Gibraltar has little cause for celebration at the moment. Still smarting from inclusion in the OECD list of offshore financial centres with so-called "harmful tax practices", which has been deemed "very grave and serious" by the Gibraltar authorities, the small territory with the famous rock is now facing a deterioration in relations with Spain.
British Foreign Secretary Robin Cook and his new Spanish counterpart Josep Pique were due to meet yesterday in London, essentially to discuss European and bilateral matters but no doubt touching on the Gibraltar situation as well, which seems to have hit a wall.
The Chief Minister of Gibraltar Peter Caruana has confirmed that relations with Spain are, as he puts it, "getting worse", despite the recent deal between Britain and Spain on EU matters which many see as being politically detrimental to Gibraltar. At the London meeting, it is expected that the Spanish Finance Minister will once again call for joint sovereignty of Gibraltar, leading to full Spanish sovereignty after a period of time. This plan originated from Mr Pique’s predecessor Abel Matutes at talks in London in December 1997.
Gibraltar is keen for Britain to reject such an idea, although an outright dismissal of the proposals has not yet been forthcoming and Britain has said that its response to the future of Gibraltar will come at the next meeting under the so-called Brussels process, an agreement between the UK and Spain signed in 1984 under which both parties agreed to work towards eradicating their differences on the Gibraltar question.
Mr Caruana has little time for Spain, accusing the country of wasting the opportunity to resolve the Gibraltar problem. He wants to see the Spanish government ease restrictions in three main areas - frontier queues, European Parliament voting rights and the provision of more telephone numbers for Gibraltar residents. However, he sees Spain as continuing to create administrative and political obstacles for Gibraltar, even after an agreement in April to unblock a range of European Union laws.
Caught between Britain and Spain, Gibraltar has little power to do anything but sit back and watch events unfold. However, one way in which the territory can perhaps fight back, or at the very least give off an air of stubbornness, is over the OECD attack on its offshore sector. Mr Caruana is reported as saying that Gibraltar would continue to uphold banking secrecy, even if Britain had other ideas. The Gibraltar government took a policy decision at the outset not to give a commitment to work towards meeting OECD requirements, but this decision has been criticised by the opposition party as jeopardising Gibraltar’s economy, or more accurately Gibraltar as an offshore financial centre. The opposition is said to believe that a major consultation exercise with the industry should take place and a public debate should ensue as to which is the best way forward for Gibraltar, saying ‘The opposition will be supporting the stand adopted by the government if it can be demonstrated that it is in the best interests of Gibraltar.’
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