)  We conclude that by publicly questioning the probity of the Gibraltar Government during the course of the relaunched Brussels Process talks, the British Government has unwisely increased tension and suspicion of its motives within Gibraltar (paragraph 45).

(i)  We conclude that it is highly ironic that the British Government has given credence to complaints by Spain about law enforcement and the supervision of financial services in Gibraltar, given that these areas are the responsibility, not of the Gibraltar Government, but of the British Government and of the Financial Services Commission appointed by it (paragraph 47).

(j)  We conclude that there is no parallel to be drawn between Gibraltar's legitimate complaints against Spain and Spain's unjustified accusations against Gibraltar. We recommend that the British Government should, as our predecessor Committee recommended, rebut such allegations promptly and decisively. We feel strongly that the Government's failures to rebut Spain's unfounded allegations have let the people of Gibraltar down. If the Government believes that any of the Spanish allegations are in fact justified, it must set out clearly in its response to this Report which allegations these are, and how it expects the relevant authorities to remedy the situation (paragraph 50).

(k)  We conclude that the British Government now faces an unenviable choice. On the one hand, it can continue to negotiate on the issue of joint sovereignty and reach a bilateral agreement with Spain which may be in the wider British interest, but which will not be acceptable to the Government or people of Gibraltar. On the other hand, it can withdraw its joint sovereignty proposal—with the risk that Spain will react negatively, both bilaterally and against Gibraltar—re-establish trust and good relations with the Government and people of Gibraltar, encourage Spain to do the same, and only then attempt to negotiate an agreement with Spain, with a representative of Gibraltar participating as a full negotiating party (whether under the British flag or not). We further conclude that this dilemma is entirely of the Government's own making (paragraph 52).

(l)  We recommend that the Government in its response to this Report explain what measures any European Union member state could take to obstruct unilateral action by the United Kingdom to enfranchise the Gibraltar electorate (paragraph 55).

(m)  We conclude that the British Government is honour bound to carry out its promise to enfranchise the Gibraltar electorate in time for the European Parliamentary elections in 2004. We recommend that the Government ensure that adequate parliamentary time is made available during the next session of Parliament to ensure that the necessary legislation is enacted (paragraph


(n)  We conclude that it is manifestly unjust for Gibraltar to be legally liable to pay uprated pensions to Spanish pensioners who had been prevented from making pension contributions for years by their own Government. We further conclude that it is unfortunate that the issue of this liability was not satisfactorily resolved before Spanish accession to the European Community (paragraph 64).

(o)  We conclude that the legality of Community Care payments has yet to be established under European law. We recommend that a resolution of this issue be sought as soon as possible, without the British Government taking a view on the merits of the case which might prejudice its outcome (paragraph 76).

(p)  We conclude that the status quo established by the freezing of Gibraltar pensions was unsustainable, and that it would have been politically precarious, and potentially immoral, had the Gibraltar Government not taken steps to ensure that Gibraltar residents of a pensionable age were adequately provided for (paragraph 78).

(q)  We recommend that the British Government should continue to meet the original liability to pay pensions at frozen 1988 rates to Spanish pensioners, although we believe it unjust that this liability should exist at all (paragraph 79).

(r)  We recommend that in the event that additional liability relating to pensions is incurred directly as a result of the existence of the Household Cost Allowance, this liability should be apportioned between the British and Gibraltar Governments on an agreed basis if possible and failing that by some form of arbitration, but that any additional liability which would have been incurred regardless of the existence of that allowance should be met in its entirety by the British Government (paragraph 82).

(s)  We conclude that it was deplorable for a Government minister to have described the pensions situation in Gibraltar as a 'scam' (paragraph 84).

(t)  We conclude that the root cause of the current pensions issue in Gibraltar is a weakness in EU legislation, exploited by the Spanish Government, which requires the Gibraltar Government to pay full pensions to a large class of people (who happen to be Spanish) who have barely contributed to the Gibraltar pension fund, through no fault at all of the Gibraltar Government. It may be that this is the law, and that nothing can be done to change it. But the current arguments between the British and Gibraltar Governments as to liability, and about the rather opaque activities of Community Care, are a direct result of this unfair legal circumstance. The current pensions situation, with or without Community Care, is highly unsatisfactory. The British and Gibraltar Governments should be co-operating to try to find a workable long-term solution to the issue, rather than wrangling about who is to blame and who should pay for the current situation, for which neither of them is to blame, and for which, in an ideal world, neither of them should have to pay (paragraph 87).

(u)  We recommend that the Government seek as a matter of urgency a meeting between British, Spanish and Gibraltar officials to find a workable solution to the issue of communications between Gibraltar and Spain (paragraph 105).

(v)  We recommend that if no solution to the Gibraltar communications issue can be found through negotiation with Spain, the Government should refer the matter back to the European Commission and should be prepared if necessary to take it to the European Court (paragraph 106).

(w)  We recommend that, in the absence of further progress on telecommunications access with Spain in the near future, the British Government should explore with Gibraltar the possibility of enabling access to Gibraltar telephone lines via the British numbering plan and dialling code as well as via Gibraltar's international dialling code (paragraph 107).

(x)  We conclude that Spain's refusal to allow Gibraltar-bound aircraft to divert to Spanish airports in adverse weather conditions is potentially dangerous as well as unjustified. This is precisely the sort of incomprehensible restriction which obstructs hopes of understanding between Spain and Gibraltar (paragraph 110).

(y)  We recommend that the Government reexamine its landing charges for commercial aircraft at Gibraltar airport to ensure that they do not exceed the real cost of allowing commercial operations to take place. We further recommend that the Government should assess whether reducing the landing charges would encourage greater commercial use of the airport, thereby ensuring that current revenues are maintained (paragraph 111).

(z)  We welcome the opening of a second customs lane at the crossing from Gibraltar to Spain, and we recommend that the Government encourage Spain also to open a second lane at the crossing from Spain to Gibraltar (paragraph 112).

(aa)  We conclude that it is mystifying that the European Commission has been unable to find any evidence at all to support the legal argument that Spanish checks at the border with Gibraltar are disproportionate. We recommend that the Government in its response to this Report set out its understanding of the basis on which the European Commission concluded that Spanish checks at the border with Gibraltar are not disproportionate, and the evidence that was considered in reaching this conclusion (paragraph 116).

(bb)  We conclude that it would be inequitable were Gibraltar to be forced unilaterally to abolish its low rates of tax and import duty, without the same situation applying more widely. We recommend that the Government explain in its response to this Report its position on the sustainability of Gibraltar's tax and customs status, with detailed reasons for this position. We further recommend that, in the event of offshore financial centres being phased out, the British Government should provide practical assistance and advice to Gibraltar to help its economy to react to these changed circumstances (paragraph 124).

(cc)  We recommend that the Government take vigorous and determined steps through NATO to lift the reservation on direct military movements between Gibraltar and Spain and to end the ban on direct military communications between NATO forces in Gibraltar and Spain (paragraph 127).

(dd)  We conclude that there is a risk that in the event of an agreement concluded between Spain and the United Kingdom which did not enjoy the support, or at least the acquiescence, of the people of Gibraltar, the military base might find its ability to operate severely constrained by the local population (paragraph 129).

(ee)  We recommend that the Government explain in its response to this Report how responsibility for Gibraltar is apportioned within the FCO, with an explanation of why this is the case (paragraph 130).

The Foreign Affairs Committee has agreed to the following Report:

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