HC 461

House of Commons

Foreign Affairs Committee

Gibraltar: Time to get off the fence

Second Report of Session 2014–15

HC 461 Published on 1 July 2014

by authority of the House of Commons London: The Stationery Office Limited

£0.00

House of Commons

Foreign Affairs Committee

Gibraltar: Time to get off the fence

Second Report of Session 2014–15

Report, together with formal minutes relating to the report

Ordered by the House of Commons to be printed 24 June 2014

The Foreign Affairs Committee

The Foreign Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Foreign and Commonwealth Office and its associated public bodies.

Current membership

Rt Hon Sir Richard Ottaway (Conservative, Croydon South) (Chair) Mr John Baron (Conservative, Basildon and Billericay) Rt Hon Sir Menzies Campbell (Liberal Democrat, North East Fife) Rt Hon Ann Clwyd (Labour, Cynon Valley) Mike Gapes (Labour/Co-op, Ilford South) Mark Hendrick (Labour/Co-op, Preston) Sandra Osborne (Labour, Ayr, Carrick and Cumnock) Andrew Rosindell (Conservative, Romford) Mr Frank Roy (Labour, Motherwell and Wishaw) Rt Hon Sir John Stanley (Conservative, Tonbridge and Malling) Rory Stewart (Conservative, Penrith and The Border)

Gibraltar: Time to get off the fence 1

Contents

Report Page

Summary 3

Conclusions and recommendations 5

1 Introduction 9

2 Brief background to the dispute 11 Historic background 11

1984–1997 Brussels process 11 2001- 2002 Renewed Brussels process: joint sovereignty talks 11 2004–2009 trilateral forum and Cordoba Agreements 12

3 2012-14 escalation and current situation 14 Suspension of diplomatic talks 14

Is there any truth to tax allegations against Gibraltar? 15 Alternative motivations for criticism of Gibraltar 17

Illegal incursions into Gibraltarian territorial waters 18 Concrete reef 21 Threats against bunkering companies operating in BGTW 22

Border delays 22 European Commission border visit 23

Charts showing maximum waiting times at the border Jan-Jun 2014 26 Is there a problem with tobacco smuggling across the Gibraltar/Spain border? 28 Could Gibraltar join Schengen? 30 Diplomatic bag incident 31

International pressure 31 Action in European Union institutions 32 Action at the United Nations 33

4 Assessing the UK Government response 35 Does Spain care more than the UK about the Gibraltar dispute? 37 Diplomatic protests and summons 38

Summoning the ambassador 40 Representation in the EU 41

Prospects for taking the Gibraltar border dispute to the European Court 43 Representation at the UN 44 Alternative means of applying diplomatic pressure 45 Royal Navy and military presence 45

NATO restrictions 46

5 Conclusion 49

Annex A 51 Committee meetings in Gibraltar 51

2 Gibraltar: Time to get off the fence

Annex B 52 Legal Dispute 52

Background 52 What is the European Union Habitats Directive? 52 How are SCIs agreed? 52 On what basis has the UK challenged the designation? 52 Why did it fail? 53 What happens now? 53

Formal Minutes 55

Witnesses 57

Published written evidence 58

Gibraltar: Time to get off the fence 3

Summary

The behaviour of Spain toward Gibraltar is unacceptable. A NATO and EU ally is, as a matter of policy, deliberately impacting the economy of a British Overseas Territory. It is time for the Government to get off the fence and take a tougher line.

Spain has long disputed the UK’s sovereignty over Gibraltar, but since the People’s Party government in Spain was elected in 2011, it has taken a more hard-line approach and has significantly increased its pressure on Gibraltar and its people. Over the last three years, Gibraltarians have suffered long border delays; maritime incursions; and heightened rhetoric from Spanish ministers about its sovereignty and its economic affairs.

This has resulted in strong criticism traded between the UK and Gibraltar, and Spain, who are ordinarily strong European partners. We consider the reasons for the increased tension, including Spanish allegations against Gibraltar’s financial system and smuggling controls, as well as suggestions that Spain is seeking to distract from its own domestic troubles. We regret that dialogue between the UK, Gibraltar and Spain has been suspended over the last three years, and ask the Government to set out what offer it has made to Spain, and how it intends to secure talks before the next election.

We consider the ways in which Spain has exerted pressure on Gibraltar’s maritime and border. We are deeply concerned about the dramatic increase in maritime incursions in British Gibraltarian Territorial Waters, and the hostile tactics of some of the vessels that conduct them. We applaud the restraint of British and Gibraltarian vessels in their attempts to enforce British sovereignty, and are disappointed in the FCO’s current practice of lodging diplomatic protests weeks after the event, robbing them of all force. We were particularly concerned to learn that in March 2014 it had taken the FCO weeks to register diplomatic protests about even serious incidents, which gives the wrong impression to Spain about how seriously the UK takes this issue.

We have no doubt that delays imposed by Spain at the border with Gibraltar are politically motivated, and that the border is being used as a means of coercion. This is unacceptable in a European partner. The Government is right to look to the European Commission to address this matter, but it should state publicly that it will take legal action against Spain in the European Court if there is little improvement in the next six months. As a potential solution to the border problems, we consider the possibility of Gibraltar joining Schengen while the UK remains outside. Although we can see the merit in this idea in terms of removing a mechanism of pressure and creating goodwill, we suspect that the legal and economic implications could be considerable. The UK Government should support the Government of Gibraltar as it conducts its review.

The Government should robustly oppose continued attempts by Spain to use international institutions as a means of securing international support for its case. Gibraltar remains on the UN list of Non-Self-Governing Territories, despite repeated UK government attempts to de-list it. We ask the Government to set out what action it is taking in order to achieve

4 Gibraltar: Time to get off the fence

this.

Spain also continues to refuse to allow direct military movements or communications between Gibraltar and Spain, even among its NATO partners. This restriction is unacceptable, and it is not appropriate for the UK to simply work around it. We are disappointed that the Government is not taking a more active approach to lifting the NATO restriction, including by enlisting its NATO partners’ support and by raising the matter formally at meetings.

The combination of direct pressure on its border and sovereign waters as well as diplomatic pressure at the EU, UN and NATO, have resulted in a feeling in Gibraltar of being under siege. This has placed the UK Government in a difficult position. It has a broad and strong bilateral relationship with Spain that is in the interest of all British citizens, but the UK Government also has responsibilities toward Gibraltar and cannot ignore actions by Spain that are intended to make the lives of Gibraltarians difficult. The Government has taken a cautious approach until now in order to ‘de-escalate’ tensions. While laudable, this has not produced acceptable results for the people of Gibraltar. Spain should not be able to pursue aggressive policies toward Gibraltar without harming its relationship with London, and the UK Government must make this clear.

It is now time to think again about what measures can be taken to discourage Spain from exerting pressure on Gibraltar. While recognising that the UK Government has limited scope for action if it is not to escalate the dispute, we recommend that the Government increase its use of its own diplomatic measures toward Spain (in terms of diplomatic protests and summons) as well as making the UK’s support for Spanish aims on the international stage dependent upon improvements to the situation in Gibraltar.

Gibraltar: Time to get off the fence 5

Conclusions and recommendations

Historic background

1. The difficulties the current Government faces are in part a legacy of regrettable decisions made in 2001-02 to allow for joint sovereignty discussions, which raised expectations on the Spanish side. Since 2004, the Government has sought to correct this by a consistent message that no discussions will take place without the consent of the people of Gibraltar. This is the correct approach, and should be consistently re-affirmed. The ‘double lock’ has provided Gibraltar with security following a difficult period; this guarantee of self-determination should never be abandoned again. (Paragraph 12)

Suspension of diplomatic talks

2. Progress on re-starting talks is long overdue. In response to this report, the Government should set out the offer it has made to the Spanish government and its strategy for overcoming the problems. The UK Government should make clear to its international partners that it is a change in Spanish government policy, rather than UK policy, that has brought about the suspension of the much-needed talks. (Paragraph 21)

Illegal incursions into Gibraltarian territorial waters

3. We are deeply concerned by the cavalier approach taken by Spanish vessels in their attempts to assert an illegitimate form of authority in British Gibraltarian Territorial Waters. We consider that the actions taken by the Government of Gibraltar in relation to the fishing agreement and concrete reef do not justify the increase in incursions, nor the hostile tactics of some of the vessels that conduct them. We recommend a more robust approach in defending British Gibraltarian Territorial Waters. In its response to this report, the Government should set out the naval and police options it has identified to this end; and those it intends to pursue. (Paragraph 30)

Border delays

4. In its response to this report, the Government should state its position on whether Gibraltar could join Schengen without the rest of the UK, and how it will support the work of the recently-announced consultation. (Paragraph 44)

5. We are in no doubt that Spain’s measures at the border in 2013 were politically motivated and that it continues to use the border as a coercive tool against Gibraltar. This is entirely unacceptable behaviour by an EU partner and should not be tolerated by the UK. (Paragraph 46)

6 Gibraltar: Time to get off the fence

6. The Government should continue to pursue a stronger response by the European Commission through consistent and sustained follow-up in Brussels. The Government should also encourage further monitoring inspections by the Commission with the minimum possible notice given to both parties. (Paragraph 46)

International pressure

7. We are particularly concerned by Spain’s withdrawal from some aspects of the Cordoba Agreement, representing a significant backward step in relations with Gibraltar, and the UK. As Spain tries to apply pressure via EU aviation legislation, the UK Government should ensure that its EU partners are fully aware that Spain has reneged on an agreement negotiated in good faith, under which the UK has paid over £70 million to Spanish citizens. By continuing to abide by its obligations under the Cordoba Agreement, the UK Government has put itself in a strong position to give weight to this argument. (Paragraph 51)

8. Spain’s claims on Gibraltar are undermined by its defence of its own overseas territories in North Africa. The Spanish Government’s arguments about the constitutional differences between Ceuta and Melilla and Gibraltar are unconvincing at best, and leave Spain open to the charge of hypocrisy. (Paragraph 53)

Assessing the UK Government response

9. Spain is a key partner for the UK both bilaterally and in the EU and NATO. It is a testament to the importance that both states place on the bilateral relationship that it remains strong despite our differences. However, Spain should not be able to pursue aggressive policies toward Gibraltar without consequences for its relationship with London. (Paragraph 59)

Does Spain care more than the UK about the Gibraltar dispute?

10. Ministerial visits are an important display of support to the people of Gibraltar, as well as a signal to Spain of the UK’s continued commitment. We recommend that, in the light of the difficult twelve months that Gibraltar has experienced, the Government consider a high-level visit to Gibraltar before the end of this year and we welcome the fact that the Minister for Europe will be visiting shortly. (Paragraph 65)

Diplomatic protests and summons

11. When the UK delivers protests about maritime incursions three or four weeks after the actual incident, it robs those protests of any force they might have had and gives the impression of an official simply ‘going through the motions’. This might be acceptable at a time of relative harmony, but during this period of heightened pressure on Gibraltar, the Government should re-assess its internal deadlines for delivering diplomatic protests. We recommend that it put in place procedures under which all diplomatic protests to Spain about Gibraltar are delivered within a maximum of seven days. (Paragraph 71)

12. We recommend that if the situation does not show signs of improvement, the Government should re-assess its criteria for summoning the Spanish Ambassador

Gibraltar: Time to get off the fence 7

and should consider doing so more frequently to reflect its ongoing concern about the unacceptable status quo. (Paragraph 73)

Representation in the EU

13. The failure to prevent British Gibraltarian Territorial Waters from being designated a Site of Community Interest by Spain was a significant mistake which has proven impossible to reverse. The FCO should set out the action it has taken since this incident to ensure that Government departments consider Gibraltar, and Overseas Territories more generally, when representing the UK at EU level. (Paragraph 79)

14. The Government should keep the option of using Article 259 to take Spain to the European Court under review, pending the final results of the Commission’s investigation into the situation at the border. If the situation at the border does not improve within the next six months then the UK should make it clear that it intends to begin legal proceedings against Spain under Article 259. (Paragraph 84)

Representation at the UN

15. The Government should robustly oppose continued attempts by Spain to use international institutions as a means of securing international support for its case. We again urge the Government to take steps to remove Gibraltar from the UN list of non-self-governing territories. The Government should set out in its response to this report what action it is taking in order to do this. (Paragraph 86)

Alternative means of applying diplomatic pressure

16. The Government should seek to identify areas of non-essential cooperation and occasions on which British assistance would be helpful to Spain (for example, Spain’s bid for membership of the UN Security Council) and make the UK’s support dependent on improvements to the situation in Gibraltar. (Paragraph 87)

Royal Navy and military presence

17. We commend the Government’s policy of choosing to use Gibraltar as a stop off point for naval vessels in transit as a sensible and effective measure. (Paragraph 89)

18. We are disappointed that so little progress has been made in the last 16 years toward lifting Spain’s NATO reservation against ships travelling between Spanish and Gibraltarian ports. The UK should actively seek for Spain’s NATO reservation on Gibraltar to be overturned and set out in its response to this report how it intends to do so. The Government should also set out any steps it has taken to solicit support from other NATO partners who are inconvenienced in operational matters by Spain’s restriction on Gibraltar. (Paragraph 94)

8 Gibraltar: Time to get off the fence

Conclusion

19. We consider that the pressure currently being applied on Gibraltar by Spain, through the imposition of delays at the border, unwarranted maritime incursions, and diplomatic pressure in international institutions amounts to a campaign of harassment and intimidation. (Paragraph 95)

20. The UK Government has shown restraint in response to provocation by Spain. It was right to do so: but the UK’s approach of consistently trying to de-escalate tensions in the face of mounting provocation has also achieved little discernible effect, aside from giving Gibraltarians the impression that not enough is being done. It is now time for the UK Government, with the agreement of the Government of Gibraltar, to think again about what measures can be taken to discourage Spain from exerting pressure on Gibraltar. (Paragraph 97)

21. Finally, while intensifying the diplomatic pressure, the Government should make clear to the Spanish Government that there is much goodwill between our peoples and a real desire on the part of the British government to re-start dialogue. (Paragraph 99)

Gibraltar: Time to get off the fence 9

1 Introduction

1. Spain has long disputed the UK’s sovereignty over Gibraltar, which is located at the southern tip of the Iberian Peninsula and is one of the UK’s fourteen remaining Overseas Territories. The last three years have seen an increase in tensions between Spain and the UK over the status of Gibraltar, with increased maritime incursions into British Gibraltarian Territorial Waters (BGTW) and a prolonged suspension of diplomatic talks between the three parties. In the summer of 2013, the dispute received international coverage when Spain imposed controls on the border resulting in delays of up to seven hours for vehicles passing in and out of Gibraltar. The incident prompted diplomatic complaints, and a referral to the European Commission by both the UK and Spain. The Foreign Secretary made a Statement to the House of Commons on 2 September 2013 in which he described the actions and threats of the Spanish Government as an attempt to exert pressure on the people of Gibraltar that was “wholly unacceptable”. He said that the heightened rhetoric of the Spanish Foreign Minister was concerning and “clearly intimidating to the people of Gibraltar”; and he suggested that "there may be worse to come from the Spanish Government”.1

2. The Committee maintains an interest of the FCO’s work on the Overseas Territories, and in December 2013 it held its annual evidence session on the Overseas Territories from Foreign and Commonwealth Office Minister, Mark Simmonds MP. In the light of the problems during summer 2013 in Gibraltar, we took the opportunity to ask Mark Simmonds about the dispute. We then visited Gibraltar in March 2014, where we took evidence from the Chief Minister, the Hon. Fabian Picardo, and met a range of local officials and representatives (a list can be found in Annex A). Following our return, we held an evidence session on Gibraltar with the Minister for Europe, the Rt Hon. David Lidington MP, in April 2014. Although we did not put out an official call for evidence, we received some correspondence from concerned members of the public, along with data from the Government of Gibraltar, to which we refer in this report.

3. We twice invited the Spanish Ambassador to the UK, His Excellency Federico Trillo-Figueroa, to give evidence to the Committee’s inquiry. The Ambassador met privately with the Committee Chairman, and then offered a private meeting with the Committee. We declined this invitation because we wanted to get evidence on-the record. The Ambassador later provided a translated transcript of a statement on Gibraltar by the Spanish Foreign Minister Jose Manuel Garcia Margallo, to Spain’s own Foreign Affairs Committee in September 2013.

4. In this report, we consider the current situation in Gibraltar and the extent to which the border and maritime problems have been resolved since summer 2013. We acknowledge that the UK has a strong and close relationship with Spain, which has been home to hundreds of thousands of British nationals for decades. We consider the various means by which Spain is nonetheless exerting pressure on Gibraltar, including at the border and via

1 HC Deb, 2 September 2013, col 11WS

10 Gibraltar: Time to get off the fence

European Union institutions. We go on to assess the UK Government’s policies toward Gibraltar, and whether the UK Government’s actions are effective and proportionate to the problems in Gibraltar.

5. This report builds on a number of important reports by our predecessor Committees on Gibraltar. These include a detailed report in 1999 at a time of similar border and maritime difficulties; two follow-up reports in 2000 and 2001; and further detailed reports in late 2001 and 2002 at the time of joint sovereignty talks between Spain and the UK over Gibraltar.2 The Committee returned to the issue in its 2008 report on the Overseas Territories, which also made recommendations about the UK-Spain dispute over Gibraltar.3

2 Foreign Affairs Committee, Fourth Report of Session 1998-99, Gibraltar, HC 366; Foreign Affairs Committee, Ninth

Report of Session 1999-2000, Gibraltar: Follow-up, HC 863; Foreign Affairs Committee, Sixth Report of Session 2000-01, Gibraltar, HC 319; Foreign Affairs Committee, First Report of Session 2001-02, Gibraltar, HC 413; and Foreign Affairs Committee, Eleventh Report of Session 2001-02, Gibraltar, HC 973

3 Foreign Affairs Committee, Seventh Report of Session 2007-08, Overseas Territories, HC 147-I

Gibraltar: Time to get off the fence 11

2 Brief background to the dispute

Historic background

6. Gibraltar has been under British sovereignty for over 300 years. It was captured by the UK in 1704 and was formally ceded by Spain in the Treaty of Utrecht in 1713. However, Spain has long disputed the UK’s sovereignty over Gibraltar, arguing that the Rock should be returned as part of long-overdue decolonisation, and that the isthmus (land connecting the Rock to the mainland) had never been formally ceded, nor had any of the waters surrounding Gibraltar. At various times since the Second World War, Spain has imposed significant punitive measures on the Territory. These include closing the border between Gibraltar and Spain completely between 1969 and 1982, under General Franco.

7. Over the last 50 years, Gibraltar developed into one of the most autonomous of the UK’s fourteen Overseas Territories. It adopted its first constitution in 1966, which allowed for its own legislature and government, and updated it in 2006 to transfer all governance responsibilities to the Government of Gibraltar, apart from foreign affairs, defence, and internal security. Our predecessor Committees have produced a number of reports with detailed historical background of Gibraltar and of the various dialogue initiatives that have taken place since the 1970s.4

1984–1997 Brussels process

8. In the 1970s and early 1980s, Spain was seeking to become a member of the European Community, to which the UK (and, by extension, Gibraltar)5 already belonged. As part of preparations for this, Spain and the UK signed the Brussels Agreement in 1984. This bilateral agreement on Gibraltar acted as a precursor to normal relations between members of the EC, and also provided for discussions between the UK and Spain, on topics including sovereignty. These talks came to be known as the Brussels Process and resulted in a series of meetings throughout the 1980s and 1990s, though without a great deal of progress. Spain made two formal proposals during the talks for integrating Gibraltar into Spain, the second of which was put forward in 1997 by Spanish Foreign Minister Abel Matutes of the Spanish Socialist Workers' Party (PSOE), who offered a “fresh attempt” to resolve the issue, including by offering an indefinite transitional period of joint sovereignty. Although the UK did not formally reject the proposal, the talks lapsed and Gibraltar endured a further period of border and maritime difficulties.

2001- 2002 Renewed Brussels process: joint sovereignty talks

9. In 2001, the Rt Hon Jack Straw MP, then Foreign Secretary, announced that the UK and Spain were once again holding talks on Gibraltar. It was later confirmed that these talks

4 See, for example, Foreign Affairs Committee, Fourth Report of Session 1998-99, Gibraltar, HC 413; and Foreign

Affairs Committee, Eleventh Report of Session 2001-02, Gibraltar, HC 973

5 Article 355(3) (ex Article 299(4)) applies the treaty to "the European territories for whose external relations a Member State is responsible", a provision which in practice only applies to Gibraltar.

12 Gibraltar: Time to get off the fence

included proposals for joint sovereignty over Gibraltar. The proposals were strongly resisted by Gibraltar, which had not taken part in the dialogue. In 2002 Gibraltar held a referendum asking Gibraltarians whether they would agree to shared Spanish and British sovereignty. The turnout was 87.9 per cent and nearly 99 per cent of those voting voted "no". The talks collapsed soon afterwards. Our predecessor Committee strongly opposed the talks and heavily criticised the Government both for the proposal and the less than transparent way in which it had proceeded. It said 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 […] 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”.6

2004–2009 trilateral forum and Cordoba Agreements

10. Following the collapse of the joint sovereignty proposal in 2002, in October 2004 Spain and the UK agreed to consult further on a new forum with an open agenda in which Gibraltar would have a voice. This resulted in a series of trilateral ministerial meetings, the first of which took place in Cordoba in 2006. That meeting resulted in the Cordoba Agreement, which addressed a number of long-standing issues, including the removal of air restrictions against Gibraltar airport; Spanish recognition of Gibraltarian dialling codes; and improved pedestrian and traffic flows at the border. It also contained an agreement on the payment of pensions to Spanish citizens who had been affected when the border between Spain and Gibraltar was closed by the General Franco government in 1969. Under EU rules, the Gibraltarian government had continued liabilities to these citizens though they had not been able to contribute to the pension scheme. As part of the Cordoba agreement, the UK took on liability for the pensions continued payment at agreed rates, ending a controversial and bitter dispute.7 The FCO estimated in 2008 that the additional costs to be borne by the UK as a result of this agreement were £73 million, which was in addition to the ongoing costs of £49 million in future pensions payments which would have been made anyway.8 Our predecessor committee considered that, although costly, this agreement was worthwhile as it ended challenges to Gibraltar’s pension system and removed other potential liabilities for the UK.9

11. In subsequent trilateral meetings the agenda was extended still further, and the UK Government and Government of Gibraltar both commented favourably to our predecessor committee in 2008 on the forum and the Cordoba agreement.10 During this period, it appears that sovereignty discussions were effectively off the table, as the UK Government had by then provided Gibraltar with a guarantee that not only would it never enter into

6 Foreign Affairs Committee, Eleventh Report of Session 2001-02, Gibraltar, HC 973, para 31

7 See Foreign Affairs Committee, Eleventh Report of Session 2001-02, Gibraltar, HC 973 paras 58-87 of 2002; and Foreign Affairs Committee, Seventh Report of Session 2007-08, Overseas Territories, HC 147-I paras 393-400, on the pensions ‘scam’

8 Foreign Affairs Committee, Seventh Report of Session 2007-08, Overseas Territories, HC 147-I, para 399

9 Foreign Affairs Committee, Seventh Report of Session 2007-08, Overseas Territories, HC 147-I, para 414

10 Foreign Affairs Committee, Seventh Report of Session 2007-08, Overseas Territories, HC 147-I, para 387-391

Gibraltar: Time to get off the fence 13

arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their wishes (as promised in the 1966 constitution preamble), but the UK would not even enter into a process of sovereignty negotiations with which Gibraltar was not content. This guarantee is known in Gibraltar as the ‘double-lock’. Regardless of the UK’s refusal to discuss sovereignty, relations between the UK, Gibraltar and Spain improved to such an extent during this period of dialogue that in 2009 the then Foreign Minister Miguel Angel Moratinos, from the Socialist Party (PSOE), made the first visit to Gibraltar by a Spanish foreign minister in over 300 years.

12. The difficulties the current Government faces are in part a legacy of regrettable decisions made in 2001-02 to allow for joint sovereignty discussions, which raised expectations on the Spanish side. Since 2004, the Government has sought to correct this by a consistent message that no discussions will take place without the consent of the people of Gibraltar. This is the correct approach, and should be consistently re-affirmed. The ‘double lock’ has provided Gibraltar with security following a difficult period; this guarantee of self-determination should never be abandoned again.

14 Gibraltar: Time to get off the fence

3 2012-14 escalation and current situation

13. Despite the limitations of the Trilateral Forum and Cordoba Agreement, the period can be seen with hindsight as a high water mark of diplomatic progress on Gibraltar. In 2012, a new government in Spain, which was elected on a manifesto that promised a more hard line approach to Gibraltar, began once again to exert pressure on the Territory. We turn now to consider the ways in which Spain is currently seeking to bring pressure to bear on Gibraltar, and its reasons for doing so.

Suspension of diplomatic talks

14. In November 2011, the Spanish leadership changed as a new centre-right Government was elected in Spain, under Prime Minister Rajoy of the People’s Party (Partido Popular, or PP). The new PP Foreign Minister, Jose Garcia Margallo, immediately ended the Trilateral Forum and called on the UK to enter bilateral talks with Spain on sovereignty over Gibraltar, which he said “had been on hold for too long”.11 The current Spanish government states that it will not return to the trilateral talks with the full participation of the Government of Gibraltar, which Mr Margallo refers to as “the local authorities”.12

15. All of the parties state that they have nonetheless sought to re-start dialogue in some form. The UK and Gibraltar have reaffirmed their commitment to trilateral talks, but in the absence of progress, in April 2012 the Foreign Secretary proposed ‘ad hoc’ talks “with the relevant and competent parties present” to deal with certain practical issues, though not sovereignty. The Spanish Government has in response re-stated its desire for bilateral talks on sovereignty, but has also said that it is willing to accept the creation of these ‘ad-hoc’ forums “in which other authorities, such as the Gibraltarian government and the regional government of Andalusia, could participate regarding areas where they have competencies”.13 Progress on these talks has appeared to be imminent ever since. Mark Simmonds told us in December 2012 that the invitation to ad hoc talks was still on the table and that the UK was encouraging the Spanish government to re-establish dialogue:

we are trying to find ways and mechanisms to ensure that communication is re-engaged between the three partners in a responsible, sensible and structured way. 14

In December 2013, he said “we are still awaiting specific dates from the Spanish as to when these ad hoc talks might take place, but we continue to lobby and push for them to take place as a key part of our diplomatic strategy.”15

11 “Britain rejects Spanish request for Gibraltar talks”, Reuters, 20 August 2013

12 “We Need to Talk About Gibraltar”, The Wall Street Journal, 19 August 2013

13 Ibid

14 Q23

Gibraltar: Time to get off the fence 15

16. In March 2014, Gibraltar’s Chief Minister, the Hon. Fabian Picardo, seemed less optimistic and provided some insight into his view of the continuing negotiations:

Spain and the Spanish Government are trying simply to ensure that there is an ad hoc meeting with four parties around the table, not three, and that that should be the only instance of those ad hoc meetings that occurs. Spain will then simply cry childishly, “We achieved the quadrilateral; it’s the end of the trilateral.” That is not the way to advance this diplomatically. 16

Mr Picardo added that the UK and Gibraltar had “bent over backwards” to meet the ‘red lines’ of each of the three partners and that “we could have an encounter to deal with the issues, but it is not happening.”17 Mr Lidington told us that the Government “continue to hope” for progress on talks, but acknowledged that the approach of a general election in Spain in 2015 could mean political parties were “less willing to take risks”.18 Nonetheless, in response to a Parliamentary Question on 18 June 2014, the Government said it was “actively discussing” the proposal for ad hoc talks with the Governments of Spain and Gibraltar and “hope it will be possible to hold talks soon.”19

17. The rhetoric of the current Spanish Foreign Minister is noticeably more forceful about Gibraltar, when compared to that of his predecessor. Chief Minister Picardo told us that Mr Margallo’s first words on becoming Spain’s Foreign Minister were to claim that ‘Gibraltar is Spanish’.20 Since then, Mr Margallo has announced that "playtime is over" when it came to Gibraltar,21 and has stated that he would not set foot on Gibraltar unless it was under a Spanish flag.22 Much of Mr Margallo’s criticism of Gibraltar is based on its financial and economic model, which he claims is based on “free trade, opacity and low taxation”.23 In September 2013, the UK Foreign Secretary said Mr Margallo’s heightened rhetoric was “concerning” and “clearly intimidating for the people of Gibraltar”.24

Is there any truth to tax allegations against Gibraltar?

18. The Spanish Government argues that Gibraltar is a “tax haven” whose tax regime is “characterised by opacity”. Mr Margallo has been outspoken about alleged tax fraud originating from Gibraltar, both from ‘shell’ companies and by individuals who he claims

15 Q58

16 Q115

17 Q115

18 Q189

19 HL Deb, 18 June 2014,Col WA64

20 Q105

21 "Why are we still arguing about Gibraltar?", Channel 4 News, 5 August 2013

22 Gibraltar Chronicle, 7 March 2013

23 Spanish Parliament, Report of Proceedings of the Congress of Deputies Committees, Foreign Affairs, Session No.17, 3 September 2013, 10th Parliamentary term N. 392. A courtesy translation of this statement was supplied by the Embassy of Spain.

24 HC Deb, 2 September 2013, col 11WS

16 Gibraltar: Time to get off the fence

are located there only for tax purposes. He recently told Spanish legislators that Gibraltar had the fourth largest per capita income in the world, adding that it was:

at the very least surprising that a peripheral territory, with an area of 6.8 square kilometres and totally lacking in natural resources, should attain such enviable heights of prosperity. This obliges us to reflect upon what is going on, at least insofar as it affects us. We welcome the happiness of others, but not if it is acquired at our expense.25

In addition to complaints about the tax regime allowing offshore companies to avoid tax elsewhere, Mr Margallo has also criticised Gibraltar’s gaming industry which he says is causing Spain “financial harm”. More seriously, he has alleged that significant amounts of money laundering take place, alleging that 200 major investigations “have ended up or are ending up in Gibraltar”. In response to these problems, Mr Margallo has threatened more serious economic measures against Gibraltar, including a possible action by the Spanish tax authorities relating to property owned by Gibraltarians in Spain, and has threatened to involve EU institutions in complaints against Gibraltar.

19. Gibraltar is a low-tax jurisdiction. It has a low rate of corporation tax of 10%; and no Value Added Tax (VAT). Chief Minister Fabian Picardo made no apologies for Gibraltar’s low tax regime, telling us that many other states, including the UK, competed on tax and “we are all talking about competitive rates of corporate tax being the way forward and the way to attract business to each of our jurisdictions.” However, he robustly dismissed allegations about tax transparency, stating that “Gibraltar has been proud to lead other overseas territories, and internationally, in the fight against tax evasion. […] there is a big difference between tax evasion and tax avoidance”.26 Mr Picardo told us that his Government had been supportive of international efforts to ensure “total transparency in relationships between companies and subsidiaries in different parts of the world, so that nobody can pretend to be paying tax in one place but not actually pay it”. He said that while there was some work to be done to improve the transparency of ‘beneficial ownership’ of companies, the Government of Gibraltar had nonetheless ensured that Gibraltar had fully incorporated all EU rules on financial services and money laundering, and that Gibraltar was at an “identical” stage to the UK when it came to transparency. Mr Picardo added:

we have 27 tax information exchange agreements, not with small economies, but with some of the biggest economies in the world, including the United States, Germany and France. Those that we have with the European Union have now been overtaken by the multilateral directive, which is the equivalent, according to the OECD, of tax information exchange agreements. So now we have even got one with Spain, for example, even though they did not want to sign one with us bilaterally. The OECD multilateral convention

25 Spanish Parliament, Report of Proceedings of the Congress of Deputies Committees, Foreign Affairs, Session No.17, 3

September 2013, 10th Parliamentary term N. 392. A courtesy translation of this statement was supplied by the Embassy of Spain.

26 Q99

Gibraltar: Time to get off the fence 17

has the same effect as a tier between all those who are signatories, and there are 71 signatories. Gibraltar asked the UK to extend the multilateral convention to Gibraltar.27

Alternative motivations for criticism of Gibraltar

20. A number of observers have attributed the Spanish Government’s approach to Gibraltar to its wish to distract from Spain’s current economic and social difficulties and the corruption scandals involving the current government. Mr Simmonds, the FCO Minister, said that Gibraltar was “perhaps a domestic distraction while the Spanish economy has significant problems”, while Mr Picardo put it more bluntly, stating, “It is clear to me that Gibraltar is going to once again be used as a whipping boy when they are feeling a little less popular”.28

21. We are disappointed by the reversal of the progress that had been made under the Trilateral Forum. The Government is right to continue to offer talks that involve all three main partners, and to urge Spain to re-engage on this basis as the only possible format for talks. Progress on re-starting talks is long overdue. In response to this report, the Government should set out the offer it has made to the Spanish government and its strategy for overcoming the problems. The UK Government should make clear to its international partners that it is a change in Spanish government policy, rather than UK policy, that has brought about the suspension of the much-needed talks.

27 Q101

28 Q105

18 Gibraltar: Time to get off the fence

Illegal incursions into Gibraltarian territorial waters

22. Gibraltar and the UK consider that Gibraltar’s territorial waters extend three miles from the Territory according to the UN Convention on the Law of the Sea (UNCLOS). Spain insists that the Treaty of Utrecht did not cede any coastal waters to Gibraltar. Incursions by Spanish vessels into British Gibraltarian Territorial Waters (BGTW) have therefore long been a source of tension between Gibraltar and Spain, but they have escalated to new heights since 2012.

23. These illegal incursions do not include vessels conducting the ‘right of safe passage’ as determined in UNCLOS (that is, the right to peacefully and directly traverse territorial waters), used by many vessels every day in BGTW. Rather, they fall into two main categories: Spanish police vessels accompanying Spanish fishermen seeking to conduct commercial fishing in BGTW; and other Spanish state vessels (i.e. police, naval or research vessels) asserting their supposed right to be active in those waters. Data from the UK Government tracking illegal incursions into BGTW shows a pronounced increase in illegal incursions by Spanish government vessels since March 2012:29

29 HC Deb, 10 Apr 2014, Col 374W

MAP SHOWING TERRITORIAL WATERS AROUND GIBRALTAR

[Source: provided by Foreign & Commonwealth Office]

Gibraltar: Time to get off the fence 19

24. The increase is in part due to a decision in 2012 by the incoming Gibraltar Government to end an informal agreement that had previously allowed some Spanish fishing vessels to operate in BGTW. There is a long history to the fishing dispute: in 1991 Gibraltar passed legislation that made it unlawful to use the most common commercial fishing methods in Gibraltarian waters, for reasons of conservation. Nonetheless, some fishing was allowed to continue, until a surge in the number of fishing boats in 1997-98 prompted the Gibraltarian government to enforce it. Protests followed, and an agreement was brokered in 1998 between the Gibraltarian Government and Spanish fishermen’s representatives that allowed for limited fishing. Our predecessor Committee welcomed the agreement as a practical response but urged Gibraltar to harmonise its legislation to reflect the agreement. In 2012, the new Government of Gibraltar ended the agreement (having campaigned on a manifesto promise to do so), explaining that it was contrary to Gibraltarian law. This resulted in a surge of illegal incursions by Spanish Guardia Civil boats accompanying Spanish fishing vessels. The Government of Gibraltar has since been in negotiation with Spanish fishermen, and the Chief Minister told us that they were close to finding a resolution. However, the Chief Minister rejected the suggestion that fishing disputes were the main cause of the problem, stating:

At the early stages of what you call the fishing dispute, some of those state actors—the Guardia Civil in particular—accompanied Spanish fishing vessels into our waters. Therefore you would count that as an incursion. But that has not happened for months, or for at least a year or so.

What we are seeing is an increase in incursions exclusively by state actors, doing things totally unrelated to fishing, for example, interfering with executive action being taken by the Gibraltar authorities; interfering with

2 5 3

6 4 5 0 1 0 0 2 2 3 5

1 3

25 24

39 36

29

21 22 24 30

36

26

38

50 50 46

68

35

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20 Gibraltar: Time to get off the fence

lawful bunkering30 activities in our waters; and filming those who are bunkering in our waters in an attempt to intimidate them. Although I would very much wish that we could get rid of the problem of incursions simply by resolving the fishing issues that we have with 60 fishermen in Spain, I do not think that we will.31

25. Aside from the fishing dispute, Spanish state vessels (ie. Guardia Civil or even naval or research vessels) also conduct incursions into BGTW in order to demonstrate a form of control and non-recognition of British sovereignty over BGTW. The refusal of these vessels to recognise the authority of the Royal Gibraltar Police (RGP) and Royal Navy in BGTW has led to a number of dangerous incidents, for instance:

• On 25 June 2013, rubber bullets were reportedly fired by a Spanish Guardia Civil vessel pursuing a jet skier into BGTW. Mr Lidington complained to the Spanish authorities, but Spain denies that the incident took place, stating that no incident had taken place and no shot was fired. 32

• On 30 October 2013 a Guardia civil patrol boat approached Royal Navy vessels in BGTW and conducted “several dangerous manoeuvres”, and a minor collision occurred (no damage or injuries resulted).33

• On 2 April 2014, the research ship Angeles Alvarino accompanied by a Guardia Civil vessel entered BGTW, and "dangerous manoeuvring" by the Guardia Civil vessel resulted in a minor collision with a police boat.

• In late April 2014 Spain claimed that the Royal Gibraltar Police had caused injuries to a Guardia Civil officer; press reports stated that the officer was injured following a collision with an RGP launch.34

26. While visiting Gibraltar, we were shown video evidence of the aggressive tactics used by some vessels, resulting in collisions and a danger of serious damage and injury. The naval and police officers we spoke to considered that if the current activity were to continue, it would be only a matter of time before there was serious injury. Such incursions deliberately make it difficult, if not impossible, for the Royal Gibraltar Police (RGP) and Royal Navy vessels to enforce their authority and British sovereignty without becoming involved in a potentially serious incident at sea. We were impressed by the professionalism and restraint with which both the RGP and Royal Navy conducted their work in the face of clear and repeated provocation.

27. On other occasions, Spanish vessels have entered BGTW and simply refused orders from British authorities to leave. For example:

30 Bunkering is the process of supplying fuel to a ship for its own use

31 Q103

32 “UK protests after ‘shots fired at jet skier’ off Gibraltar”, BBC News, 25 June 13

33 HC Deb, 4 November 2013, col 3WS

34 “Spain to intensify border controls”, GBC news, 16 May 2014

Gibraltar: Time to get off the fence 21

• On 19 November, 2013 a Spanish government research ship entered Gibraltarian waters and refused orders from the Royal Navy to leave. Its captain said the ship was conducting "oceanographic works in the interest of the European community" at the behest of the Spanish government. A small British patrol boat closed in on the Spanish vessel, ordering it to leave Gibraltar waters, but it refused. The Spanish ship finally left the area after almost 24 hours. Mr Lidington strongly condemned the “provocative incursion”, and the FCO summoned the Spanish Ambassador the following day. 35

• On 19 February 2014, a Spanish warship entered the waters around Gibraltar causing the diversion of a Royal Navy ship and thereby disrupting a British forces parachute training exercise. Warnings were issued to the Spanish vessel and a Royal Navy ship ‘shadowed’ the vessel, but it left only after radioing to state that it was in Spanish waters.36

28. In a further attempt to demonstrate a form of control over BGTW, in 2008/9 Spain applied to the European Commission to designate almost all of BGTW as a protected marine area. The application was approved before the UK was aware of the designation. The UK tried to appeal but lost on a technicality relating to the timing of the case. We will return to the UK Government’s mishandling of this situation later in this report.

Concrete reef

29. In July 2013, the Gibraltarian government installed concrete blocks in BGTW in an area north-west of the airport runway, in order to create an artificial reef to encourage sea life to flourish in a marine reserve. Spain has vigorously protested about the installation of the concrete blocks. The Foreign Minister has stated that the blocks were placed in Spanish waters "without the necessary authorisation"; as they are located in waters off the isthmus connecting the Rock of Gibraltar to the mainland, and he argues that neither the isthmus nor the water was ceded under the Treaty of Utrecht. Spain also considers that the blocks contravened environmental laws; and damaged its fishing industry because Spanish fishing nets were in danger of catching on them. The Government of Gibraltar argues that the reef was installed in BGTW (it does not accept Spanish claims over sovereignty of the isthmus); and that it was installed for conservation purposes. The Government of Gibraltar said that the artificial reef is identical to a number of artificial reefs Spain has itself recently installed in its own waters for the same purpose,37 and the Foreign Secretary repeated this claim in his statement on 2 September 2013.38 Anger about the installation of the reef has been widely seen as the motivation for the Spanish government’s imposition of restrictive checks at the land border between Spain and Gibraltar. It was also the reason that lorries carrying

35 HC Deb, 20 November 2013, col 1234

“36 “Gibraltar: UK to protest against actions of Spanish warship that disrupted British military training”, The Telegraph, 19 February 2014

37 See, for example, “Gibraltar: Spanish government 'hypocrites' for complaining about reef”, The Telegraph, 6 August 2013, and “Gibraltar row: Spain 'misinformed' over artificial reef”, Guardian, 22 August 2013

38 HC Deb, 2 September 2013, col 11WS

22 Gibraltar: Time to get off the fence

construction materials were turned away from the border as they tried to enter Gibraltar in July 2013.39

30. We are deeply concerned by the cavalier approach taken by Spanish vessels in their attempts to assert an illegitimate form of authority in British Gibraltarian Territorial Waters. We consider that the actions taken by the Government of Gibraltar in relation to the fishing agreement and concrete reef do not justify the increase in incursions, nor the hostile tactics of some of the vessels that conduct them. We recommend a more robust approach in defending British Gibraltarian Territorial Waters. In its response to this report, the Government should set out the naval and police options it has identified to this end; and those it intends to pursue.

Threats against bunkering companies operating in BGTW

31. In August 2013, the Spanish Government also announced that it would take steps to outlaw the refuelling of ships at sea (known as bunkering) in the waters surrounding Gibraltar, for environmental reasons. The Spanish government warned that it would impose fines on companies flouting the ban. Bunkering is an important industry for Gibraltar, which is well-placed to offer vessels re-fuelling as they pass through the straits. In June 2013, the Spanish Environment Ministry sent a letter to one company alleging that it was in breach of Spanish law and threatening sanctions, which prompted a diplomatic protest from London.40 Spain disagreed with the UK’s protest, but has not pursued a case against the company and Mr Lidington told us that this was a case of effective and robust diplomatic action.41

Border delays

32. Unlike Spain, Gibraltar is not part of the Schengen open border agreement. The UK opted out of joining the main parts of Schengen when it was brought under the umbrella of the EU institutions in 1997, which ensured that the UK and Gibraltar maintain an external border. This means that Spain and Gibraltar are both entitled to carry out proportionate checks on travellers and vehicles crossing the border. However, Spanish border controls regularly result in extended traffic delays for those going in and out of Gibraltar and are a source of regular antagonism between the Gibraltarian government and Spain. The delays not only cause enormous inconvenience to Gibraltarians but also affect the seven to ten thousand Spanish citizens who cross the border every day to work in Gibraltar.

33. In July and August 2013, Spain suddenly instigated rigorous border checks that resulted in motorists waiting up to seven hours to cross the border, as each car was thoroughly searched. The queues peaked on the weekend of 27-28 July, and again on 9-10 August. These delays followed shortly after Gibraltar’s installation of the artificial reef in BGTW, and many observers, including the Governments of Gibraltar and the UK,

39 HC Deb, 19 November 2013, col 282WH

40 HL Deb, 24 March 2014, col 71W

41 Q142

Gibraltar: Time to get off the fence 23

consider the timing to have been politically motivated. Mr Picardo described the delays to be another example of what he termed “the use of the frontier as an abusive weapon against Gibraltar and its economy”.42

34. Spain stated that the delays were due to measures it had been forced to take to prevent tobacco smuggling across the border. Foreign Minister Jose Manuel Garcia-Margallo said at the time that Spain was considering introducing more formal restrictions, including a €50 fee to cross the border, and that Spain could close its airspace to flights heading to Gibraltar (the European Commission quickly warned Spain that a €50 fee at the border would be illegal).43 In an article published in the Wall Street Journal in August 2013 titled ‘We need to talk about Gibraltar’, Mr Margallo listed Spain’s criticisms of Gibraltar, including the installation of concrete blocks, the fishing dispute, smuggling, and Gibraltar’s tax regime.44

35. The UK government formally protested about the delays. It summoned the Spanish Ambassador on 2 August; the Foreign Secretary spoke to his Spanish counterpart on 7 August; and the Prime Minister phoned Prime Minister Rajoy on 7 August. As delays continued the following weekend and throughout August, the Prime Minister called the President of the European Commission to request an urgent EU monitoring mission to inspect the border.

European Commission border visit

36. The European Commission conducted a one-day visit to the border on 25 September 2013. The Commission had investigated Gibraltar border delays before, in 2002. In that case, it issued contradictory responses, first announcing that the checks at the border “could not be proportionate to the legal and practical objectives that are intended to pursue”, but then closing the investigation and stating that it had found no evidence to legally support claims that the checks were disproportionate.45 This time, the Commission announced on 15 November 2013 that it had “not found evidence to conclude that the checks on persons and goods as operated by the Spanish authorities at the crossing point of La Línea de la Concepción have infringed the relevant provisions of Union law.” However, it added:

The management of this crossing point is nevertheless challenging, in view of the heavy traffic volumes in a relatively confined space and the increase in tobacco smuggling into Spain. The Commission believes that the authorities on both sides could take further measures to better address these challenges, and is addressing three recommendations to both Member States.

In its letter to Spain, the Commission recommends: 1) to optimise the physical space available on the Spanish side of the crossing point in view of

42 Q87

43 Q87

44 “We Need to Talk About Gibraltar”, The Wall Street Journal, 19 August 2013

45 Eleventh Report of Session 2001-02, Gibraltar, HC 973

24 Gibraltar: Time to get off the fence

ensuring a greater fluidity of traffic (and in particular to review the traffic organisation on entry into Spain and on exit from Spain in order to increase the number of vehicular lanes for travellers or to make better use of the existing lines); 2) to optimise risk-based profiling: carrying out more targeted checks, based on a refined risk analysis, in order to reduce the large amount of random border controls and 3) to develop the exchange of information with the United Kingdom on tobacco smuggling.

In its letter to the United Kingdom, the Commission recommends: 1) to develop risk-based profiling (in particular Gibraltar should ensure non-systematic and risk analysis-based checks on travellers and their belongings upon exit from Gibraltar at the crossing point of La Línea de la Concepción); 2) optimising legislation and safeguards in view of contributing to an efficient fight against tobacco smuggling and 3) develop the exchange of intelligence on tobacco smuggling with Spain.46

The Commission encouraged all of the relevant authorities to co-operate and engage in “constructive dialogue”. It said it would continue to monitor the situation and asked to receive information from both authorities within six months on how the recommendations had been taken into consideration.

37. Both Spain and the UK welcomed the Commission’s findings. Spain said it was satisfied that the Commission had found that its checks were not illegal,47 while Mr Lidington, Minister for Europe, welcomed the Commission’s recommendations to Spain for changes to its side of the border, which he described as “strong”, and said that the UK and Gibraltarian governments had been calling for such measures for years. However, he added:

It is unsurprising that the Commission found insufficient evidence that Spain is breaking EU law, as the Spanish checks were significantly reduced during the Commission’s visit. We remain confident that the Spanish government has acted–and continues to act–unlawfully, through introducing disproportionate and politically motivated checks at the Gibraltar-Spain border. And we will continue to provide evidence of that to the Commission.48

The visit was announced in advance, in accordance with the then Schengen Border Code. These rules have recently been updated and it is now possible for European Commission experts to make border visits with only 24 hours’ notice.49 The Government of Gibraltar, in

46 “Commission reports on the border situation in La Línea (Spain) and Gibraltar (UK)”, European Commission press

release IP/13/1086, 15 November 2013

47 “Spanish border checks on Gibraltar not illegal, EU says”, euobserver, 18 November 2013

48 “UK welcomes Commission’s statement on Gibraltar-Spain border”, Foreign and Commonwealth Office press release, 15 November 2013

49 COUNCIL REGULATION (EU) No 1053/2013 establishing an evaluation and monitoring mechanism to verify the application of the Schengen acquis and repealing the Decision of the Executive Committee of 16 September 1998 setting up a Standing Committee on the evaluation and implementation of Schengen, 7 October 2013; Official Journal of the European Union L 295/27, 6 Nov 2013

Gibraltar: Time to get off the fence 25

consultation with the UK, immediately published the letter it had received from the Commission. The Spanish Government did not. Following an official ‘access for documents’ request by the then MEP for Gibraltar, Sir Graham Watson, the Commission published the letter it had sent to Spain. However, it has refused a second ‘access to documents’ request for a further letter it sent to Spain about the border on 19 December 2013.

38. In the six months since the Commission sent recommendations, the Gibraltarian government states that it has taken a number of measures to implement the recommendations, which were mostly aimed at curbing tobacco trafficking, including:

• increasing powers of authorities to tackle smugglers;

• upgrades to the border infrastructure to make smuggling more difficult;

• reducing the number of cigarettes that an individual can buy and carry;

• raising duty on tobacco50

In April 2014, the Government of Gibraltar submitted to the Commission a collection of evidence of border delays, including testimonials from 500 affected citizens. On 15 May 2014, David Lidington publicly criticised Spain for its failure to implement the Commission’s recommendations and continuing “politically motivated and disproportionate checks” at the border, commenting:

I am deeply concerned by the delay by the authorities in Spain in responding to the Commission’s recommendations. The Commission has already concluded that the intensity of the checks is unjustified. Spain needs to take simple, practical steps to improve the situation - and quickly. 51

On 16 May, it was reported that Spain had written to the European Commission to say that the UK had failed to adopt the necessary measures to curb tobacco smuggling, which had further increased, and Spain planned to intensify controls at the border. It also promised a €5.3 million upgrade to its border facilities.52 Spain also claimed that cooperation with Gibraltarian authorities had actually deteriorated over the six months since the visits, that it was continuing to confiscate record levels of smuggled tobacco, stating: “This lack of cooperation in the face of an increase requires Spain to intensify controls both in the waters and at the fence.”53

39. Although the delays have lessened since August 2013, they remain significant. At the time of our visit to Gibraltar in March 2014, the Chief Minister told us that in the previous

50 “Gibraltar-Spain border delays: EU Recommendations six months on”, Foreign and Commonwealth Office press

release, 15 May 2014

51 “Gibraltar-Spain border delays: EU Recommendations six months on”, Foreign and Commonwealth Office press release, 15 May 2014

52 “Spain to intensify border controls”, GBC news, 16 May 2014

53 “Spain hits back at Britain over border smuggling”, Gibraltar Chronicle, 18 May 2014

26 Gibraltar: Time to get off the fence

month, cars crossing the border were waiting on average 67 minutes to enter Gibraltar and 93 minutes to leave.54 He added that Spain had also implemented a new measure of delaying the pedestrian queue for up to 90 minutes, stating:

Things are not getting better, and the figures I am giving you take account of the reduced number of cars and pedestrians coming into Gibraltar. In my view and that of the Gibraltar Government, the issue at the border is not being resolved. 55

The British Government agrees that border checks remain “disproportionate” and has promised to maintain diplomatic pressure until they return to reasonable levels. The Government of Gibraltar has provided data to the European Commission on waiting times to cross the border experienced over the last six months, which states that delays of an hour or more for traffic leaving Gibraltar took place on at least 20 days each month between November 2013 and May 2014, and that maximum waiting times are still reaching up to three hours for vehicles on occasion, while pedestrians have waited for up to 90 minutes to cross the border:

Charts showing maximum waiting times at the border Jan-Jun 2014

54 Q110

55 Q110

Gibraltar: Time to get off the fence 27

40. It is not only Gibraltarians that are affected by the border delays: up to 10,000 Spanish nationals cross the border to work in Gibraltar each day. The area on the Spanish side of the border has experienced high levels of unemployment and poverty, and many of its residents depend on work and business from Gibraltar. We received representations from Spanish Workers in Gibraltar (ASCTEG) and For a Humanitarian Frontier, an organisation which defends the rights of commuters who cross the frontier of Gibraltar and La Linea on a daily basis “who suffer unnecessary, unjustified and in an inhumane way, the long lasting queues because [of] the use of the frontier as a political weapon”.56 The local government in Andalucia, led by Socialist (PSOE) party, has also protested about

56 Spanish Workers in Gibraltar(ASCTEG)/For a Humanitarian Frontier (GIB0004)

28 Gibraltar: Time to get off the fence

the restrictions. The local Andalusian parliament passed a motion in May 2014 that called on the Spanish government to relax controls at the border which were adversely affecting Spanish workers crossing daily into Gibraltar. The motion was passed with the support of the Socialist and left wing parties, who reportedly claimed that the controls had had a disastrous effect on businesses on the Spanish side of the border. The press reported that the PP government in Madrid considered the motion to go against Spanish national interests.57 The press reported in May 2014 that Susana Diaz, the PSOE president of the Junta de Andalucia, had written to Spain’s central government urging it to ease controls that had become a “heavy burden” for cross-border workers.58 The opposition PSOE has previously criticised the Spanish Government for its policies toward Gibraltar, accusing it of “starting a conflict without a solution” and describing “sad outcomes” for the local region.59

Is there a problem with tobacco smuggling across the Gibraltar/Spain border?

41. Tobacco smuggling does take place across the Spain/Gibraltar border and has soared following the financial crisis and unemployment in Spain. Spain claims that seizures of illegally imported cigarettes from Gibraltar increased by 213% between 2010 and 2012.60 Mr Margallo told Spain’s own Foreign Affairs Committee in September 2013 that the number of cigarettes imported into Gibraltar was so high that it was not possible that they were for domestic consumption only:

55 million packs of cigarettes were imported to Gibraltar from Spain in 2009; in 2010 this rose to 86 million packs; in 2011, to 117 million, in 2012, to 139 million, and in 2013, in six months and even when controls had been implemented, 93 million packs. This suggests if action had not been taken, well over 200 million packs would have been imported. Bearing in mind that Gibraltar has some 30,000 inhabitants, and ruling out the children, non-smokers and others who are not involved in this trade, it is clear that the numbers do not add up.61

Spain claims that these cigarettes are smuggled back into Spain for sale, tax-free, via cars, pedestrians and on the water.

42. Chief Minister Picardo acknowledges that tobacco smuggling is a problem and states that his government has put in place “draconian” measures to tackle it.62 These measures include restricting the amount of tobacco that people can be in possession of without a

57 “PSOE motion upsets Partido Popular”, 8 May 2014

58 “Lunchtime queues as Spain steps up border checks”, Gibraltar Chronicle, 21 May 2014

59 “PSOE slams Spanish government over ‘conflict without solution’”,Gibraltar Chronicle, 1 April 2013

60 “We Need to Talk About Gibraltar”, The Wall Street Journal, 19 August 2013

61 Spanish Parliament, Report of Proceedings of the Congress of Deputies Committees, Foreign Affairs, Session No.17, 3 September 2013, 10th Parliamentary term N. 392. A courtesy translation of this statement was supplied by the Embassy of Spain

62 Transcript of “A Conversation with Fabian Picardo”, 7 October 2013, Council on Foreign Relations

Gibraltar: Time to get off the fence 29

transportation licence, and the amount of tobacco that can be sold to an individual; restricting the areas where tobacco can be sold; and extending police powers to stop and search cars suspected of smuggling tobacco. However, he also argues that tobacco smuggling is a problem throughout southern Spain and the problems on the Gibraltar border are minimal in comparison with elsewhere. He also claims that Spain ignores the fact that:

Gibraltar has 12 million tourists every year, a lot of cross- frontier workers and 12 million tourists in total. When you look at the numbers of cartons of cigarettes that are sold in Gibraltar, they are less than one carton per tourist that comes to Gibraltar.63

63 Ibid.

30 Gibraltar: Time to get off the fence

Chief Minister Picardo also argues that Spain is using the tobacco smuggling as a smokescreen for punitive measures against Gibraltar:

Gibraltar is doing its bit to control the legitimate aspect of the concerns that there may be about cross-frontier tobacco trade. None of that is recognized. Although our laws are much tougher than the laws in Andorra, et cetera. And it's not recognized, for example, that Gibraltar arrests and prosecutes people on a daily basis for breaching our Tobacco Act. But, when you look at the numbers all of this is completely de minimis compared to the number in Algeciras, in Valencia, Barcelona, et cetera. But, of course that doesn't matter when you want to use political rhetoric to damn a particular territory.64

Could Gibraltar join Schengen?

43. One possible solution to the border delays is to remove the border altogether, by allowing Gibraltar to join Schengen while the UK remains outside. Since we took evidence from the Chief Minister, he has announced the beginning of a consultation process on Gibraltar’s status in the EU, which will explore the possibility of membership of Schengen and the Common Customs Union.65 Although this consultation is at a very early stage, we can see the merits of this idea. It would eliminate one of the main mechanisms for applying pressure to Gibraltar and would make little difference to the rest of the UK, as Gibraltar is not currently part of a travel arrangement that bypasses UK borders anyway. It could also create goodwill both across the border and in the EU more widely. We must acknowledge that at present the UK might find few friends in Brussels who will sympathise about lengthy border delays in Gibraltar; as one of the only states in Europe not to be part of Schengen, the only time most Europeans encounter border checks in Europe is when they enter the UK. Gibraltar’s accession to Schengen could therefore be one potential means of neutralising this long-standing and major irritant.

44. When we asked Mr Lidington if the UK Government would consider the possibility of Gibraltar joining Schengen he said that he could envisage the scenario, and commented:

As a matter of political principle, I would not object to Gibraltar being more closely integrated in some elements of the EU acquis if that was what Gibraltar wanted. My caveats would be first that this would involve a negotiation, at minimum. Secondly, it might well require changes to the European treaties, because at the moment […] the treaties lay down which elements of the acquis apply to Gibraltar and which do not.66

Spain has not formally commented on how it views the idea of Gibraltar joining Schengen. We suspect that the legal difficulties will be substantial. Joining Schengen is a major step with political and economic implications for Gibraltar that require very careful consideration. In its response to this report, the Government should state its position on

64 Ibid.

65 “Picardo announces consultation on Schengen and Customs Union”, GBC News, 9 May 2014

66 Q136

Gibraltar: Time to get off the fence 31

whether Gibraltar could join Schengen without the rest of the UK, and how it will support the work of the recently-announced consultation.

Diplomatic bag incident

45. Tensions between the UK and Spain over the Gibraltar border were further inflamed in November 2013 when Spanish officials opened two UK diplomatic bags at the border with Gibraltar. According to the Vienna Convention of 1961, diplomatic bags cannot be opened without authorisation from the sending country. The incident prompted an outcry from the UK Government, which said it was the first example of such a breach of diplomatic protocol by one EU state on another. The Foreign Office sought an “urgent explanation” from Spain. Mr Lidington later told the House that Spain had explained that it was "an error at a junior operational level at the crossing point between Gibraltar and Spain and a more senior official put a stop to that interference as soon as he realised what had happened" He added that Spain had promised not to repeat its interference.67 However, reports in the press pointed out that Mr Margallo had nonetheless told reporters that the bag was "not technically diplomatic bags", adding “If it is not a diplomatic bag, there is no diplomatic incident.”68 This account was rejected by the British Government, which said that "There is and should have been no doubt that these bags were the property of Her Majesty's Government, that they were marked as such, and that tampering with the bags was a breach of these principles."69

46. We are in no doubt that Spain’s measures at the border in 2013 were politically motivated and that it continues to use the border as a coercive tool against Gibraltar. This is entirely unacceptable behaviour by an EU partner and should not be tolerated by the UK. The Government should continue to pursue a stronger response by the European Commission through consistent and sustained follow-up in Brussels. The Government should also encourage further monitoring inspections by the Commission with the minimum possible notice given to both parties.

International pressure

47. In addition to its bilateral measures against Gibraltar, Spain has also sought to enlist international allies. In August 2013, the Spanish media reported that Spain was considering partnering with Argentina to take action against the UK in the UN or even the International Court of Justice.70 Since then, a town in Spain (Algeciras) announced it would be ‘twinned’ with one in Argentina (Rio Grande) as part of an Argentine-led initiative to highlight British “occupation” of the Falklands and Gibraltar (though Algeciras’ mayor was criticised in Spain for making the agreement without consulting local

67 HC Deb, 27 November 2013, cols 261-263

68 “Gibraltar bag incident: Spain ‘promises no repeat’, says UK, BBC News online, 27 November 2013

69 “Gibraltar row: Spain vows not to open any more UK diplomatic bags”, The Guardian, 27 November 2013

70 “Falklands and Gibraltar: Spain considering a joint front with Argentina at UN, says Madrid media”, MercoPress, 12 August 2013

32 Gibraltar: Time to get off the fence

authorities).71 Spain has also used international and multilateral forums to press its case against Gibraltar, and to use their mechanisms to exclude Gibraltar or otherwise bring pressure to bear on the territory:

Action in European Union institutions

48. The EU infamously has an “allergy” to sovereignty disputes and tries to avoid becoming involved in them. Spain has nevertheless tried, with some success, to use EU institutions to complain about or exclude Gibraltar. It has most recently done this in the case of the EU’s aviation legislation, despite its commitment not to use this measure under the Cordoba Agreement.

Withdrawal from Cordoba Agreement

49. The 2006 Cordoba Agreement resolved a number of important issues for both Gibraltar and Spain, including pensions, communications, and aviation (see paras 10-11, above). In 2013, however, Spain informed the UK that it would no longer comply with one of its Cordoba Agreement commitments relating to aviation, and would once again seek to exclude Gibraltar from EU aviation legislation.72 This is significant because if Gibraltar is excluded from EU aviation legislation it potentially limits the use of its airport (which was expensively upgraded following the Cordoba Agreement) and restricts the number of airlines that will use the airport. Over the last year Spain has repeatedly opposed the inclusion of Gibraltar in new aviation legislation. Mr Lidington told us that the UK had fought back in 2013 by threatening to veto a proposed EU-Ukraine aviation agreement if Spain tried to exclude Gibraltar from it.73 We note that the European Scrutiny Committee has asked the Government for further information on the EU-Ukraine aviation agreement because it is concerned about the Gibraltar issue. The Committee concluded that “We understand that Spain appears reluctant to accept the Agreement as it stands. So we are keeping the documents under scrutiny pending further information on the situation.”74 However, Spanish MEPs succeeded in March 2014 in amending draft legislation for the Implementation of the ‘Single European Sky’, which will harmonise air traffic over Europe, to exclude Gibraltar.75 This legislation is not yet finalised; it is subject to further consideration and negotiation between the European Parliament and the Council of the European Union.

50. Mr Picardo pointed out Spain has thereby withdrawn from its side of an agreement under which the UK has paid over £70m in pensions: “Spain resiled from the agreement, but the British taxpayer—rightly, because the United Kingdom performs on its

71 “Spanish and Argentine towns twin in protest over Falklands and Gibraltar”, The Telegraph, 2 April 2014

72 HL Deb, 11 February 2013, col 107W

73 Q152

74 European Scrutiny Committee, First Report of Session 2014-15, Documents considered by the Committee on 4 June 2014, HC 219-I

75 “EU vote first step to rock exclusion from aviation measure”, Gibraltar Chronicle, 13 March 2014

Gibraltar: Time to get off the fence 33

agreements—continues to pay.” 76 Spain has also threatened to withdraw from other aspects of Cordoba, though it has not yet done so. Cordoba is a non-binding agreement, which is not enforceable in international law, but the UK Government has assured Parliament that it would do all it could to hold Spain to its other commitments under the Cordoba Agreement.77 The Government has also emphasised that it is against Spain’s “importation” of the Gibraltar dispute into the mechanisms of EU institutions more generally. Mr Lidington told us:

Certainly when it comes to European Union negotiations, the standing instructions from the Foreign Secretary and me are that officials in UKRep and elsewhere are to be very alert for any attempt to exclude Gibraltar or adversely affect Gibraltar in the terms of European Union law as it is being drafted.78

51. We are particularly concerned by Spain’s withdrawal from some aspects of the Cordoba Agreement, representing a significant backward step in relations with Gibraltar, and the UK. As Spain tries to apply pressure via EU aviation legislation, the UK Government should ensure that its EU partners are fully aware that Spain has reneged on an agreement negotiated in good faith, under which the UK has paid over £70 million to Spanish citizens. By continuing to abide by its obligations under the Cordoba Agreement, the UK Government has put itself in a strong position to give weight to this argument.

Action at the United Nations

52. Spain has sought to use the United Nations to advance its arguments about Gibraltar’s sovereignty. Spain considers the dispute to be one of ending colonial power in foreign territories, and cites a number of UN resolutions on Gibraltar, secured in the 1960s and 1970s, in support of its arguments. In an address to the Spanish Foreign Affairs Committee, Mr Margallo said that these Resolutions made three key points: that that Gibraltar is “a non-self-governing territory that is subject to decolonisation”; that such decolonisation should be in accordance with the principle of territorial integrity and not that of self-determination; and that it should be achieved by means of bilateral negotiation.79 The UK disputes all three of these points, noting particularly that Gibraltar is a self-governing territory with a constitution, legislature and government.

53. It is also notable that despite these arguments, Spain also maintains its own Overseas Territories in North Africa, Ceuta and Melilla. These two separate territories are located on Morocco’s north coast and have been a source of tension between Spain and Morocco, which claims the territories as its own. Spain insists that their case is different to that of Gibraltar, as Ceuta and Melilla are an integral part of Spanish territory and have the same

76 Q114

77 HL Deb, 11 February 2013, col 107W

78 Q152

79 Spanish Parliament, Report of Proceedings of the Congress of Deputies Committees, Foreign Affairs, Session No.17, 3 September 2013, 10th Parliamentary term N. 392. A courtesy translation of this statement was supplied by the Embassy of Spain.

34 Gibraltar: Time to get off the fence

status as semi-autonomous regions as those on the mainland, whereas Gibraltar is not constitutionally part of the UK and, it argues, has been recognised as a “colony”. Spain’s claims on Gibraltar are undermined by its defence of its own overseas territories in North Africa. The Spanish Government’s arguments about the constitutional differences between Ceuta and Melilla and Gibraltar are unconvincing at best, and leave Spain open to the charge of hypocrisy.

Gibraltar: Time to get off the fence 35

4 Assessing the UK Government response

54. Spain is an important EU and NATO partner, and it co-operates with the UK on a number of strategic priorities for the UK Government, including counter-terrorism and drug smuggling. Since 2001 the UK has pursued a strategic partnership with Spain, establishing bilateral forums for dialogue.80 Relations between our populations are also strong: 14 million British nationals visit Spain each year, and one million live there.81 During our recent visit to Malaga to assess FCO consular facilities, we saw first-hand how large numbers of British expatriates are made welcome by the Spanish population and Government.

55. The actions of the Spanish Government over the last three years have therefore placed the UK Government in a difficult position. It has a broad and strong bilateral relationship with Spain that is in the interest of all British citizens, and it is understandable that the UK Government does not want the dispute over Gibraltar to damage this. However, the UK Government also has responsibilities toward Gibraltar and cannot ignore actions by Spain that are intended to make the lives of Gibraltarians difficult.

56. Perhaps in the light of these dual interests, when responding to provocative actions by Spain the UK Government has time and again called for a calm approach to reduce tensions. In July 2012 Lord Howell told the House of Lords that the “best way forward” was to press the Spanish Government carefully and “avoid raising the temperature.”82 Mr Simmonds repeated this when giving evidence to the Committee, commenting that: “We are not convinced that ratcheting up either the rhetoric or [...] moving to a more aggressive gunboat diplomacy would in fact be a positive or responsible step to take.”83 Even at the end of his very robust statement to the House on Gibraltar’s border and maritime problems in summer 2013, the Foreign Secretary said, “The Government’s aim is to de-escalate the tension, so that Gibraltarians can go about their business unhampered and free of intimidation.”84

57. The Government has emphasised that it considers this approach to be in Gibraltar’s interests, as it prevents further escalation. The Government has at the same time repeatedly made strong statements of its commitment to Gibraltar’s freedom and security. It has also resolutely confirmed the ‘double lock’ that prevents the UK from entering into any negotiations on sovereignty without the consent of Gibraltarians. Mr Lidington, Minister for Europe, said on 11 June 2012:

80 Eleventh Report of Session 2001-02, Gibraltar, HC 973, para 25

81 Q148

82 HL Deb, 16 July 2012, Cols 6-7

83 Q20

84 WMS 3 September 2013 …… HC Deb, 2 September 2013, col 11WS

36 Gibraltar: Time to get off the fence

Successive Spanish Governments have made representations to the Government about Gibraltar since May 2010. We have made clear on numerous occasions the UK's position on sovereignty has not changed and will not change. The UK will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another State against their wishes. Furthermore, the UK will not enter into a process of sovereignty negotiations with which Gibraltar is not content. We remain committed to furthering co-operation between Gibraltar and Spain through appropriate arrangements for dialogue which are acceptable to Gibraltar.”85

58. Mr Picardo acknowledged the UK Government’s language is now more robust than it had been for 30 years. 86 Nonetheless, Mr Simmonds acknowledged to us that there was “a feeling in some parts of the Gibraltarian Government that we need to take a firmer line.”87 Chief Minister Picardo made this very clear in his evidence to us, stating:

The Spanish President and the Spanish Foreign Minister often say, when they are taken to task about Gibraltar, that the relationship with the UK is “excellent, despite Gibraltar.” It is important that people should wake up to the fact that Spain is doing that and feels that she can do that without having that sentiment in any way countered by British Ministers. Spain cannot get away with thinking that she can punish and damage Gibraltar at her whim and still say that the relationship with the UK is excellent.88

59. Spain is a key partner for the UK both bilaterally and in the EU and NATO. It is a testament to the importance that both states place on the bilateral relationship that it remains strong despite our differences. However, Spain should not be able to pursue aggressive policies toward Gibraltar without consequences for its relationship with London.

60. The Government has taken a cautious approach until now in order to ‘de-escalate’ tensions. Mr Lidington pointed out that this approach recognised that Spain was in a position to apply even more pressure to Gibraltar, if provoked:

It is also important, however, that we seek to avoid a situation in which Gibraltar ends up being worse off than it is at the moment. […] The facts of geography mean that it is relatively easy for Spain, if she were to be that maliciously intent, to squeeze Gibraltar more tightly, […] we have to continue with a diplomatic approach89

Mr Lidington added that the UK Government also had to bear in mind the interests of all of its citizens, and said that it would not, for example, block EU legislation that was in the interests of the EU only to annoy Spain. He denied that the UK was allowing Spain to

85 HC Deb, 11 June 2012, col 230W see also HC Deb, 6 February 2012, col 52W

86 Q107

87 Q21

88 Q102

89 Q162

Gibraltar: Time to get off the fence 37

“simply do whatever it likes” and said that the UK’s messages about Gibraltar had been delivered very clearly to Spain. He added that the UK Government “certainly do not rule out any measure that is necessary to defend Gibraltar from a genuine threat to its security or defence”.90 Mr Lidington assured us that any request by the Gibraltarian government for stronger measures would be given consideration, but said there was “no blank cheque” from the UK.91

61. Although calculated and at times laudable in its restraint, the Government’s approach has not so far produced acceptable results for the people of Gibraltar. This failure was summed up by Mr Picardo: “A year and a half later, we have not engaged in ad hoc dialogue and we have not gone back to trilateral dialogue. The queues are longer and the incursions just as bad.”92

Does Spain care more than the UK about the Gibraltar dispute?

62. Gibraltar is considered to be one of Spain’s priorities in its foreign policy, while it is generally acknowledged to be somewhat lower on the UK’s foreign policy agenda. Chief Minister Picardo told us that for Spain, Gibraltar was “the foreign affair”:

They have a huge level of concentration of resources on the subject, they are able to react immediately, they are prepared for any contingency and they have a level of understanding and preparedness at every level of Spanish diplomacy in relation to Gibraltar that we do not have in the British Foreign Office at the moment. We have a Department that deals with these issues under the Europe directorate as best it can with the resources available to it.93

Jill Morris, Director of Europe for the FCO, assured us that “our embassies around the world have standing instructions to ensure that they are promoting the interests of Gibraltar and protecting the interests of Gibraltar, including intervening in the media where necessary.”94

63. The Chief Minister also commented on a particular lack of resources in the Governor’s office in Gibraltar, stating:

We have seen a reduction in the staff available to the Governor’s Office in recent years, at the same time as, unfortunately, we have seen the issues with Spain become increasingly problematic. […] The work and activity that needs to be undertaken by the Governor’s Office in Gibraltar to fulfil the constitutional obligation and report back to the United Kingdom and work with the Government of Gibraltar has therefore grown exponentially. In my

90 Q163

91 Q174

92 Q118

93 Q112

94 Q62

38 Gibraltar: Time to get off the fence

view, we are suffering at the moment a lack of resources in that particular area of industry.95

When we challenged Mr Lidington on this, he disagreed with the Chief Minister’s assessment and said that the Governor’s office was currently supported by a staff of two UK-based diplomats and eleven locally engaged staff, while the British Embassy in Madrid had staff that spent “a considerable amount of time” on Gibraltar issues. He added that “One of my senior officials maintains regular telephone and e-mail contact, personally, with the Chief Minister.”96 Alex Hurst, Deputy Head of the Europe-Mediterranean Department at the FCO, told us that there were a four people in the Gibraltar team in London.”97

64. Some observers have suggested that not enough ministerial time has been spent in Gibraltar. Mr Lidington told us that he had visited Gibraltar only once during his four years as the responsible minister, but that he intended to go again this year. On 17 June he told the House that he intended to visit again “in the near future”.98 Other ministers have also visited Gibraltar, including Mark Francois, Minister of State for the Armed Forces in December 2013, and Danny Alexander, Chief Secretary to the Treasury, who visited in April 2014. Giving evidence to us before Mr Alexander’s visit, the Chief Minister acknowledged that there had not been a high-level minister in Gibraltar and agreed that a visit would be worthwhile, but noted that he had met ministers on his visits to the UK, and believed he had received “fulsome support whenever I have needed to see them, even at short notice.” He also pointed out that he had had two opportunities to meet the Prime Minister, which had not been afforded to many of his predecessors.99

65. Ministerial visits are an important display of support to the people of Gibraltar, as well as a signal to Spain of the UK’s continued commitment. We recommend that, in the light of the difficult twelve months that Gibraltar has experienced, the Government consider a high-level visit to Gibraltar before the end of this year and we welcome the fact that the Minister for Europe will be visiting shortly.

66. We turn now to the actions the Government has taken in response to particular policies pursued by the Spanish government against Gibraltar.

Diplomatic protests and summons

67. The Government emphasised to us that it responds to each unacceptable action by Spain with a proportionate diplomatic protest. These are usually delivered in the form of a written protest from the British Embassy in Madrid to the Spanish Government. Over the last two years, they have most commonly been used to protest about maritime incursions. The protests form an ‘audit trail’ demonstrating the continuous exercise of British

95 Q93

96 Q123

97 Q155

98 HC Deb, 17 June 2014, col 955

99 Q92

Gibraltar: Time to get off the fence 39

sovereignty over BGTW, should the UK ever need to prove this in an international court.100 The below chart shows the number of illegal maritime incursions and the number of diplomatic protests in each month since January 2011:

68. Not every incursion warrants an individual protest. The FCO classify incursions into three categories:

Category A: incursions constituting a threat to UK sovereignty (i.e. a deliberate attempt by Spain to show that it is exercising jurisdiction within BGTW)

Category B: incursions constituting a violation of British sovereignty (i.e. a Spanish boat patrolling and changing course and speed in BGTW instead of maintaining a direct course through the territorial waters)

Category C: vessels exercising a right of innocent passage (not counted as an incursion in the graph above).

Mr Lidington explained that Category A incursions prompted a protest from the FCO within 48 hours, while Category B incursions were sometimes grouped into a single protest, and were delivered roughly once a month.101 We were troubled to learn from Mr Lidington that, at a time when actions were increasing, there were some weeks in early 2014 when incidents were wrongly categorised and not dealt with appropriately by the Embassy in Madrid, meaning that protests were not delivered as quickly as they should have been. Mr Lidington assured us that he had taken action to correct this.102

69. We asked for the March 2014 record of incursions and protests, in order to see the FCO’s processes at work. We were disappointed to find that although there were 37 illegal incursions in March, the FCO did not deliver any related protests during the calendar

100 Q112

101 Q156

102 Ibid.

0 10 20 30 40 50 60 70 80

JAN

-11

MA

R-1

1

MA

Y-1

1

JUL

-11

SEP

-11

NO

V-1

1

JAN

-12

MA

R-1

2

MA

Y-1

2

JUL

-12

SEP

-12

NO

V-1

2

JAN

-13

MA

R-1

3

MA

Y-1

3

JUL

-13

SEP

-13

NO

V-1

3

JAN

-14

MA

R-1

4

INCURSIONS AND PROTESTS Number of Illegal Incursions Protests

40 Gibraltar: Time to get off the fence

month. All of the protests for March except one were delivered on 8 and 9 April, the week after our evidence session with Mr Lidington, in which we asked for records. Only one protest was delivered within two days of the relevant incursion.103 When we enquired further about the March records, it emerged that there were seven Category A incursions in March 2014, six of which were not protested within 48 hours, and were in fact delivered in April, up to four weeks later.

70. The Government has also lodged 34 diplomatic protests on non-maritime issues with the Spanish government between 2011 and 2014. Most of these (26 of 34, or 76%) were on border delays; other protests were on topics including the conservation zone, the work on the airport, the designation of Gibraltarian waters as a Site of Community Interest (see paras 76-79), and the diplomatic bag incident in November 2013.104

71. We agree with the Government’s policy of protesting formally about every incursion into British Gibraltarian Territorial Waters. However, we are concerned that in carrying out this policy, the Government focuses more on the long-term need to establish an audit trail than it does on the immediate need to register a real protest with the Spanish authorities. When the UK delivers protests about maritime incursions three or four weeks after the actual incident, it robs those protests of any force they might have had and gives the impression of an official simply ‘going through the motions’. This might be acceptable at a time of relative harmony, but during this period of heightened pressure on Gibraltar, the Government should re-assess its internal deadlines for delivering diplomatic protests. We recommend that it put in place procedures under which all diplomatic protests to Spain about Gibraltar are delivered within a maximum of seven days.

Summoning the ambassador

72. The UK has summoned the Spanish Ambassador to the UK to the Foreign Office five times in the last two years to protest over Gibraltar issues. The FCO described such summonses as “a particularly serious and exceptional step to take”.105 We asked the Foreign Office for a list of ambassadors it had publicly summoned, and it was striking to find that a strong European and NATO ally should be in the same group as Syria, Iran and North Korea. Only Syria has been summoned more times than Spain, and no other EU state has been subject to this extraordinary measure in the same time period:

103 Foreign and Commonwealth Office (GIB0002) and Foreign and Commonwealth Office (GIB0008)

104 Foreign and Commonwealth Office (GIB0002)

105 Ibid.

Gibraltar: Time to get off the fence 41

73. It is hard to discern whether this high number of summonses is a positive signal that the FCO is taking robust action, or whether it is a sign that the measure is not working and is rather seen in Spain as a mere slap on the wrist. We nonetheless consider that the Government is right to take exceptional measures such as summoning the ambassador in cases where there has been a breach of international law or particularly concerning incident related to Gibraltar. We recommend that if the situation does not show signs of improvement, the Government should re-assess its criteria for summoning the Spanish Ambassador and should consider doing so more frequently to reflect its ongoing concern about the unacceptable status quo.

Representation in the EU

74. Gibraltar has a unique position in the European Union: it has been in the EU since 1973 as part of the UK’s membership so EU law is applicable to Gibraltar, though it is excluded from four major areas of EU policy (Customs Union, Common Commercial Policy, Common Agriculture Policy, Common Fisheries Policy and requirement to levy VAT). Although the Gibratlarian government is responsible for transposing EU law to apply in Gibraltar, the UK Government remains responsible for Gibraltar’s external relations, including its representation in the European Union. David Lidington told the House in November 2013 that “The most important thing that we can do with fellow members of the European Union and other allied counties–indeed this is what we have been seeking to do–is draw their attention to the fact that Gibraltar is not some exploited colony: it is a self governing territory whose people have time and again freely expressed their wish to remain under the sovereignty of the United Kingdom.”106 FCO official Jill Morris told us that the UK’s Permanent Representation in Brussels is “continually lobbying the Commission and explaining the situation” with regard to Gibraltar’s sovereignty.107

106 HC Deb, 27 November 2013, Col 265

107 Q62

6

5

4

3

2

1

0 1 2 3 4 5 6 7

SYRIA

SPAIN

LIBYA

NORTH KOREA

IRAN

KENYA; YEMEN; MALAWI; URUGUAY; BELARUS; ARGENTINA; ISRAEL; UKRAINE; RUSSIA; BURMA

Number of times summoned

Stat

e Ambassadors publicly summoned to the FCO

September 2010 to May 2014

42 Gibraltar: Time to get off the fence

The FCO has also stated that it has been in “frequent contact” with the Commission regarding border delays in particular, and it has discussed these at a Ministerial level as well as the senior official level.108

75. Gibraltar has complained in the past that UK civil servants or diplomats in Brussels are not sufficiently aware of Gibraltarian issues, and do not consult Gibraltar until a late stage (if at all). Mr Picardo stated:

Then we have to try and educate those particular Departments, and they may not just be in the Foreign Office, that they need to be aware of Gibraltar and the Gibraltar dimension—particularly in the context of European legislation, whether it is directives, regulations or any other aspect of our relationship with Europe—and that they need to communicate with the Government of Gibraltar and they need to involve us at an early stage. Of course, we are a small Executive and a small legislature, and that is hugely challenging for us.109

However, Mr Picardo said that Gibraltar understood the need for it to develop its own expertise as well, and consequently it had invested heavily in its Europe department.

76. This understanding came about in part due to a recent significant failing in the UK’s protection of Gibraltar and promotion of its interests. As noted in paragraph 70 above, in 2009-10 the UK Government failed to realise that Spain had applied to the European Commission for it to designate almost all of BGTW as a Site of Community Interest (SCI). The FCO states that the application was conveyed to the UK among hundreds of other routine applications, and the Commission did not alert the UK to the overlap with its territorial interests, as the UK expected it would. The UK therefore did not take its opportunity to object to this proposed designation, which was duly agreed in 2010. By the time the UK realised its mistake, it was too late to reverse the process. [A timeline with details of this incident can be found in Annex B]

77. The UK and Gibraltar both took the Commission to the European Court in 2010-12 to try to overturn the designation, but they lost the case. They nonetheless state that they do not recognise the designation, which they say has no legal force or consequence.110 The UK insists that the designation does not constitute default recognition by the EU of Spanish sovereignty over the waters. Nonetheless, Spanish research vessels have used the designation of BGTW as an SCI as their justification for conducting incursions into BGTW, setting a dangerous precedent.

78. Mr Lidington told us that the awareness of “the Gibraltar angle” in the UK’s work at the EU had improved over the last four years, adding:

Certainly when it comes to European Union negotiations, the standing instructions from the Foreign Secretary and me are that officials in UKRep

108 HC Deb, 12 June 2014, col 267W

109 Q95

110 Oral evidence taken on 11 December 2012, HC 752-i, Q22 [Mr Simmonds]

Gibraltar: Time to get off the fence 43

and elsewhere are to be very alert for any attempt to exclude Gibraltar or adversely affect Gibraltar in the terms of European Union law as it is being drafted. 111

The Gibraltarian government has since announced plans to increase its presence in Brussels and in Washington DC, in order to ensure a higher profile for Gibraltar.112

79. The failure to prevent British Gibraltarian Territorial Waters from being designated a Site of Community Interest by Spain was a significant mistake which has proven impossible to reverse. The FCO should set out the action it has taken since this incident to ensure that Government departments consider Gibraltar, and Overseas Territories more generally, when representing the UK at EU level.

Prospects for taking the Gibraltar border dispute to the European Court

80. The FCO told us that it had considered taking steps against Spain over the border dispute under Article 259 of the Treaty on the Functioning of the European Union. Article 259 allows for one member state to initiate proceedings against another member state for violation of EU obligations. Member States usually ask the European Commission to bring cases rather than initiating them themselves so this would be an unusual but not unprecedented measure to take; Article 259 has been used on six previous occasions by a member state to bring an action against another.

81. By imposing restrictions at the border, Spain may be considered to be in violation of the free movement of people, as well as the Schengen Borders Code. The Borders Code provides for the abolition of internal borders between signatory states, and a single set of rules for checks at “external borders”. According to the Code, EU citizens undergo a minimum check (a rapid and straightforward verification of identity) when crossing an external border, and checks should be “proportionate”. Under these rules, the state is also responsible for ensuring “the safety and smooth flow of road traffic”.113

82. Spain has already used Article 259 to bring a case relating to Gibraltar before the European Court, when it brought a case against the UK in 2006 regarding the UK’s provision of European Parliament elections voting rights to the citizens of Gibraltar. Spain objected to the extension of voting rights to ‘qualifying commonwealth citizens’ who are not UK citizens and to the inclusion of Gibraltar within an existing electoral region in England. The action was dismissed by the Court on both counts, ruling that no EU legislation had been infringed. Unusually, the European Commission decided not to issue a reasoned opinion due to the political sensitivities involved.

83. Mr Lidington repeatedly highlighted to us the Government’s hopes that the ongoing European Commission investigation into Gibraltar’s border problems will secure some improvement to the situation. However, he confirmed that the UK did not rule out the

111 Q152

112 “Government set to increase international lobbying work”, Your Gibraltar TV, 19 May 2014

113 Schengen Borders Code Annex VI

44 Gibraltar: Time to get off the fence

possibility of legal action in the EU courts if the Commission’s investigation does not reach a satisfactory conclusion, though he warned that legal cases could take a long time to come to court, and:

There is never a guarantee of winning any litigation. I don’t think I am revealing too much in saying that we were not surprised when the Court of Justice decided to make a judgment on a technicality that avoided it having to get involved in the sovereignty dispute. I think EU institutions generally and other member states generally want to treat the problem between the UK and Spain as a bilateral one, and do not want to become too closely involved.114

84. The Government should keep the option of using Article 259 to take Spain to the European Court under review, pending the final results of the Commission’s investigation into the situation at the border. If the situation at the border does not improve within the next six months then the UK should make it clear that it intends to begin legal proceedings against Spain under Article 259.

Representation at the UN

85. The greatest issue for Gibraltar at the United Nations is its enduring position on the UN list of Non-Self-Governing Territories. Our predecessor Committee’s reports on Gibraltar all urge the UK to make progress in securing its removal, and the UK Government has made repeated attempts to secure its removal from the list. Mr Lidington told us that the UK had improved the awareness of Gibraltar in its own work at the UN in the last four years, as well as increasing its presence, stating:

At the United Nations, for example, we have very deliberately encouraged the Chief Minister and representatives of Gibraltar citizens to go along and make their comments directly to the decolonisation committee on behalf of the people of Gibraltar, and not just leave it to UK diplomats to do that job.115

He added that the UK Government had to:

continue also to highlight internationally the fact that our sovereignty over Gibraltar does not stem from some outmoded conception of colonialism, but from the repeated democratically expressed wishes of the people of Gibraltar themselves.116

86. The Government of Gibraltar itself has been active in efforts to remove Gibraltar from the list. Most recently, in May 2014, Minister Joe Bossano told the United Nations Special Committee that Spain was running a campaign to deprive Gibraltar of its right to self-determination, based on arguments identical to those the fascist government in Spain had held decades ago. He urged the Committee to consider Gibraltar as a colonial people with their own constitution and a separate cultural identity to that of the rest of the UK, with the

114 Q183

115 Q152

116 Q162

Gibraltar: Time to get off the fence 45

right to exercise self-determination and to choose for themselves.117 In June 2014, Chief Minister Fabian Picardo repeated this message in an address to the United Nations Special Committee on Decolonisation, when he complained that Gibraltar was met with “deafening silence” from the Committee.118 The Government should robustly oppose continued attempts by Spain to use international institutions as a means of securing international support for its case. We again urge the Government to take steps to remove Gibraltar from the UN list of non-self-governing territories. The Government should set out in its response to this report what action it is taking in order to do this.

Alternative means of applying diplomatic pressure

87. Some observers have suggested that the UK should make more use of opportunities to impede Spain from achieving international goals as a way to demonstrate the costs of its actions against Gibraltar. For example, Sir Graham Watson, then MEP for Gibraltar, was recently reported as having said that during the border troubles in 2013, the UK Government drew up a list of thing it could do to retaliate. He reportedly claimed that as part of this, Prime Minister David Cameron warned Spain that the UK would block its bid for the 2020 Olympic Games (later won by Tokyo).119 However, this report was denied by the UK Government, which said “as has always been the practice, the UK Government did not favour any of the three finalists over the others and there was absolutely no attempt to influence the bids.”120 Similarly, when we asked David Lidington if the UK Government would consider withholding UK support for Spain’s current bid to join the UN Security Council, he told us that the UK had a “longstanding policy of not revealing its voting intentions in UN Security Council elections” and that the Government “carefully consider[s] all bids on their merits, taking into account candidates contributions to the Security Council and to the United Nations more broadly.”121 The Government should seek to identify areas of non-essential cooperation and occasions on which British assistance would be helpful to Spain (for example, Spain’s bid for membership of the UN Security Council) and make the UK’s support dependent on improvements to the situation in Gibraltar.

Royal Navy and military presence

88. The Royal Navy maintains a small operational front line squadron in Gibraltar to contribute to its maritime defence and security and, where necessary, the prosecution of offensive maritime operations. The Government states that the Royal Navy upholds British sovereignty “by challenging all unlawful incursions by vessels of the Spanish state, through radio warnings and the close monitoring of all such vessels, until they leave British

117 Speech by Rt Hon Joe Bossano at the ‘Pacific Regional Seminar’, 21-23 May 2014, United Nations Special Committee

on Decolonisation

118 “Committee Hears from Petitioners, Observers on Questions of Western Sahara, Gibraltar”, United Nations Special Committee on Decolonisation press release GA/COL/3268, 16 June 2014

119 “Watson claims London scuppered Madrid’s Olympic bid over Gibraltar”, GBC News, 16 May 2014

120 “HMG denies Sir Graham Watson claim”, GBC, 17 May 2014

121 Foreign and Commonwealth Office (GIB0008)

46 Gibraltar: Time to get off the fence

Gibraltarian Territorial Waters.122 Royal Navy vessels ‘shadow’ vessels performing incursions until they leave, and there have been recent reports in the press of using helicopters low over vessels performing incursions to incite them to leave.

89. Gibraltar also acts as a naval base for ships and submarines en route to and from deployments in the Gulf or Africa, and receives regular visits from British and NATO ships each year. Mr Picardo has repeatedly stated that an increased military presence in Gibraltar would provide reassurance to Gibraltarians as well as an important deterrent effect. He told us that

larger assets in Gibraltar—not deployed aggressively, but simply deployed to demonstrate that these are British waters by going about their own business and not in any way confronting anyone else—would be hugely positive in ensuring that the UNCLOS position is understood not just de jure, by way of notes every time there is an incursion, but de facto on the water.123

The Government has so far resisted calls to station larger naval vessels permanently in Gibraltar, though in February 2014 it deployed additional personnel to Gibraltar to enhance the response capability and resilience of the Royal Navy Gibraltar Squadron.124 The Government has also repeated that Royal Navy warships will continue to call regularly at the Rock, reflecting its utility as a permanent joint operating base. In the course of this inquiry, we have noted that a considerable number of Royal Navy vessels have visited Gibraltar over the last few months, including HMS Somerset in January 2014 and HMS Diamond in February 2014. While in Gibraltar, we were able to appreciate the conspicuous reassurance such vessels provide to a population that regularly witnesses illegal incursions by foreign vessels. We commend the Government’s policy of choosing to use Gibraltar as a stop off point for naval vessels in transit as a sensible and effective measure.

NATO restrictions

90. Despite being a full NATO partner alongside the UK, Spain continues to refuse to allow direct military movements or communications between Gibraltar and Spain. NATO Standardised Agreement (STANAG) 1100 sets out the arrangements for transits to NATO ports and naval ships of NATO members. In 1989, Spain inserted a reservation to prevent visits by NATO ships to or from Gibraltar directly from Spanish ports. Similarly, the UK Government has confirmed that any request by military aircraft from NATO (or other) nations to overfly or land in Spain, which has Gibraltar as a departure or arrival airfield is also routinely denied by Spanish authorities, though the Spanish authorities are “swift and cooperative” in allowing British military aircraft to pass through Spanish airspace to any other destination.125 Spain also bans direct communication between the British Military in

122 HC Deb, 6 January 2014, col 179W

123 Q109

124 HL Deb, 29 January 2014, col 234W

125 HC Deb, 18 November 2013, col 699W and HL Deb, 18 June 2014, cols 63WA

Gibraltar: Time to get off the fence 47

Gibraltar and the Spanish Armed Forces. Mr Picardo described the situation as “lamentable” and expressed confusion over the UK Government’s lack of response:

Why must Spain for one moment think that there is anything wrong with the United Kingdom using her own military facilities in Gibraltar for her own purposes? Why must Spain somehow discriminate against an ally for that reason? Why doesn’t British diplomacy say, “Enough”? Why? I am yet to be persuaded by anyone of a good reason, affecting western democracies generally, for why we shouldn’t be making the position very clear to Spain. 126

91. The ongoing restriction has been raised by our predecessor Committees in four previous reports on Gibraltar. On each occasion, the FCO has stated that it agrees that the restriction is unacceptable and efforts to overturn it were ongoing.127 In April 2014, the Foreign Secretary told us that the FCO was “not passive on these issues”.128 However, when we questioned Mr Lidington in April 2014 about Spain’s continued imposition of restrictions, he said that the UK simply worked around it:

We do not think that raising this at NATO is going to be the appropriate way forward. Precisely because this has been a long-standing, very regrettable practice by Spain, this is not getting in the way of sensible, practical, NATO operational planning.

The Royal Navy and the Royal Air Force have built the STANAG reservation into their planning arrangements for many years. I am advised by the MOD that this has minimal if any impact upon operations.129

Mr Lidington also noted that other NATO allies—including Canada, the US and Norway last year—regularly use Gibraltar for operational reasons. He concluded: “I think this is a practice by Spain that we regard as an irritant. It is bad practice, but it is not getting in the way of proper operational planning or activity.”130 In a later letter, Mr Lidington added that “we do regularly make clear to Spain that this is not the sort of impediment that close allies should have to manage.” However, he said the UK addressed the issue at a bilateral level and did not raise it at the NATO Council or other NATO bodies, stating “This is in line with the policy of this and previous governments that NATO is not the appropriate forum for pursuing bilateral disputes.”131

92. The arrangement has been criticised by some observers from NATO ally countries: a recent report by the conservative US based think tank the Heritage Foundation criticised

126 Q119

127 Foreign Affairs Committee, Fourth Report of Session 1998-99, Gibraltar, HC 366, para 95; Foreign Affairs Committee, Ninth Report of Session 1999-2000, Gibraltar: Follow-up, HC 863, para 8; Foreign Affairs Committee, Eleventh Report of Session 2001-02, Gibraltar, HC 973, para 127; Foreign Affairs Committee, Seventh Report of Session 2007-08, Overseas Territories, HC 147-I, paras 401-404, 414

128 Oral evidence taken on 18 March 2014, HC (2013-14) 1150, Q48 [Mr Hague]

129 Q200

130 Q200

131 Foreign and Commonwealth Office (GIB0008)

48 Gibraltar: Time to get off the fence

Spain for continuing to allow Russia to use its port in Ceuta, one of its two territories in North Africa, at the time of the Ukraine crisis. The report noted the continuing restriction on NATO vessels travelling to or from Gibraltar, and concluded that “Spain’s policy off allowing the Russian navy to use Ceuta in North Africa is also hypocritical in relation to its reluctance to allow visits from NATO ships to or from the British Overseas Territory of Gibraltar directly to or from Spanish ports. Therefore, under certain circumstances Spain would rather have a Russian ship visit a Spanish port than a NATO ship”.132

93. We were also concerned to hear that a Norwegian research vessel had been refused entry to Las Palmas in September 2013 because its last port of call had been Gibraltar. When we pressed the UK Government to explain this case, involving a private vessel, it told us that Spanish law considers all research vessels to be state vessels, even if commercially owned, so this was “in line with existing restrictions” and did not represent a further extension of Spain’s NATO reservation.133

94. We are disappointed that so little progress has been made in the last 16 years toward lifting Spain’s NATO reservation against ships travelling between Spanish and Gibraltarian ports. The UK should actively seek for Spain’s NATO reservation on Gibraltar to be overturned and set out in its response to this report how it intends to do so. The Government should also set out any steps it has taken to solicit support from other NATO partners who are inconvenienced in operational matters by Spain’s restriction on Gibraltar.

132 Heritage Foundation, Issue Brief 4226, 20 May 2014

133 Foreign and Commonwealth Office (GIB0001)

Gibraltar: Time to get off the fence 49

5 Conclusion

95. We do not believe that any Spanish government is likely to renounce its sovereignty claims to Gibraltar in the foreseeable future, but the stance taken by the current Spanish government appears particularly aggressive when it comes to imposing penalties on Gibraltar. We were struck when we visited Gibraltar by the sense that its citizens felt under siege. We consider that the pressure currently being applied on Gibraltar by Spain, through the imposition of delays at the border, unwarranted maritime incursions, and diplomatic pressure in international institutions amounts to a campaign of harassment and intimidation.

96. Not only is this unacceptable in a close EU partner, it is also counter-productive, as it only hardens Gibraltarians’ feelings toward Spain. Spain must understand that any hope it has of settlement will only be achieved with the goodwill and consent of the people living on Gibraltar. If Spain is indeed using the Gibraltar dispute as a means of drumming up populist sentiment at the expense of the quality of life of Gibraltarians, this is a deeply cynical form of politics.

97. With little prospect of reaching a settlement of the core sovereignty dispute, the UK Government’s task is to reach an acceptable status quo for the people on Gibraltar. At present, the status quo is far from acceptable, and there is a pervasive feeling in Gibraltar of being under siege by a bullying and unreasonable power, as well as frustration at the lack of progress. The UK Government has shown restraint in response to provocation by Spain. It was right to do so: but the UK’s approach of consistently trying to de-escalate tensions in the face of mounting provocation has also achieved little discernible effect, aside from giving Gibraltarians the impression that not enough is being done. It is now time for the UK Government, with the agreement of the Government of Gibraltar, to think again about what measures can be taken to discourage Spain from exerting pressure on Gibraltar.

98. However, the limited measures we have recommended in this report reflect the fact that the UK Government has a narrow scope for action in this regard. It would be counter-productive to engage in tit-for-tat squabbles and there is no desire on the part of the British or Gibraltarian governments to escalate the dispute. The most responsible course is for the Government to review and intensify the mechanisms for diplomatic pressure that it is already using, in light of the continuing provocation by the Spanish government. In this context, we have recommend in this report that the UK Government should:

Robustly oppose Spain’s attempts to use international institutions

Revive efforts to remove Gibraltar from the UN list of non-self-governing Territories

Increase the speed with which it delivers diplomatic protests, and review criteria for summoning the ambassador

50 Gibraltar: Time to get off the fence

Identify areas of non-essential cooperation and make the UK’s support for Spain’s international initiatives dependent on improvements in Gibraltar.

99. Finally, while intensifying the diplomatic pressure, the Government should make clear to the Spanish Government that there is much goodwill between our peoples and a real desire on the part of the British government to re-start dialogue.

Gibraltar: Time to get off the fence 51

Annex A

Committee meetings in Gibraltar

Meeting with the Hon Fabian Picardo, Chief Minister; and the Hon. Dr Joseph Garcia MP, Deputy Chief Minister

Briefing from Deputy Governor of Gibraltar, Alison MacMillan and FCO officials

Visit to the border

Reception with representatives of Government, Opposition, business, finance, judiciary and law enforcement

Private dinner hosted by the Chief Minister with senior Government and political figures.

Public evidence session with the Hon Fabian Picardo, Chief Minister; and the Hon. Dr Joseph Garcia MP, Deputy Chief Minister; Mr Michael Llamas QC, Senior Legal Advisor, Government of Gibraltar

Briefing by Cdre J Clink, Commander of the British Forces Gibraltar; Captain R Stanbrook, Captain of the Port; Commissioner E Yome, Royal Gibraltar Police; Mrs L. Torres, Head of Department of the Environment; Mr Hector Montado, Head of Technical Services

Briefing by Andrew Bonfante, CEO of the Borders & Coastguard Agency; John Rodriguez, Collector of Customs

52 Gibraltar: Time to get off the fence

Annex B

Legal Dispute

Background

In 2007-08 Spain applied for and succeeded in designating a large area including most of British Gibraltar Territorial Waters as a marine protected area, recognised by the European Commission. It calls this the Estrecho Oriental site. The UK has repeatedly tried to overturn the Commission’s Decision, but the UK’s case was rejected first by the General Court (May 2011) and then by the ECJ on appeal (Nov 2012).

What is the European Union Habitats Directive?

The Habitats Directive aims to establish a pan-European network of Sites of Community Interest (SCIs) in which natural habitats that satisfy specified criteria are legally protected. The network of SCIs is called Natura 2000.

How are SCIs agreed?

Member States propose sites within their own territory to the European Commission. The Commission compiles a list of sites that meet the criteria. The consolidated list is approved in draft by the Habitats Committee (on which all Member States are represented) by qualified majority. The Commission then adopts the list as a Commission Decision.

On what basis has the UK challenged the designation?

The UK was not notified by either the Commission or Spain that the proposed SCI covered British Gibraltar Territorial Waters. The UK therefore allowed a consolidated list of SCIs to be agreed in 2008, unaware that one of the proposals related to one of the UK’s own Territories. Mark Simmonds told the Foreign Affairs Committee that when the UK had previously proposed the Southern Waters of Gibraltar SCI, the Commission had notified Spain in advance of tabling their draft decision and following this notification there had been lengthy discussions between the UK, Spain and the Commission before the UK listing was agreed and adopted. This had not happened in the Estrecho Oriental case.

Timeline: How the European Commission designated the Estrecho Oriental site:

2006: UK secures an SCI that covers a small part of British Gibraltar Territorial Waters, named Southern Waters of Gibraltar.

23 July 2007: Spain applies to Commission for SCI named Estrecho Oriental site, which overlaps with almost all British Gibraltar Territorial Waters, including the existing Southern Waters of Gibraltar site.

March 2008: The Commission sends each Member State an updated list of its own proposed SCIs. The UK is not notified of the proposed Spanish Estrecho Oriental SCI.

October 2008: Commission sends each Member State a consolidated list of all SCI sites, existing and new.

Gibraltar: Time to get off the fence 53

Mark Simmonds said: “The UK had no reason to and did not check the thousand or so existing or proposed Spanish sites.”

12 December 2008: Following approval of the consolidated list by the Habitats Committee, the list of SCIs is adopted in a Commission Decision.

16 December 2008: The Commission Decision on consolidated list notified to the UK. The UK did not challenge the Decision.

13 February 2009: The List of SCIs published in the Official Journal of the European Union.

15 October 2009: Now aware of the issue, the UK sought to initiate a reconsideration of the listing at a meeting of the EU Habitats Committee, as the list of SCI sites is adopted on an annual basis. The UK presented its case, and said if the designation was not reconsidered it would vote against approving the revised list, and invited others to do the same. Despite UK efforts, the Habitats Committee approved the revised consolidated list, which included the Estrecho Oriental site, as in 2008.

22 December 2009: The list of SCIs is adopted in a Commission Decision.

Why did it fail?

The case, and appeal, appear to rest on a technicality: the UK did not appeal the original decision in time. By the time the UK took action, the time period for challenging the original 2008 Commission Decision had elapsed. However, the list of SCI sites is adopted on an annual basis so the UK therefore challenged the 2009 decision to relist the Estrecho Oriental site, arguing that the fact that the Estrecho Oriental site overlapped with the Southern Waters of Gibraltar site was a “substantial new fact” that came to light only after the time period for challenging the 2008 decision had elapsed, so the 2009 re-listing was “a fresh decision capable of being challenged”. The courts disagreed: the General Court decided in 2009 that there was no new factor so the 2009 decision was not capable of being challenged. The UK appealed to the European Court of Justice, arguing that the General Court had made errors in its appraisal of the facts, specifically in respect of whether a party could have had prior knowledge of the overlapping territories, and that the Court committed an error of law by wrongly identifying the parties whose “constructive” knowledge of the overlapping sites was legally relevant, arguing that the correct test was whether the UK could have realistically known. The ECJ ruled the appeal inadmissible.

What happens now?

Immediately following the ruling, the Spanish Government made a declaration banning marine activities including land reclamation, ship-to-ship transfers of combustible materials and industrial fishing without Government permission. It was also reported that Spanish environmental research vessels had begun to enter Gibraltarian waters to undertake survey work.134

134 “Picardo and Governor to meet Lidington after Spain purports to pass law controlling British waters”, Gibraltar

Chronicle, 1 December 2012

54 Gibraltar: Time to get off the fence

The Government said it rejected any suggestion that the loss of the cases was due to incompetence on the part of the UK Government, and said that the situation was caused by “deficient listing procedures and a lack of transparency and effective consultation.”

In December 2012, the Minister Mark Simmonds told the Committee that the Government would not abide by the court ruling: “Despite the court case, we do not recognise the Spanish SCI listing. We do not recognise their attempt to designate SAC either. We have made this position clear to the Spanish government.”135

135 Oral evidence taken on 11 December 2012, HC 752-i, Q22 [Mr Simmonds]

Gibraltar: Time to get off the fence 55

Formal Minutes

Tuesday 24 June 2014

Members present:

Sir Richard Ottaway, in the Chair

Mr John Baron Sir Menzies Campbell Ann Clwyd

Mike Gapes Mark Hendrick

Draft Report (Gibraltar: Time to get off the fence), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 29 read and agreed to.

Paragraph 30 read, as follows:

30. We are deeply concerned by the cavalier approach taken by Spanish vessels in their attempts to assert an illegitimate form of authority in British Gibraltarian Territorial Waters. We consider that the actions taken by the Government of Gibraltar in relation to the fishing agreement and concrete reef do not justify the increase in incursions, nor the hostile tactics of some of the vessels that conduct them. In its response to this report, the Government should set out the naval and police options it has identified for defending the integrity of British Gibraltarian Territorial Waters more robustly.

Amendment proposed, in line 4, after “them.” to insert:

“We recommend a more robust approach in defending British Gibraltarian Territorial Waters”.—(Mr John Baron.)

Question put, That the Amendment be made.

The Committee divided.

Ayes, 3 Mr John Baron Sir Menzies Campbell Mike Gapes

Noes, 2 Ann Clwyd Mark Hendrick

Amendment accordingly agreed to.

Another amendment made.

Amendment proposed, in line 5, after “identified”, to leave out the words “for defending the integrity of British Gibraltarian Territorial Waters more robustly.”—(Mr John Baron.)

Question put, That the Amendment be made.

The Committee divided.

Ayes, 3 Mr John Baron

Noes, 2 Ann Clwyd

56 Gibraltar: Time to get off the fence

Sir Menzies Campbell Mike Gapes

Mark Hendrick

Amendment accordingly agreed to.

Paragraph, as amended, agreed to.

Paragraphs 31 to 48 read and agreed to.

Paragraph 49 read, amended and agreed to.

Paragraphs 50 to 85 read and agreed to.

Paragraph 86 read, amended and agreed to.

Paragraphs 87 to 99 read and agreed to.

Summary read and agreed to.

Annexes read and agreed to.

Written evidence was ordered to be reported to the House for publication on the internet.

Resolved, That the Report be the Second Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134.

[Adjourned till Monday 30 June at 4.00 pm

Gibraltar: Time to get off the fence 57

Witnesses

The following witnesses gave evidence. Transcripts can be viewed on the Committee’s inquiry page at www.parliament.uk/facom.

Tuesday 17 December 2013 Question number

Mark Simmonds, Parliamentary Under-Secretary of State, Foreign and Commonwealth Office, Jill Morris, Additional Director Europe, Foreign and Commonwealth Office and Dr Peter Hayes, Director, Overseas Territories, Foreign & Commonwealth Office. Q1-86

Wednesday 5 March 2014

The Hon. Fabian Picardo MP, Chief Minister of Gibraltar, The Hon. Dr. Joseph Garcia MP, Deputy Chief Minister, Gibraltar, and Mr Michael Llamas QC, Senior Legal Advisor, Government of Gibraltar

Q87-120

Thursday 3 April 2014

The Rt Hon David Lidington MP, Minister of State for Europe, Louise de Sousa, Head, and Alex Hurst, Deputy Head, Europe-Mediterranean Department, Foreign and Commonwealth Office

Q121-202

58 Gibraltar: Time to get off the fence

Published written evidence

The following written evidence was received and can be viewed on the Committee’s inquiry web page at www.parliament.uk/facom. INQ numbers are generated by the evidence processing system and so may not be complete.

1 Foreign and Commonwealth Office (GIB0001)

2 Foreign and Commonwealth Office (GIB0002)

3 For a Humanitarian Frontier/ASCTEG (GIB0004)

4 John Borda (GIB0005)

5 HM Government of Gibraltar (GIB0006)

6 Foreign and Commonwealth Office (GIB0008)