We have recently seen how the agreement between the European Union and the United Kingdom for BREXIT was about to run aground due, in part, to the need to satisfy Spain’s concerns and to give it its guarantees of maintaining a position with respect to Gibraltar.
Beyond the debate on whether these guarantees have been given or not, the question remains: Has BREXIT turned Gibraltar into an opportunity for the Spanish economy?
If all timeframes are maintained, as of 30 March 201930th, the United Kingdom will cease to be a member of the EU. However, between that date and December 2020, there will be a period of transition in the Single Market and the Customs Union, with the United Kingdom having no voice, no vote, no veto and, logically, no presence in the Community institutions.
During the 21-month transition period, the second phase of negotiations will begin where the future relationship between the EU and the United Kingdom will be addressed. This process might take several years of negotiation and requires the unanimity of all the Member States of the Union. Can Spain take advantage of this period of negotiation in order to integrate the buoyant Gibraltarian economy, to a greater extent, into the neighbouring economy of Spain?
It should be remembered at this point that 96% of the votes cast in Gibraltar during the 2016 referendum on EU membership were actually in favour of staying within the European Union. But Gibraltar’s status as a territory within EU jurisdiction is more than just tenuous; when the United Kingdom joined the European Community in 1973, Gibraltar joined the EC as a non-self-governing territory whose external relations were managed by London, but without adhering to many aspects of the Community’s legal acquis, including taxation or the Customs Union. This has allowed Gibraltar to remain within the EU, but with very competitive tax rules in comparison to Spain.
The Governments of Spain and the United Kingdom are both aware of the importance of the Gibraltar issue within the general framework of the BREXIT Agreement. They have decided to conclude a series of bilateral agreements, which may have very positive economic repercussions for Spain, once Gibraltar leaves the EU together with the United Kingdom. There are four Memorandums of Understandingand a fiscal treaty, which Gibraltar has supported on the basis of practicality: as Gibraltarians overwhelmingly want a close relationship with the EU, then it would be convenient and reasonable that the contents of these bilateral agreements are acceptable to Spain.
The Memorandums of Understanding address four areas between Spain and the Rock, ranging from the issue of tobacco, to the issue of the social and labour rights of thousands of Spanish workers who cross the border every day for work on the Rock. They represent a valuable source of labour for the day-to-day operations of Gibraltar. A third part includes environmental commitments and a fourth sets out to police and customs cooperation.
However, these four Memorandums of Understanding will only be valid for the time of the aforementioned transition period, which will be in effect from the day of departure, on 30 March 2019, until the coming into force of the future relationship between the United Kingdom and the Community block, predictably, in January 2021.
Perhaps the most important of all the agreements reached between London and Madrid, from the point of view of the economic interests of our country, is the treaty on taxation, since Gibraltar has taken on certain commitments on fiscal measures. This is beneficial because currently many companies with activities in Spain settle on the Rock to benefit from reduced taxation in Gibraltar. However, it is worth remembering that this treaty requires parliamentary approval for the changes to come into effect.
It is evident that if the contents of the four memorandums and the tax treaty are fulfilled, we will have thousands of Spanish workers in Gibraltar with improved social and labour conditions as a result of non-discrimination; Spanish public coffers will not suffer as a consequence of the great fiscal differential between one side of the fence and the other; and police cooperation will favour the fight against money laundering which will also benefit public coffers, as well as create a higher safety index for an area such as the Campo de Gibraltar that enjoys an average 300 days of sunshine per year and where investments in the services and tourism sectors can multiply exponentially.
In short, BREXIT offers the opportunity for wealth creation in our country in general and the Campo de Gibraltar in particular, as well as a more reasonable economic relationship between Gibraltar and a Member of the European Union such as Spain.
Alejandro Sánchez
Senior Analyst. He has more than 14 years of experience in the public sector both in the Spanish Administration and in European Institutions. He has been Chief of the Cabinet of the Spanish Secretariat of State Security and later Head of the Spanish Delegation for the COSI (Committee on Operational Cooperation on International Security) in the European Union. He has expertise in the political, regulatory and operational dimensions of security and cybersecurity. Recently he has focused on the protection of critical infrastructures such as oil refineries, electrical substations, etc. Member of the American Chamber of Commerce of European Security and Defense Committee. Degree in Political Science, University of Granada. Three Masters in European Studies from the European College of Bruges, International Relations and Global Security by the Catholic University of Louvain and Leadership in the Public Sector by the IESE Bussiness School.
