Memorandum from the Chief Minister, Government
1. By this Memorandum, the Chief Minister
of Gibraltar the Hon Peter Caruana QC, on behalf of the Government
of Gibraltar wishes to place before the Committee, by way of evidence,
the information contained herein, and the documents attached (as
& COMMONWEALTH AFFAIRS
ON 19 JUNE
2. At paragraph 22 of the transcript
and in answer to Mr Illsley, the Foreign Secretary gave evidence
to the effect that the Gibraltar Government's initial condition
for participation in dialogue was "two flags, three voices"
and that after this had been made available, it was rejected,
and further, last minute conditions were added. This is simply
3. The Foreign Secretary stated as follows:
"My very great regret is that the Government
of Gibraltar have not been present at these negotiations notwithstanding
the fact, LET ME MAKE THIS ABSOLUTELY CLEAR, that the initial
demand of the Government of Gibraltar was for what has been described
as two flags three voices, which was originally resisted by Spain.
I negotiated with Spain, they agreed two flags, three voices in
every particular and that was then turned down again by the Government
of Gibraltar when they imposed further conditions on their participation
which had not been there in the first place. One of the conditions
was that there should be some kind of complete veto over the final
outcome of any negotiations between three parties. Well you can't
have negotiations on that basis. . . "
4. These statements are wholly incorrect
and irreconcilable with the true facts as they have happened,
for two reasons:
(1) Firstly, it is not true that the Gibraltar
Government turned down "two flags, three voices". The
Gibraltar Government itself first proposed the practical detail
of a "two flags, three voices" proposal in 1996. At
no stage until 25 January 2002 did HMG accept this proposal. Attempts
had been made to negotiate these details in 1996 and 1997, but
these had failed. Finally, at meetings with the Foreign Secretary
and the Director Wider Europe, James Bevan on 25 January 2002
detailed two flags, three voices proposals were orally offered
by HMG and accepted by GOG. This acceptance has been acknowledged
in public several times by GOG (despite the fact that the arrangement
has not yet been concluded in writing). I cannot therefore comprehend
the statement that GOG "turned down" the "two flags,
three voices" offer.
(2) Secondly (and far from being "absolutely
clear") it is not true that the Gibraltar Government subsequently
to the above (or ever) imposed "further conditions on their
participation in dialogue which had not been there in the first
place". The so-called "veto" condition, namely
that no agreement should be entered into unless all three participants
(HMG, the Government of Spain and GOG) were agreed, in manner
that no agreement should be struck over the head of the Gibraltar
Government has been a GOG requirement from the outset. I would
refer the Committee, for example, to Gibraltar Government press
release No 143/96 dated 26 November 1996 (Copy attached as Annex
That press release contained the following statement:
"The fact that Gibraltar is a separate side
within the British delegation must be reflected by Gibraltar's
agreement being required for ALL decisions and agreements affecting
us and not just about sovereignty. In other words, nothing could
be agreed without the specific agreement of three sides, ie UK,
Gibraltar and Spain".
This fact has been the subject of innumerable
public statements over the years in media in Gibraltar, the UK
and Spain and in many public speeches witnessed by Foreign Office
Officials. In addition, it has been the subject of much correspondence
between GOG and the FCO, and has also been discussed extensively
and at length in meetings between the Chief Minister and every
Foreign Secretary and Minister of State for Europe at the Foreign
Office (includig the present incumbents) sine May 1996, and at
numerous meetings with FCO officials.
It is simply not possible to assert that it
is not intimately well known to the Foreign Office, both from
public and private statements, that this has been the unchanged
position of GOG since 1996.
5. By way of sample (only) of the above,
there is attached to this memorandum copies of the following documents:
(1) As Annex 1(a),
Press Release No 143/96 dated 26 November 1996 issued by the Government
of Gibraltar. (Paragraph (3) on page 2quoted aboverefers).
(2) As Annex 1(b), Press Release No 266/97
dated 27 November 1997 issued by the Government of Gibraltar.
This press release contains the following statement:
"Those conditions are that Gibraltar must
have an effective separate voice, that Gibraltar must be present
throughout all parts of the talks and that nothing can be agreed
at talks on any issue affecting Gibraltar without the explicitly
expressed agreement of the Gibraltar Government".
(3) As Annex 1(c), Press Release No 277/97
dated 8 December 1997 issued by the Government of Gibraltar.
(4) As Annex 1(d),
Letter dated 9 December 1998 addressed by the Chief Minister,
Peter Caruana, to the then Minister of State at the FCO, Joyce
Quinn. (paragraph (3) on page 2 refers)
(5) As Annex 1(e),
Letter (without enclosures) dated 29 October 1997 addressed by
the Chief Minister, Peter Caruana to Mr David Redaway (Head SED/FCO).
(6) Annex 1(f),
Letter dated 8 December 1997 addressed by the Chief Minister,
Peter Caruana to Robin Cook.
(7) As Annex 1(g),
Page 31 of the Election Manifesto of 2000 of the Governing party
(the Gibraltar Social Democrats), which says:
"We will remain willing to engage Spain
in a process of dialogue provided that the process is both dignified
and safe. Dignified in that we are represented in our own right
with our own voice, and safe in that nothing can be agreed on
any issue without our consent or imposed on us against our wishes".
6. On 16 July 2001 I was telephoned by the
Director Wider Europe at the FCO, then Mr John MacGregor, who
informed me that Messrs Straw and Pique had, that afternoon at
the margins of a European Council meeting, agreed to re-launch
the Brussels process and would publicly invite me to attend. I
replied that GOG's terms for participation were very well known,
that these had not been addressed and that there was no point
in trying to "bounce" us into participation without
addressing our terms. On 18 July 2001, I wrote to Mr MacGregor
confirming these points in detail. A copy of that letter was sent
to Mr Hain on the same day.
7. On 20 September 2001, I made a public
statement at a press conference which was broadcast live on GBC
and fully reported in the Gibraltar written press. In that broadcast
I repeated the longstanding position. I said:
"For many years now the Government's policy
has been that it wishes to engage Spain in a process of dialogue
provided that it is both safe and properly structured. Safe for
Gibraltar means that nothing can be agreed at, or result from,
such dialogue on any issue (not just sovereignty) affecting Gibraltar
without the specific agreement of the Gibraltar Government".
8. This position was restated to the Foreign
Secretary at a meeting between us in London on 9 October 2001.
9. The same position was restated in a formal
and detailed position paper submitted by GOG to FCO on 16 October
10. The same position was restated by me
to the Minister of State for Europe, the Rt Hon Peter Hain, at
a meeting in London on 23 October 2001.
11. On 23 October 2001 the Foreign Secretary
wrote to me offering terms for participation in the talks that
failed to take account of GOG's longstanding and well known position,
as it had been repeatedly stated since 1996. A copy of my reply,
dated 26 October 2001, is attached as Annex 1(h).
12. The Government of Gibraltar's longstanding
terms for participation in dialogue were again publicly repeated
in press releases 175/2001 dated 30 October 2001, 178/2001 dated
2 November 2001 and 190/2001 dated 20 November 2001. Copies of
these are attached as Annexes 1(i),
13. The Gibraltar Government's terms for
participation in dialogue were explained in a letter that I addressed
to the Prime Minister dated 8 November 2001. In that letter I
"The other term is that the UK should assure
me that nothing will emerge from or be agreed at talks unless
all of HMG, the Spanish Government and the Gibraltar Government
A copy of this letter is attached to this memorandum
as Annex 1(l).
14. In a ministerial broadcast on GBC radio
and television on 12 November 2001, which was fully reported in
the Gibraltar Chronicle, I repeated the line maintained since
1996 by saying:
"I advocate, indeed I positively seek, Gibraltar's
participation in safe dialogue. Safe dialogue is dialogue in which
we take part with the comfort and security that nothing is agreed
unless we agree to it as well. The alternative, which is neither
safe nor reasonable (but which Mr Hain expects of us) is to participate
in, and therefore legitimise, a process of dialogue in which I
will be consulted, but in which the UK and Spain can conclude
Agreements above our heads. I have told the British Government
that I will not take part in any process of dialogue on these
politically unreasonable and unsafe terms."
15. The same terms for participation were
articulated in my written statement dated 28 November 2001 to
this Committee. (Pages, 7, 8 and 9 thereof refer). A further copy
is attached as Annex 1(m).
16. I repeated this position to the Committee
in oral evidence on 28 November 2001 (paragraph 9 of the record
of my evidence refers.)
17. The same position was restated by me
at a meeting on 7 December 2001 with Mr Ed Owen, the Foreign Secretary's
18. The position was again restated in press
releases No 8/2002 dated 11 January 2002 and dated 14 January
2002 (no number). Copies are attached hereto as Annexes 1(n)
19. The Gibraltar Government's longstanding
position was again restated and discussed at a meeting between
the Foreign Secretary and me in London on 25 January 2002; and
in a meeting, on the same day with Mr James Bevan, Director of
Wider Europe, FCO. It was at these meetings that the "separate
voice" condition was offered by HMG (via a two flags, three
voices formula) in the terms that had been sought by us. It was
accepted by me. But the second longstanding condition (namely,
that there should be no agreements above GOG's head) was refused.
20. At paragraph 22 of the Transcript
(still in answer to Mr Illsey) the Foreign Secretary also said:
"And one of the conditions was that there
should be some kind of complete veto over the final outcome of
any negotiation between three parties. Well you can't have negotiations
on that basis . . . ".
It is not clear why the Foreign Secretary should
say this. Negotiations between three parties are always and necessarily
on the basis that nothing is agreed unless it is agreed by
all three parties, otherwise the negotiations are only between
the two parties who can agree or withhold their agreement.
21. In any case, the view expressed by Mr
Straw was not apparently shared by either of Mr Straw's two predecessors
(1) In a letter to me dated 24 October 1996,
Mr Malcolm Rifkind, then Foreign Secretary said:
"I also give you my assurance that
I will not agree to any new arrangements involving Gibraltar which
may be discussed at such meetings without your specific endorsement".
(2) In a letter to me dated 25 November 1996,
Mr Rifkind said:
"I will not agree, without your
specific endorsement, to any new arrangements on any matter involving
Gibraltar which may be discussed at such meetings".
(3) In a letter to me dated 3 December 1997,
Mr Robin Cook, then Foreign Secretary said:
"I can assure you that I will not
agree to any new arrangements on any matter involving Gibraltar
at the talks without your specific endorsement".
22. Contrary to Mr Straw's quoted statement,
the fact is that, ironically, in 1996 and 1997 we had the "veto"
but not the separate voice under two flags, three voices, whereas
in 2002 we were eventually granted two flags, three voices, but
refused the veto. Accordingly, it only became "impossible
to have negotiations on that basis" (ie with nothing being
agreed without GOG's agreement) in 2001-02. It had apparently
been perfectly possible in 1996 and 1997.
23. During the visit to Gibraltar on 7 January
2002 of Sir Emyr Jones Parry (HM's Ambassador to NATO, but conducting
this issue on the FCOs behalf) the Gibraltar Government proposed
a formula to overcome the apparent unwillingness of the UK (and
presumably also Spain), to accede to the Gibraltar Government's
longstanding condition that no agreement be concluded "over
its head" ie without its agreement. The proposal was that
the issue should be finessed by structuring the talks so that
there would be no agreements before a referendum. If there were
to be no agreements, the Gibraltar Government's condition that
there should be no agreements above its head was in effect satisfied,
since the need for it was redundant. It was also suggested by
us that any proposals that emerged and which UK/Spain wanted to
put to referendum should be described as "proposals agreed
to be put" rather than as "agreed proposals". In
other words, the agreement was to put the proposals, but the proposals
themselves would not be converted into an agreement unless and
until approved in referendum. Thus, if rejected, they would never
have constituted an agreement between the UK and Spain. These
suggestions were rejected by HMG.
24. At paragraph 19 and 20 of the Transcript
Sir John Stanley put to the Foreign Secretary the following question
which had been previously put to the Foreign Secretary on the
BBC Radio 4 "Today" programme on 20 May 2002, and his
"Question: If you got what you wanted, a
deal on sovereignty with Spain in the negotiations, and you put
it to the people of Gibraltar and the people of Gibraltar said
No would the deal that we are talking about now then be off the
Answer: Yes, of course it would and that would
be the end of it."
25. Sir John Stanley then asked the Foreign
Secretary to confirm that that statement represents the British
Government's position. Mr Straw replied, "Yes and I am surprised
that anybody would think otherwise."
Later on in that same answer Mr Straw explains
that there would be a joint declaration followed by further negotiations
leading to some form of new treaty, which new treaty would be
submitted to referendum by the people of Gibraltar. If they rejected
it "That's the end of the matter."
26. The question is whether the reference
to "it" in the answer ("that would be the end of
it") is intended as a reference to the final deal (which
is what will be put in referendum) or whether it also includes
the initial Anglo/Spanish declaration of principles (which it
is not intended to put to referendum).
27. It has always been well understood and
accepted by the people and Government of Gibraltar that no deal
would be implemented in practice if rejected in referendum. The
question has always been what will survive any such referendum
rejection and what will be its political status thereafter?
28. The concern of the Government and people
of Gibraltar is that although the detailed proposals/agreement
negotiated after the initial joint declaration will be "off
the table", "at an end" etc etc, the initial "joint
declaration" of principles itself between the UK and Spain
will nevertheless retain its status as an extant Anglo Spanish
agreement on the political principles affecting Gibraltar.
29. Of course, we understand the fact that
if the UK enters into any such agreements, the fact that it was
done cannot be "airbrushed away", not can we ask Harry
Potter to make all copies of it disappear. This is precisely why
Gibraltar is opposed to the UK unnecessarily entering into such
a Declaration of Principles. But the question is: if, despite
our opposition HMG enters into a joint declaration of principles,
will that initial joint declaration retain the status of an agreed
Anglo Spanish declaration of the political principles applicable
to the solution of the Gibraltar problem? Or will there have been
an "end of the matter" to the initial joint declaration
30. Despite Mr Straw's reply on the "To-day"
programme, and indeed his answer to Sir John Stanley's questions,
and despite also a similar answer given by Gisela Stewart MP on
the BBC TV "Newsnight" programme on 2 April 2002. The
answer to the question is not clear. The Gibraltar Government
has been unable to obtain from HMG a clear statement to the unambiguous
effect that the joint declaration would cease to have continuing
political validity and effect as a common political position between
the UK and Spain. Indeed, the opposite has always been intimated
to us. In addition to numerous discussions at meetings, I attach
as Annex 2 copy of my letters dated 30 January 2002 and 20 February
The latter is in response to Mr Straw's reply dated 14 February
to the Governor.
31. I attach, as Annex 3 the transcript
of Gisela Stewart's interview with Jeremy Paxman on the Newsnight
programme on 2 April 2002.
32. The question therefore is whether what
will be "at an end" "off the table" is only
that which is put to the people of Gibraltar in referendum. Of
course, as Mr Straw told the Committee at paragraph 63 of the
the Joint Declaration will not be put to the people of Gibraltar
33. Neither the debate around this nuance
or appreciation of its political importance is limited to Gibraltar.
The Spanish press reacted in a chorus of recrimination to Mr Straw's
above quoted statement (on the "To-day" programme) that
if rejected in a referendum the deal would be off the table and
that would be an end of it.
34. There were numerous Spanish press reports
to the effect that this was a new position, incompatible with
previous UK Ministerial Statements and incompatible with what
had been under negotiations between the UK and Spain up to that
point in time.
By way of sample I would quote the following
press reports (in loose English translation), the Spanish texts
of which are attached to this Memorandum as Annex 4.
(1) "El Pais (21 May 2002):
After reciting Mr Straw's statement on the "To-day"
programme reported as follows:
"The statement by the Minister caused surprise,
because it is incoherent with previous statements by Straw himself,
even in Parliament, and contrary to what Spaniards and Britons
have been negotiating. For Spain, given that it does not recognise
the Gibraltarian's right to self determination, it is fundamental
that the agreement retains its validity, even if it cannot be
(2) "El Mundo" (21 May 2002):
After reciting Mr Straw's statement on the "To-day"
"We are, without doubt facing a very important
change in the policy of the United Kingdom, which had until to-day
maintained the position that even if the Gibraltarians rejected
in a referendum the agreement reached by the two countries, the
agreement would remain as a declaration of intentions by London
and Madrid in that respect."
(3) Diario Sur (Sun Digital) (21 May 2002):
Again after reciting Mr Straw's "off the
table" statement on the "To-day" programme, said:
"Mr Straw's statement, which coincided
with the meeting between Jose Maria Aznar and Tony Blair, is a
radical change in Mr Straw's position as stated a few weeks ago,
and has alarmed Spanish diplomacy, which fears a British withdrawal
from the agreement".
"Jack Straw maintained precisely the opposite
position in February in the House of Commons when . . . he said
that the agreement would remain as a "common position"
of both governments."
(4) "El Pais" (26 June 2002):
"The panorama now painted by the British
is not a hopeful one. Straw said two weeks ago that the agreement
would "fall off the table" in the event that it were
rejected by the Gibraltarians, a statement that goes directly
against one of the positions that is irrenounceable for Spain:
Madrid considers it essential that the agreement should preserve
its validity after it has been rejected, even if it cannot be
implemented. The contrary would be to grant the Gibraltarians
something as close to the right to self determination as the right
to veto an agreement between two Sovereign States.
The great novelty of this relaunched negotiation,
agreed in September when the two Ministers announced in Barcelona
their intention to reach a definitive agreement before the end
of this summer, is precisely Britain's willingness to reach an
agreement even if the Gibraltarians oppose it, a fact that had
been taken for granted would happen. In exchange, Spain, for the
first time admitted the possibility of joint sovereignty of the
Rock with the UK for an undetermined period".
Delay in submitting to referendum
35. Another matter of concern is whether,
even if it is now HMG's position that all elements of the agreement
(including the initial bilateral joint declaration of principles)
are "at an end" or "off the table" in the
event of a referendum rejection, will that referendum be expeditiously
conducted or will the joint declaration subsist as a political
agreement between UK and Spain for several years without referendum?
The latter is unacceptable to Gibraltar and the Gibraltar Government
has already said that, in those circumstances, it will itself
conduct an expeditious referendum, under external supervision.
HMG has made it clear that it would not recognise such a referendum
36. It therefore needs to be clarified whether
(as the Spanish press accuse Mr Straw) he has changed his position
so that the Joint Declaration would now not survive a referendum
rejection of detailed proposals based on it. If that is a change
of position, it is welcomed by the Gibraltar Government.
37. However, as from 20 May (when the Foreign
Secretary first said what he said on the To-day programme) he
has also started to say that it may be "many years"
before anything is put to the people of Gibraltar in referendum.
38. It may therefore be possible that, as
an alternative approach, the plan is now to avoid the issue of
whether the joint declaration survives the referendum, simply
by entering into the joint declaration and not staging a referendum
for many years.
39. In this respect the Committee may be
interested in the following transcript of an interview by the
Foreign Secretary with GBC Television on 21 May 2002:
Question: Re: Yesterday's "off the table"
assertiondo you stand by it?
Answer: Yes and it's exactly what I've been saying
all the way along. I mean, by definition, if you say that the
deal will not become operative unless and until the people of
Gibraltar have endorsed it in a referendum, and if they reject
it in a referendum organised by the UK Government, not by anybody
else, then it is imperative, by definition it's not on the table.
Question: But you have said before nothing can
be airbrushed away, so either it can be airbrushed away or it's
off the table?
Answer: In the real world, if there's a joint
declaration, preliminary agreement, made between the UK and Spain
at a particular datesay we make that agreement, sometime
this year, in the year 2001, in due course, and under the terms
of the agreement, there are further negotiations which would,
under the agreement, involve Spain in tripartite negotiations,
and then you get to a point where it would take some yearsit's
put to a referendum organised by the UK Government in Gibraltar,
if at the end of that long detailed process the people of Gibraltar
reject it, the conclusions of the negotiations, the final negotiations,
the draft treaty, then we accept the verdict and the matter is
off the table. What can't happen of course is we can't suddenly
Question: Timescale for a referendum?
Answer: Can't say exactly what the timescale
would be, but it'll take some time and years in my judgement.
Gibraltar's Pension Arrangements
40. At paragraph 29 of the Transcript,
Mr Straw confirms the view that the pensions situation in Gibraltar
"is a scam".
On 16 April 2002, the Minister of State for
Europe, Mr Peter Hain, had seen fit to describe Gibraltar's pension
arrangements as a "pensions scam" in the House of Commons.
His remarks then, as the Foreign Secretary's now, completely omit
to place the issue in its (or any) historical, factual context,
now even to recognise that the issue has a long history, which,
regardless of where the technical merits lie, render the use of
such words as "scam" wholly unjustified, indefensible
These words have caused universal anger and
revulsion in Gibraltar, Spanish pensioners have, understandably
received these remarks as an admission of their legal claim. The
completely unnecessary use of such language has in effect, converted
a potential liability into a certain one. The Spanish media has
run headlines such as "UK Minister accuses the Gibraltar
Government of defrauding Spanish pensioners."
41. According to the Oxford Dictionary "scam"
means "a dishonest scheme". It does not mean something
which is "opaque, not transparent and also potentially unlawful".
A mere potential to be eventually adjudged by a civil court of
law as being incompatible with EU Social Security Regulations
prohibiting certain types of discrimination does not render the
scheme "dishonest" and therefore the word scam is as
inappropriate as it is offensive. Particularly when Mr Straw claims
that (due to GOG's lack of transparency) he does not even know
how the scheme works.
42. The alleged "scam" and "confection"
is the mere existence of a privately owned, operated and controlled
charitable trust called Community Care Trust which was established
in 1989. Mr Straw said (para 29):
"Then subsequently, the rules were changed
by the creation of a little confection".
There has been NO confection and there has been
NO change in Gibraltar pension rules (except uncontroversial new
legislation to restore the pension scheme in 1997, which HMG specifically
approved). There have been no changes in the Community Care Trust
arrangements since they started in 1990. Using mainly capital
provided by way of grant from public funds, the Community Care
Trust pays out, to residents of Gibraltar (of all nationalities,
and regardless of the existence or extent of their entitlement
to a state old aged pension), amongst other payments, grants called
"household cost allowance" to assist with defraying
the cost of housing, electricity, water and other household costs
(which are high in Gibraltar).
43. At paragraph 29 of the Transcript the
Foreign Secretary says:
"we are not sure you are on good grounds
but what is more we want to find out whether you are on good grounds,
could we see the accounts. Could we see the basis on which this
arrangement is made. My officials have been backwards and forwards
to the Government of Gibraltar trying to get them to be transparent
with us and so far the Government of Gibraltar have failed to
Later (at paragraph 32) he added:
"The difficulty is getting to the bottom
of this arrangement and I am afraid to say that the Government
of Gibraltar have not been forthcoming."
44. (1) It is not true that the British
Government has not seen accounts of Community Care or that they
have been denied access to such accounts or indeed that they have
requested such accounts and been refused them.
(2) It is not true that HMG is unaware "of
the basis on which this arrangement is made".
(3) It is not true that UK officials "have
been backwards and forwards to the Gibraltar Government trying
to get them to be transparent with us".
(4) It is not true that "so far the
Government of Gibraltar have failed to be so" or that the
Gibraltar Government have not been forthcoming.
45. These statements are not reconcilable
with the facts as they have occurred over the years. The suggestion
that the Gibraltar Government has withheld information from HMG
or that HMG is not aware, (and has been for several years), of
what the arrangements are, or how they work, is simply incorrect.
46. I attach as Annex 5
a comprehensive memorandum, drawn up by Mr Ernest Montado, the
Chief Secretary of the Government of Gibraltar, dealing with three
issues: (1) the pensions issue; (2) the Community Care Trust;
and (3) the extent of consultation and exchange of information
with HMG over the years. Mr Montado has been heavily involved
in dealing with HMG on these issues since 1983 and has led contacts
and discussions with HMG on them.
The alleged existence of opaque Government Companies
47. At paragraph 29 Mr Straw says:
"One of the things they (the Gibraltar Government)
have done, I understandthere is a whole series of companies
run by the Government of Gibraltar . . . but these companies are
still a very opaque set of front organisations by which it appears
to us, because we cannot get at the full circumstances, some of
these arrangements are made opaque."
48. This is not true. The Gibraltar Government
does not own or run a single opaque company nor are any of GOG's
companies "front organisations".
49. The Gibraltar Government owns 12 companies.
Their names, activities and ownership structure are published
by the Gibraltar Government as part of a booklet that is inserted,
every year, in local newspapers at Budget time to explain the
Government's Estimates of Revenue and Expenditure to the general
public in layman's terms.
50. The booklet for 2002 is attached to
this Memorandum as Annex 6.
I would refer the Committee to page 10 of the Booklet which sets
out the companies.
51. Of the 12 companies, one is the holding
company for the others; six simply hold real estate; one carries
out refuse collection; one is a construction company engaged in
executing some publicly funded projects; one provides semi-sheltered
employment (doing "community projects") mainly to persons
who would otherwise have difficulty in finding and holding down
employment; and one owns (but does not operate) the refuse incinerator.
52. None of these companies are in the least
(1) Their finances and transactions (except
the construction company) are controlled by the Treasury under
the auspices of the Accountant General and civil servants;
(2) Their audited accounts (including the
construction company) are laid in the House of Assembly and are
therefore in the public domain;
(3) Ministers make themselves fully accountable
for the affairs of all the companies in the House of Assembly.
53. Having painted an entirely false picture
of lack of transparency in pensions arrangements and in Government
companies, the Foreign Secretary then moves seamlessly into the
alleged issue of Statistics. At paragraph 29 he says "It
is a similar position, I may say, in respect of official statistics."
54. There does not exist in Gibraltar even
the smallest degree of lack of transparency in the conduct of
public finances, nor in the conduct of government affairs, nor
in the statistics related thereto. There has not been a failure
to publish even a single statistic appertaining to transparency
in the conduct of public finances and the affairs of Government.
I attach, as Annex 7,
a copy of a personal statement dated 26 June 2002 issued to the
press by the Accountant General, Mr Dillip Dayaram.
55. The Foreign Secretary wrote to me by
letter dated 19 April 2002 making certain allegations about statistics
and alluding to transparency and probity of government. That letter
was delivered to my office by fax on 24 April. He also raised
this issue, briefly and at the end of our meeting during his visit
to Gibraltar. I told him that he had evidently been misinformed
as to the position in Gibraltar and that the Chief Secretary would
write to the Deputy Governor setting out the correct position.
56. An article appeared in the Guardian
newspaper on 3 June 2002 (less than six weeks after Mr Straw's
letter was delivered to me and four weeks after our meeting) and
subsequently in other newspapers, making all manner of allegations
ranging from lack of transparency, failure to publish income and
expenditure accounts, lack of probity etc. All referred to Mr
Straw's letter to me. I attach as Annex 8
a sample of these articles. Indeed, before the first of these
articles appeared (in the Guardian), we had been alerted
by members of the UK press that these issues were being briefed
out to them by "Foreign Office sources".
57. The Foreign Secretary's letter referred
to the unavailability of a recent figure for the Gibraltar Economy's
Gross Domestic Product, and to the non-publication of the "Abstract
Straw questions Gibraltar over finances, The Guardian,
3 June 2002
Fresh tension with Gibraltar over accounts, The
Scotsman, 4 June 2002
Straw asks rock to explain missing data, Financial
Times, 4 June 2002
Shady business in gibraltar, The Guardian Editor
supplement, 5 June 2002
Straw fuels row over Gibraltar government's financial
dealings, The Scotsman, 20 June.
58. Neither of these is related or relevant
to transparency in public finances or the affairs of government,
still less to probity of government, as was directly impugned
in "The Scotsman" and, by implication, in all
the other articles.
59. The circumstances surrounding both these
issues are set out in a letter dated 31 May 2002 sent by the Chief
Secretary to the Deputy Governor. A copy of this letter is attached
to this Memorandum as Annex 9(a).
I also attach, as Annex 9(b)
a copy of my letter to Mr Straw dated 30 May 2002 and faxed to
him on the same day (five days before the first article in the
60. I am advised by the Government Statisticians
that practically all the statistics that are relevant to economic
issues that are contained in the Abstract are separately published
in annual, statutory survey reports that are laid annually in
the House of Assembly, and in other annual reports of Government
departments and agencies that are published. Indeed most of the
tables in the Abstract are reproductions of the tables in these
other reports, eg the Employment Survey Report, the Air Traffic
Survey Report, the Hotel Occupancy Survey Report, the Tourism
Survey Report, the Gibraltar Health Authority Annual Report, Port
Department Report etc etc.
61. At paragraph 44 Mt Straw says, "Apparently
if you delve away long enough and hard enough you can get different
tables, all right, but that is no way for a Government to operate,
you need these brought together."
62. (i) No "delving" is required.
The vast majority of this information is readily available in
the same form, in official annual reports.
(ii) The publication of statistics by the
Government of Gibraltar is regulated by long-standing legislation
with which there is strict compliance and of which there has been
no breach whatsoever.
63. I wish to record the fact that despite
the exaggerated importance that is now given to this issue, at
no time has any concern about statistics in Gibraltar ever been
raised with me, or any other Gibraltar Government Minister by
any Governor, any Convent official, any Foreign Office Minister
or any Foreign Office official. No statistic referred to by Mr
Straw (nor any other statistic) have ever been requested by HMG.
64. According to the Foreign Secretary his
concern was triggered by the state of Gibraltar's entry in the
Statesman's Year Book. However, it would appear that Gibraltar's
entry is not dissimilar to that of the majority of UK Overseas
Territories and Crown Dependencies. I am not aware that he has
written to any of those others.
65. The suddenness and vehemence of this
unjustified assault on the Gibraltar Government's performance
in relation to transparency and accountability is particularly
surprising and unexpected, not least because of HMG's own previous
complimentary pronouncements in this regard.
66. At paragraph 86 of Treasury Minute dated
July 1998 (Cm 4004), HMG informed the Public Accounts Committee
of the House of Commons as follows:
"The present Government of Gibraltar has
made a significant effort to ensure that the principles of accountability
and transparency are applied to all Government bodies and companies.
The Government of Gibraltar has done this by revising in May 1997
the Estimates system, rather than by passing new legislation.
As a result, the accounts for all Government bodies and companies,
as well as most public revenue and expenditure, are laid before,
and subject to, appropriation by the House of Assembly. They are
thus open to public scrutiny.
67. This is a far cry from the wholly erroneous
impression that Mr Straw has now sought to create. Whether, as
the Foreign Secretary says, his letter to me was polite and the
reply "bombastic" is a matter of opinion. I disagree
with the Foreign Secretary's opinion on both counts.
68. Members of the Committee will of course
make their own assessments. However, the view of the Gibraltar
Government, widely held throughout Gibraltar, is that the whole
issue of statistics and transparency has been engineered, exaggerated
and then leaked to the press, for extraneous purpose. It is entirely
unprecedented for any issue between HMG and GOG to be raised at
Secretary of State level in writing directly to the Chief Minister
without it having previously been raised and discussed with the
Chief Minister by the Governor or FCO officials. How can something
that has never been raised before with me, be both so sudden and
so serious? Why should it be briefed out to the press so quickly?
Why were such wildly inaccurate and incorrect allegations made
without checking the true facts first?
69. The Gibraltar Government is of the view
that the purpose was to distract attention from the sovereignty
negotiations with Spain, to undermine public and parliamentary
support for Gibraltar in the UK, and to discredit Gibraltar's
principal advocate in the UK, the Gibraltar Government.
70. The Committee may wish to be aware of
the fact that on 1 March 2001, the Costa del Sol (Spain) newspaper
in English "the Entertainer" carried a report
under the headline "Caruana's position at risk". That
article stated that according to high level diplomatic sources
"the UK and Spain are reported to have been looking at the
possibility of undermining the authority of the Chief Minister
publicly because of what they regard as his entrenched position
regarding Gibraltar's future". A copy of this Article is
attached to this Memorandum as Annex 10.
71. Much has been said publicly by Mr Straw
and Mr Hain, and consequently by the UK media, about Spain's alleged
offer of an additional 70,000 telephone numbers for Gibraltar.
Nothing however, has been said about the terms of the offer, which
are wholly unacceptable to Gibraltar from the commercial, regulatory,
jurisdictional and political perspectives.
72. The Spanish Government published its
offer, and the terms of it, in the Official State Gazette ("Boletin
Oficial del Estado") on 20 November 2001.
73. The offer (which has been rejected by
Gibraltar) amounted to the following:
(1) the total integration of Gibraltar's
telephone numbering plan into the Spanish numbering plan in that
Gibraltar was being allocated "Spanish numbers" rather
than (as is the case at present) specified parts of Gibraltar's
own numbering plan being accessible from Spain;
(2) all the new 70,000 numbers were to be
allocated to a Spanish telecoms licensee (Telefonica), who would
then administer the 70,000 numbers by sub-assigning them (on application)
to Gibraltar telecoms licensees. In other words, Gibraltar licensees
would have to apply for numbers, not to the Gibraltar Regulator
or the Gibraltar licensing authority, but to a telecoms company
74. Accordingly, the basis of this offer
is that Gibraltar does not have its own telephone numbering plan;
to by-pass the Gibraltar Government's ownership of the Gibraltar
numbering plan; to put Gibraltar's (and UK's) ability to enforce
and comply with our telecoms laws and EU telecoms directives in
the hands of Spanish interests; to usurp the powers of the Gibraltar
licensing authority; and to usurp the powers and functions of
the Gibraltar Telecoms Regulator (effectively making Telefonica
the Regulator for Gibraltar telephone numbers).
75. Accordingly, Spain's offer has been
rejected by all of the Gibraltar Government, the Gibraltar Telecoms
Regulator and the Gibraltar Telecoms companies.
76. The Spanish Government's "offer"
also includes the fact that the current access from Spain to the
existing 30,000 Gibraltar numbers via the Cadiz Regional code,
(956) will be terminated on 31 December 2002. It will be replaced
by the new offer which establishes a new and specific Spanish
Regional code for Gibraltar (8563).
77. Accordingly, the effect of the offer
is that Gibraltar either accepts it (despite its unacceptable
terms) or completely loses telephonic links with Spain (since
the existing links via "956" will end on 31 December
78. The situation described in outline in
this Memorandum is set out in detail in the papers attached to
this Memorandum as Annex 11 which comprise:
(1) the Spanish Government Royal Decree,
dated 16 November 2001 (decree number 21485 of 8 November 2001)
with loose English translation.
(2) my letters dated 16 January and 18 March
2002 to Jack Straw.
(3) the detailed analysis of the Spanish
offer by each of O'Connor and Company (lawyers representing the
Gibraltar telecom companies);
the Gibraltar Government
(the American shareholder of 50 per cent of the shares in the
Gibraltar Telecoms companies).
(4) Gibraltar Government Press Release No.
14/2002 dated 23 January 2002 describing and commenting on the
79. In a further and recent development,
the EU Commission has decided to treat the Gibraltar Telecoms
companies objection to the Spanish offer as "new complaints",
rather than as an unacceptable offer of settlement in the existing,
long outstanding complaints. A copy of the Commission's letter
dated 29 May 2002 in this respect is also attached at Annex 11.
80. In our view this is a device to enable
the Commission to "start again" and to focus on obtaining
modifications to the Spanish offer and thus avoid ruling on the
1996 complaints based on Spain's non-recognition of Gibraltar's
81. The original complaints were filed in
1996 under Article 82 (old Article 86) of the EC Treaty, which
concerns abuses of dominant position by the Gibraltar companies,
GNC and Gibtel, against Telefonica.
When the Commission wrote to Telefonica, it
eventually received a letter from the Spanish Permanent Representative
in Brussels saying that in not recognising the 350 code, Telefonica
was complying with the instructions of the Spanish Government.
This meant that the Article 82 complaints became
an Article 86/82 complaint (old Article 90 and 86).
In view of what appears to be an evolution of
the case law by the European Court of Justice, the companies are
contemplating bringing an action against the Commission for failure
to act under Article 232 (old Article 175).
Request for a meeting with the Prime Minister
82. Gibraltar Ministers and their advisers
have kept under review since early this year the question of seeking
access to the Prime Minister and the best timing therefore. It
was decided in early May that the Chief Minister should seek a
meeting with the Prime Minister once it had become known that
he was to meet with Senor Aznar on 20 May, a meeting at which
the Gibraltar negotiations would be discussed.
83. The Chief Minister wrote to the Prime
Minister on 7 May 2002. That letter, a copy of which is attached
hereto as Annex 12,
was sent by facsimile.
84. In that letter I said to the Prime Minister
that I would be grateful for the opportunity to meet him before
his meeting with Senor Aznar on the 20 May 2002, and, if that
was not possible, before HMG commits itself to any Anglo/Spanish
Agreement. I put myself at his entire disposal as to date and
85. In his reply dated 16 May 2002, the
Prime Minister informed me that he would not be able to see me
before his meeting with Senor Aznar but expressed the hope that
I would continue my dialogue with Jack Straw and Peter Hain.
Self Determination/the Treaty of Utrecht
86. As the Committee knows, the Gibraltar
view is that the people of Gibraltar enjoy the inalienable right
to self determination, untrammelled by the Treaty of Utrecht.
HMG advocated and defended this very same view at the United Nations
87. The British Government's position since
the 1980s is as described by Mr Peter Hain on 6 November in answer
to a parliamentary question from Mr David Crausby, ie, "We
believe that Gibraltar's right to self determination is not constrained
by the Treaty of Utrecht except insofar as Article X gives Spain
the right of refusal, should Britain ever renounce sovereignty.
Thus independence would only be an option with Spanish consent."
88. Even according to this definition of
our right to self determination, an Anglo-Spanish joint declaration
agreeing joint sovereignty in principle is incompatible with our
right to self determination.
89. The Committee will be interested to
know that the Gibraltar Government has a comprehensive legal opinion
from a pre eminent international lawyer and member of the International
Law Commission of the United Nations to the following effect:
(1) Article X of the Treaty of Utrecht is
contrary to peremptory norms of general international law and
therefore cannot be considered as a source of continuing legal
obligations. It cannot therefore be construed as curtailing the
right of the people of Gibraltar to self determination.
(2) Nevertheless, in accordance with established
principles of international law, the territorial cession effected
by the Treaty of Utrecht remains valid and effective, even though
the Treaty itself no longer is.
90. Spain justifies her current position
over Gibraltar (with all its consequences for the people of Gibraltar)
exclusively on the Treaty of Utrecht. Gibraltar has repeatedly
asked for this to be referred to the International Court of Justice
and tested under international law. Spain (and apparently also
now, the UK) refuse. Yet Gibraltar has a pre-eminent international
legal opinion which clearly concludes that the Treaty of Utrecht
is invalid and ineffective under international law to affect the
rights of the people of Gibraltar.
91. At the meeting with the Minister for
Tourism and Transport, Mr Joe Holliday, during their recent visit
to Gibraltar, Mr Holliday agreed to provide the Committee with
background information relating to the usage of the airport. This
is attached to this Memorandum, as Annex 13.
Transposition of EU Directives
92. At the meeting with the Minister for
Trade, Industry and Telecommunications, Mr Keith Azopardi, during
their recent visit to Gibraltar, Mr Azopardi agreed to provide
the Committee with a situation report of Gibraltar's transposition
record and current position. Attached to this Memorandum as Annex
is a copy of a letter of report dated 8 July 2002 from the Government's
Legislation Support Unit.
Whose Responsibility is it to respond to Money-Laundering
93. The Committee has asked me to comment
on whose responsibility it is to respond to malicious allegations
on such matters as smuggling and money-laundering.
Both Constitutionally and in practice, the Gibraltar
Government has no operational control over the Royal Gibraltar
Police or the Financial Services Commission. The Governor is constitutionally
responsible for the police.
94. The Gibraltar Government believes that
HMG in the UK has a duty (being constitutionally responsible for
our external affairs) to counter-act malicious allegations of
smuggling and money laundering against Gibraltar, given that they
are capable of inflicting severe damage on the international reputation
and thus also on the economic prospects of Gibraltar.
The Gibraltar Government therefore does all
that it can, within the constraints of its resources and reach,
to counter-act such statements. However given GOG obvious self-interest
in the matter, a rebuttal from a more detached and objective source
would carry greater credibility.
95. Historically, and despite requests from
GOG, HMG has been reluctant to do so. By way of recent example
of this, I wrote to the Foreign Secretary on 23 November 2001.
The following are extracts from that letter:
"You will have noticed the flurry of remarkably
similar UK press editorials and articles. We will obviously deal
with the politics of these ourselves.
However, there is one aspect of some of them
with which I would be grateful for your help. I refer to references
to Gibraltar's alleged involvement in smuggling and money-laundering.
These allegations are untrue and unfair. Whoever is spinning that
line obviously believes that there is some advantage in discrediting
Gibraltar in the court of British public opinion at this point
Given the grave economic damage that such allegations
do to Gibraltar, the fact that they are untrue and also the facts
that the Governor is constitutionally responsible for law enforcement
and you are statutorily responsible for our financial services
commission, I would be grateful for your help in dispelling these
I would therefore by very grateful if you could
see your way to issuing a press statement in the UK dispelling
these notions of money-laundering and smuggling in Gibraltar and,
to asking your press people to do all that they can to ensure
that your statement receives similar press coverage.
I enclose, for your information editorials in
the Financial Times and the Evening Standard and
a rather crude piece in the Scotsman."
96. The Foreign Secretary replied on 21
December as follows:
"Thank you for your letter of 23 November.
You raised some articles about Gibraltar in the UK press. I am
afraid that you are assuming that our press is more biddable than
it is. These articles were not written at the behest of Ministers,
FCO officials or anyone other than the editorial staff of the
papers themselves. You yourself responded in the most effective
way, by writing direct to the editors. And I note that the stories
have died away.
As to tobacco-smuggling and money-laundering,
we welcome the recent firm measures that your Government has taken
to control smuggling, both by amending the Tobacco Ordinance this
June and by the earlier steps you took. I also welcome your support
for the regulation of the finance centre to the highest standards."
11 Ev 4 Back
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Annexes 1(a) to 1(c) have not been printed Copies have been placed
in the Library. Back
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Annexes 1(i), 1(j) and 1(k) have not been printed. Copies have
been placed in the Library. Back
Ev 39 Back
See First Report of the Foreign Affairs Committee, Session
2001-02, Gibraltar, HC 413, pp. 1-7. Back
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Government of Gibraltar Public Finances 2002-03. Not printed
with this Evidence. Back
Ev 52 Back
The following articles were included in the evidence, but have
not been re-printed: Back
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Q44 [Jack Straw]. Back
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See www.boe.es/boe/dias/2001-11-16/pdfs/A42100-42101.pdf Back
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