How many ‘Gibraltars’ will there be over the next two years?

It’s Spring in the UK. The sun is out, Parliament and schools are on recess, and yet another political dispute has surfaced for Theresa May to manage.

Gibraltar, a British overseas territory that has been largely unnoticed within the context of the Brexit discussions, became front page news last weekend following Lord Michael Howard’s suggestion that Britain would be prepared to go to war to protect its sovereignty. Despite various media comparisons to Margaret Thatcher and the Falkland’s, the Prime Minister played down his comments and indicated she would opt for ‘jaw-jaw’ over ‘war-war’ politics.

Following the outcome of last year’s referendum, the Government has the unique challenge of retaining international political ties, whilst also exerting strength to show Britain can stand on its own two feet without the backing of the EU. As a result of this, issues such as Gibraltar present a new challenge.

The Spanish have made multiple attempts to regain even the smallest level of influence over the territory since it was signed over to Britain in the Treaty of Utrecht in 1713. In examining the economic and geographical attributes of the country you can understand their efforts. Being the entryway to the Mediterranean sea it was a vital control point for allied naval forces during the Second World War. Its GDP for 2014/15 was £1.64bn and its unemployment rate below 1%, which is significantly lower than the 22% unemployment rate in Spain. These combining factors make it one of the most affluent places in the world, with the third highest GDP capita per head in the world – behind only Qatar and Luxembourg).  

Despite Spanish military and diplomatic approaches the 32,000 Gibraltarian population have stood firm. In 2002, 98.97% of Gibraltarians voted to remain a British overseas territory, which was admittedly down from the previous referendum result in 1967 of 99.64%. At this rate, Gibraltar may return to Spanish rule in a few thousand years, unless it is used as a bargaining chip before then.

I state this because the success of Gibraltar has been largely dependent on its access to the European single market but also non-participation in the customs union. Further, Gibraltar does not operate in the common agricultural or fishing policies and is not obligated to levy VAT. This ‘half in, half out’ arrangement allows it to adopt and reject many of the EU rules and regulations and tailor its economy in favour of its financial sector. It is no wonder then that Gibraltar voted overwhelmingly for the status quo in the referendum; 96% voted to remain. But Britain is leaving the EU.

Spain has already indicated that it may delay the Brexit negotiations with a veto if it is not satisfied with the implications of the deal for Gibraltar.

Perhaps the most significant question is how many other Gibraltar sized obstacles will the Government have to manage over the next two years.

Author

Alexander Cassells

Researcher

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