Table of Contents
Chapter One: Presentation of Gibraltar
Gibraltar ‘s Geographic Features
Gibraltar, an Overseas Territory of the United Kingdom
Gibraltar ‘s History
The Origins of the Gibraltarian People
Gibraltar in the 18th and 19th Centuries
Gibraltar in the Two World Wars
Gibraltar in the Second Half of the 20th Century
Gibraltar’s Political Organization
Chapter Two: Gibraltar, a Split Territory
Gibraltar, a Territory Torn between the United Kingdom and Spain
The Inner Struggles between the British Politicians and the Civilians
Chapter Three: The British, Gibraltarian and Spanish View about Gibraltar
Why does the United Kingdom refuse to hand over Gibraltar to Spain ?
Why do Gibraltarians refuse the transfer of sovereignty to Spain ?
Why does Spain want to get Gibraltar back?
With a surface of 6.5 square kilometres, we could think that Gibraltar is a territory of little importance and little interest. It is probably the case for the whole world except two countries: the United Kingdom and Spain . The British colony is the subject of many quarrels between the two countries and as they are not able to reach any agreement that would satisfy all three parts, these quarrels may still last for many years.
Agitated by external quarrels, the Rock of Gibraltar also suffered inner struggles. They took place between the British politicians that tended to favour the military aspect of Gibraltar and the civilians in search of civil rights and political representation. It took nearly 300 years for the Gibraltarians to be granted all the rights to which they could aspire. This is why they do not seem prepared to lose them if placed under Spanish rule.
In the first part, we will present Gibraltar , its history as well as its present political and economical situation. The second part will focus on the external and internal quarrels that Gibraltar has experienced. Finally, we will discuss the arguments of the United Kingdom , Gibraltar and Spain regarding the transfer of sovereignty to Spain .
Chapter One : Presentation of Gibraltar
Gibraltar ‘s Geographic Features
Gibraltar is an overseas territory of the United Kingdom located in south-western Europe on the southern coast of Spain . This is a strategic location on the Strait of Gibraltar that links the North Atlantic Ocean and Mediterranean Sea . It is part of the European Union , though not part of the Customs union .
• Surface and natural resources
The territory covers 6.5 square kilometres. It shares a 1.2 kilometre land border with Spain and has 12 kilometres of shoreline. Its climate is Mediterranean with mild winters and warm summers. Its terrain is a narrow coastal lowland bordering the 426-meter-high Rock of Gibraltar. It had negligible natural resources and limited natural freshwater resources until the recent usage of large concrete or natural rock water catchments to collect rainwater. In addition, it now has a desalination plant.
• Origin of the name ‘ Gibraltar ‘
The name Gibraltar comes from the Arabic Jabal al Tariq, which means ‘Tariq’s mountain’. Earlier it was Calpe , one of the Columns of Hercules . Today, Gibraltar is known colloquially as ‘Gib’ or ‘the Rock’.
Gibraltar, an Overseas Territory of the United Kingdom
Gibraltar is an overseas territory of the United Kingdom (formerly known as a dependent territory or earlier as a crown colony), that is a territory under the sovereignty and formal control of the United Kingdom but not a physical part of the United Kingdom .
This is a different status from that of Crown dependencies (the Channel Islands and the Isle of Man ) or that of protectorates (which were not formally under the sovereignty of the United Kingdom ). Neither should it be confused with Commonwealth realms that are independent states sharing the same sovereign as the United Kingdom .
• Political status
At one time, overseas territories were just like any other colony and were directly administered by officials appointed by the British government. Today, however, most overseas territories are nearly fully self-governing, only relying on the United Kingdom for defence, foreign affairs, and some trade issues.
Queen Elizabeth II is head of state in her role as Queen of the United Kingdom . This compares with independent realms of the Commonwealth of Nations , such as Canada or Australia , where the Queen has a separate and distinct role in each realm as ‘Queen of Canada’ or ‘Queen of Australia’.
• Level of integration
As an overseas territory Gibraltar has never been considered an integral part of the United Kingdom , and has never had representation in the British Parliament , on the grounds that they are separate jurisdictions. This is in contrast to other European countries, such as France , Denmark , and the Netherlands , whose dependencies have varying degrees of integration with their so-called ‘mother countries’.
Integration was seriously considered by the British Government, in 1976 , but it was rejected.
This absence of integration is probably what explains the lack of civil representation and administration that the Gibraltarian people suffered during many years whereas the British people were already enjoying them.
Gibraltar ‘s History
The Rock of Gibraltar has always been a fortress with a strong military role. Nonetheless there has always been a Gibraltarian people on which historians have not concentrated much.
The Origins of the Gibraltarian People
• Exodus and immigration
When the Rock fell to an Anglo-Dutch force in 1704 during the War of the Spanish Succession, almost all its approximately 4,000 Spanish inhabitants left for the neighbouring parts of Spain . Immigration from other Mediterranean regions then took place, with incomers from Malta , Genoa , and Portugal , among others, settling on the Rock.
• The Treaties of Utrecht
In 1713 it was formally ceded by Spain to Great Britain under Article X of the Treaties of Utrecht, a city of the United Provinces (now the Netherlands ). Along with the Treaties of Rastatt and Baden , they concluded the War of the Spanish Succession . The main provisions of the treaties confirmed that Louis XIV’s grandson Philip V would remain on the throne of Spain , and retain Spain ‘s new world colonies.
Many of Spain ‘s other territories were partitioned out among the allied powers. The Emperor received the Spanish Netherlands, the Duchy of Milan, Naples , and Sardinia . The Duke of Savoy received Sicily and some strips of land in Lombardy . The British received Gibraltar and Minorca , which they had captured during the war. There were also some colonial provisions pertaining to North America: France recognized British control of the Hudson Bay Territory and Newfoundland and ceded Acadia to the British. France retained Cape Breton Island , the St. Lawrence Islands, and fishing rights off of Newfoundland .
• Increase in population
In 1721 a count of Gibraltar ‘s civilians able to bear arms was taken and this revealed that 45 were English, 96 were Spaniards and over 169 were Genoese. This Genoese element supplied a vital contribution towards what was to make a Gibraltarian.
By 1753 the civilian population had grown to 1,816 persons, mainly Genoese, Jews and British inhabitants. This British component were mostly merchants, who arrived on the Rock to service the needs of the military, and who soon recognised the importance of the place as a trading post from which to advance northwards into the Iberian peninsula, southwards towards Africa and eastwards into the Mediterranean.
The first real census of inhabitants was taken in February 1777. It stands as testimony to the agglomeration of nationalities that have made the modern day Gibraltarian. The total number of civilians was 3,201, of these 1,832 were Roman Catholics, the rest were British Protestants. The majority of the Roman Catholics were classified either as natives (845), Genoese and Savoyards (672), or as Spaniards (134). Other minor Catholic groups included English, Irish, Minorcans, Portuguese and French.
It is significant to note the appearance of this ‘native’ element in the registers of 1777, containing the implicit recognition of the birth of the Gibraltarian.
Gibraltar in the 18 th and 19 th Centuries
Regarded for many decades purely as an appendix to the military base, the constitutional development of this heterogeneous community was slow.
• First judicial entities
A civil judiciary was authorised in 1720, and in 1739 criminal and civil jurisdiction was granted to Gibraltar , but no courts were created and this jurisdiction was exercised by the military, headed by the Governor himself.
Justices of the Peace were appointed in 1753, and forty years later a Vice-Admiralty Court was established to tap the first real basis of Gibraltar ‘s wealth, the public auctioning of enemy ships captured by the Royal Navy.
• Governor George Don: first political advances
The Governorship of General George Don, which started in 1814 and lasted for 17 years led to the first real advances in the political development of Gibraltar .
In 1817 the Exchange and Commercial Library was founded. The Exchange Committee concerned itself with forwarding the interests of the prosperous merchant group which had grown up in the city. Thus the Exchange Committee had little to do with the first moves which led to Gibraltar being given the status of a Colony in 1830.
A Charter of Justice was granted in that year, a civilian magistracy established, and civil rights bestowed on its inhabitants. A Supreme Court was also created, with a resident chief justice and jury system. The same year Gibraltar set up its police force. It was the second oldest British police force since in 1829 Sir Robert Peel’s Metropolitan Police Force had been created in London . ‘The City and garrison of Gibraltar in the Kingdom of Spain ‘ became the ‘Crown Colony of Gibraltar.’
All these changes were vitally important in that they recognised the inherent duality in a fortress-colony, and sought to cater in some measure for the administration of the civilian inhabitants.
• Governor Robert Gardiner: political advances cut short
These political advances were cut short by the appointment of Sir Robert Gardiner as Governor in 1848. The new Governor had strong views on how a fortress should be administered, and this drew him into a series of undignified wrangles with the Exchange Committee that we will broach in the second part. Eventually he was recalled in 1855.
• Gibraltar , a real British colony
An interesting fact to take note of is the replacement in 1859 of the post of ‘civil secretary’ by the post of ‘colonial secretary’. This can be seen as the recognition of Gibraltar as a fully-fledged Colony. The colonial secretary became the corner-stone of the civilian government and all correspondence addressed to the Governor passed through his hands.
• Implementation of the ‘Sanitary Order’
In 1865 a severe cholera epidemic led to the ‘Sanitary Order for Gibraltar ‘, which created a Sanitary Commission consisting of twelve members, all of whom were civilians nominated by the Governor. The Sanitary Commissioners took responsibility for problems of health and water-supply.
Gibraltar in the Two World Wars
• World War I and the interwar period
World War I saw the Rock play a crucial role in the control of the Straits as an assembly point for convoys. This is why in 1921 Gibraltar was rewarded by the creation of a City Council to replace the Sanitary Commissioners.
The Council, although with a majority of 5 nominated officials to 4 members elected by ratepayers, was an important advance for a civilian population which by then had passed the 18,000 mark. The concerns of the council were essentially matters of a municipal nature, streets, sanitation, sewage disposal and water supply.
On December 1 st , 1921 the first elections were held. For the first time since 1704, it was recognised that the civilian inhabitants of Gibraltar had a right to elect their own representatives.
Moreover, on October 14 th , 1922 a new consultative body was established in Gibraltar in order to advise the Governor: the Executive Council.
• World War II and the evacuation of the civilian population
During World War I , Spain remained neutral and was not a danger to the security of the fortress.
By 1939 all that had changed. The three years of bloody civil war that swept Francisco Franco to power had been marked by the aid he received from the Axis countries. In the autumn of 1939 the United Kingdom was at war with Germany . Mussolini soon joined Hitler, and in doing so he opened a new theatre of war in the Mediterranean . There was a very real danger that Franco would join the men who had helped him win Spain . Gibraltar was thus judged to have been in acute danger.
At the beginning of 1941, the Governor assumed all the powers of the City Council, the Executive Council was suspended and approximately 16,700 civilians, women, children and other non-combatants were evacuated.
The evacuation of the civilian population was a traumatic time in the history of Gibraltar . The elderly, the infirm, women and children left their homes on the Rock for temporary accommodation in Jamaica , Madeira , Northern Ireland and London .
Gibraltar in the Second Half of the 20 th Century
Under Hassan the internal political reform resumed as we will discuss it in the second part.
• Firm will to remain British
In 1967 a referendum was held at which the people of Gibraltar were asked whether they wanted to remain British or be handed over to Spain . Over 12,000 people voted for the United Kingdom , with only 44 choosing the Spanish option.
• Gibraltar under siege
From 1969 until the border opened in December 1982 for pedestrians only, Gibraltar was a city under siege. General Franco had cut off the territory by land and by sea. Telephone communications were also removed and air restrictions imposed. The only lines of communication kept open were travel by air to London and by sea to Morocco .
• Gibraltar in the European Economic Community
On January 1 st , 1973 , Gibraltar joined the European Economic Community with the United Kingdom , as a European territory for whose external affairs a member state is responsible. A number of special arrangements were negotiated which means that Gibraltar is not liable to pay the Value Added Tax, does not belong to the Customs Union nor to the Common Agricultural Policy.
• Spain in the European Economic Community : the debate reopened
Spanish accession into the European Community on January 1 st , 1986 opened a new dimension to the Gibraltar question, when Madrid moved from a policy of being content to safeguard their position over the Rock to one of actively using the Community as a vehicle to advance their claim.
• Successive Chief Ministers
Sir Joshua Hassan retired as Chief Minister in December 1987, having been at the helm of Gibraltar politics for over forty years.
In elections held in March 1988 Mr Joe Bossano, leader of the Gibraltar Socialist Labour Party, was elected Chief Minister. Four years later Mr Bossano bettered this win in the elections of January 1992, where he was re-elected on a huge landslide, winning 73 percent of the vote.
The General Election held on May 16 th , 1996 was won by the Gibraltar Social Democrats with 51 percent of the vote. Mr Peter Caruana was appointed as Chief Minister. Gibraltar went to the polls again on February 10 th , 2000 .
The Gibraltar Social Democrats who continued to be led by Peter Caruana were re-elected into office with an increased majority obtaining over 58 percent of the vote. An alliance led by Joe Bossano between the Gibraltar Socialist Labour Party and the Gibraltar Liberals obtained 40 percent of the vote and formed the Opposition.
Peter Caruana and the GSD were returned to power in elections held last year, on November 27 th , 2003 .
Gibraltar ‘s Political Organization
• The Governor
Queen Elizabeth II is represented by the Governor and Commander-in-Chief, presently Sir Francis Richards (appointed in 2003 ).
The Governor should not be mistaken for the Chief Minister: the Governor, along with other members of the Council of Ministers , appoints the leader of the General Election victorious party as Chief Minister .
The Governor also appoints the Financial Development Secretary and the Attorney-General, who are ex officio members of Gibraltar ‘s legislative assembly, known as the House of Assembly or the Gibraltar Parliament. They, along with the Governor, the Deputy Governor and the Chief Minister, are members of the advisory Gibraltar Council.
The Governor is also directly responsible for the local police force, known as the Royal Gibraltar Police, while the Deputy Governor is responsible for public service appointments.
• The Executive
As we have seen previously, the present Chief Minister is Peter Caruana , of the Gibraltar Social Democrats (GSD).
The Leader of the Opposition is Joe Bossano, of the Gibraltar Socialist Labour Party (GSLP), which is in coalition with the Liberal Party of Dr Joseph Garcia.
All parties support Gibraltar’s right to self-determination, and reject agreements with Spain on the issue of sovereignty. Traditionally, the GSLP has been more hardline towards Madrid , the GSD more conciliatory.
• The Legislature
Gibraltar ‘s legislature consists of a sole chamber: the House of Assembly, henceforth called the Gibraltar Parliament. It is made up of fifteen elected members, the Speaker, and the two ex officio members.
Under the electoral system used since 1969, voters must choose eight candidates, who may necessarily not be from the same party, but usually are, in what is called ‘block voting’.
Consequently, a party seeking to form a government stands eight candidates, and the result is usually that eight of the elected seats are won by the majority party, which forms the elected Government; the remaining seven are usually won by the ‘best loser’ which forms the opposition.
• The Judiciary
The judicial system in Gibraltar is based on the adversarial system of law and follows the three tiers of English legal principles – statute law, common law and rules of equity.
As in most countries, the legislature passes all laws. Most laws, which take the form of local Ordinances, are applied by the application of English Law Ordinance. European Community Law is also applicable in Gibraltar but in the form of local ordinances in which relevant European directives are transposed.
Contrary to what occurs in the United Kingdom , the legal profession in Gibraltar is a fused profession, meaning that both barristers and solicitors carry out similar work,. Either profession is thus able to deal with a matter from its inception through to a court hearing. Cases do not have to be referred to barristers by a solicitor, the former being able to obtain instructions directly from clients.
Barristers and solicitors number about 120. Most are trained in England . The Admissions And Disciplinary Committee, appointed by the Chief Justice pursuant to the Supreme Court Ordinance, is responsible for the discipline of both barristers and solicitors.
Many law firms in Gibraltar can offer legal advice on Information Technologies (IT), telecoms and e-commerce such as jurisdiction, data protection, copyright, consumer protection, contracts, design, hosting and domain name issues among others. This is due to the fact that one of the new pillars of Gibraltar ‘s economy is the e-business.
Gibraltar ‘s Economy
• Some introductory figures
Gibraltar ‘s Gross Domestic Product of about $500 million gives a Gross Domestic Product per head of about $17,500. Unemployment remains high at over 10 percent but on the other hand inflation is low. Gibraltar’s currency, the Gibraltar pound (£G), is at par with the British pound.
• A service-based economy
As Gibraltar has a little surface, its economy is concentrated in services. It used to be substantially dominated by the British naval dockyard and military presence, but major cut-backs over the last 20 years have reduced the share of such expenditure to a small fraction of the local economy.
The Government pins its hopes for the future on the financial services sector, which has been growing rapidly. Growth in the technology sector is also promising, with a number of large betting and gaming companies taking advantage of the low-tax regime and good telecommunications facilities.
• Taxation in Gibraltar : a great advantage to install one’s business
Gibraltar ‘s situation within the European Union is unique. On the one hand, its legislative endeavours would seem to have established it as a very cost-and tax-effective base for European trading and financial operations, and it is not overcrowded; on the other hand, it is vulnerable to pressure from the United Kingdom and the European Union.
In Gibraltar there is no capital gains tax, wealth tax, sales tax or Value Added Tax.
As for companies, the main taxes are income tax, withholding taxes, stamp duties on certain transactions, and property taxes (‘rates’). Nevertheless companies can take advantage of a number of offshore regimes in order to reduce taxation since Gibraltar was one of the first British dependent territories to develop tax-exempt corporate forms for offshore business. It also offers incentives for incoming investment.
As for individuals, they pay quite high taxes on their income in Gibraltar unless they are able to take advantage of High Net Worth Individual status or gain exemption as an expatriate executive. There is a moderately high estate duty, and import duties are quite high on some items.
In July 2002 Gibraltar’s Chief Minister, Peter Caruana announced a new corporate taxation policy setting a zero rate of corporation tax for all companies but introducing new taxes on company personnel and property occupation that will be capped at 15 per cent of profits. The new regime was introduced as of January 2003. It intends to maintain Gibraltar ‘s taxation attractiveness towards business along with satisfying the Organisation for Economic Cooperation and Development (OECD) as well as the European Union.
Gibraltar enjoys a sophisticated business and professional infrastructure. Business sectors with offshore activity include banking, insurance, investment and fund management, trust management, shipping and investment holding companies. As previously mentioned, there has recently been an influx of British betting and gaming operations fleeing high taxes and using the very good telecommunications facilities to offer Internet betting services.
It seems likely that Gibraltar will be one of the most attractive offshore locations for e-commerce business aiming at the European market.
• Tourism and shipping
From the British naval dockyard remain magnificent port facilities, so that shipping and tourism are the mainstays of Gibraltar ‘s economy. More than 5 million people visit Gibraltar annually, many of them evidently stepping ashore from cruise liners. There is a fair amount of local construction work on the hotel/conferencing sector and to accommodate wealthy expatriates.
• Financial services
The origin of Gibraltar ‘s burgeoning financial services sector dates back to the enactment of the Companies (Taxation and Concessions) Ordinance in 1967, which made provision for a special tax regime for international business.
The industry has made great strides since those early days, and now includes a broad spectrum of professional services, ranging from private banking to captive insurance management.
Recent developments include the establishment on the Rock of a number of Swiss portfolio managers, the commencement of direct trading on Eurex, Liffe and other exchanges, and the pioneering use by Deutsche Bank of Gibraltar as a domicile for securitisation/repackaging. Four other major investment banks including UBS Warburg have since followed suit.
As the only British international financial centre within the European Union, Gibraltar has a common law framework, a highly educated workforce, and British-trained professionals. It is renowned as one of the best regulated finance centres in the world, and as such, has been held up as a benchmark jurisdiction by both the former British Foreign Secretary Robin Cook, and by Andrew Edwards in his Review of Regulation in the Crown Dependencies.
In order to give a further boost to this important sector of the Gibraltar economy, the Finance Centre Division was established in 1997 within the Department of Trade and Industry, renamed ‘Department of Trade, Industry and Telecommunications’ (DTI&T) in 2000 reflecting the increasing diversification of the economy and the emergence of telecoms and e-business as a fourth pillar (after tourism, shipping and financial services).
The Finance Centre Division of the DTI&T is charged with the marketing and promotion of the financial services sector on the Rock, as well as strategic planning. It is also the first point of contact for new financial services businesses wishing to establish a presence on the Rock.
The banking sector is well established in Gibraltar in both the offshore and local market with assets in the vicinity of G£6.5 billion.
The Commissioner of Banking regulates banking in Gibraltar under The Banking Ordinance 1992. A substantial amount of subsequent legislation has kept Gibraltar up with current European regulatory standards. Under European ‘common passport’ legislation any branch of an authorised European bank may establish itself in Gibraltar , subject only to notification procedures. Likewise a Gibraltar-licensed bank may set up branches elsewhere in Europe . Most of the twenty banks established in Gibraltar are branches of major British, European or American banks.
The advantages of offshore banking in Gibraltar include its favourable tax status, the lack of exchange controls, excellent communications, stable government, and European Union membership.
Under the Deposit Guarantee Scheme Ordinance 1997, a deposit protection policy was put into effect in 1999 by the Gibraltar Deposit Guarantee Board in line with European directives in this area. In addition, an Investor Compensation Scheme will soon be in place.
Gibraltar has fully implemented European insurance directives, and under the ‘common passport’ rules Gibraltar insurance companies (and banks as we previously mentioned) can therefore write business into the European Union without needing to establish a presence in the jurisdiction concerned.
Taken together with Gibraltar’s other advantages (well-educated, English-speaking, low-cost, available labour force; comparatively cheap fee structure; good telecommunications; very competitive tax structure) it would seem that this should encourage the development of a European insurance marketing sector in Gibraltar, although this has yet to happen on a significant scale. Indeed, Gibraltar presently hosts 13 licensed insurance companies, but they are largely involved with the domestic market.
Gibraltar is aware of the possibilities there are to establish base operations for the European Union pension schemes of multinationals, especially if the European Union creates a harmonised regime for pensions, as it plans to, and as it has already done for fund investments (UCITS). The Government is actively planning appropriate legislation in partnership with the private sector. Indeed Gibraltar needs to be able to compete against Luxembourg , which is planning in the same direction, by offering the maximum flexibility and the best facilities.
Meanwhile, like other British offshore territories, Gibraltar is a suitable place to base tax-efficient pension and annuity schemes. Late in 2001, for instance, a Gibraltar-based life insurer launched the first annuity, which enables investors to pass on their entire pension fund assets to heirs after their death. The Open Annuity, launched by insurer London & Colonial, will mean that any money that remains within an investor’s fund will form part of their estate when they die. For the first time ever this will allow assets held in pension funds to cascade down the generations. This contrasts sharply with conventional annuities that promise a lifelong income in return for payment of a lump sum, but in most cases provide no death benefits to investors.
• Investment and Fund Management
There is a lively investment management sector in Gibraltar , with more than 20 portfolio management firms. Moreover, there are two independent firms of stockbrokers and many of the 20 banks in Gibraltar also offer investment management services.
The investment fund sector is regulated under the Financial Services (Collective Investment Schemes) Regulations 1992, which gave effect to the European UCITS (Undertakings for Collective Investment in Transferable Securities) legislation. The responsible body for the regulation of investment business in Gibraltar is the Financial Services Commission. As for banks or investment companies offering offshore investment management services to high-net-worth individuals or corporate investors, they are regulated under the Financial Services Ordinance 1998.
Foreign investment in Gibraltar is actively promoted by the government largely to create job opportunities. Tax concessions, governed by The Development Aid Ordinance, are available to light manufacturers who intend to export from Gibraltar . Any corporation with a development aid license granted by the governor for a project that will benefit Gibraltar ‘s economy is exempt from paying income tax on profit earned from the development until the total gains from the development exceed the percentage of approved capital expenditure. To qualify for a license, the project must provide at least two housing units in Gibraltar; create new industry; provide a material and immovable asset in Gibraltar; develop the tourist industry; provide new employment opportunities or tangibly enhance the economic or financial infrastructure of Gibraltar .
• Commercial Trading Companies
Due to its aforementioned particular set of advantages Gibraltar has always attracted certain types of trading operation, whereby a Gibraltar company can reap some or all of the
profits generated by trades taking place elsewhere. In some cases, its excellent port and handling facilities allow transhipment if that is needed as part of the supply chain.
The management of trading operations often generates administrative or sales or customer-handling jobs, and the Government of Gibraltar offers incentives to attract such companies. Indeed the massive retrenchment of the British military has left Gibraltar with a persistent unemployment problem – something that differentiates it from most its competitors, which have the opposite problem. Thus it is easily understandable that when the British betting industry started looking for a new home last year, the choice should have fallen on Gibraltar . Victor Chandler’s sports betting operation already has 300 employees in Gibraltar , and has been the most high-profile immigrant, but there have been a number of other similar cases.
• Trust Management
Trust management, particularly for wealthy British individuals, has been a traditional business for Gibraltar since the Rock has a favourable and well-developed legal and financial infrastructure. Successive tightenings of anti-avoidance legislation have reduced the possibilities for citizens of the United Kingdom , but trust work continues to be significant since many Collective Investment Funds are based on Trusts.
• E-business: the fourth pillar of Gibraltar ‘s economy?
The Government of Gibraltar has demonstrated a clear commitment to make Gibraltar an International E-Business Centre and firmly believes that Gibraltar is in a position to benefit greatly from the Information and Communication Technologies and its development as an information society.
The information, communication and technological revolution has created new economies for many countries and has had a profound impact on commerce, education, entertainment, banking, leisure, travel and legislation. Governments, organisations and businesses need to rethink their processes to adapt to the new environment.
The Government of Gibraltar has been developing strategies to create an environment for businesses to trade electronically, speedily and securely; based on a framework of telecommunications, infrastructure and legislation to facilitate the growth of e-commerce.
The upcoming liberalisation and regulation of telecommunications, the introduction of The Electronic Commerce Ordinance (TECO 2001) and the adoption of European directives into local legislation will give Gibraltar a great advantage over other offshore jurisdictions competing for the same market.
The Government of Gibraltar is determined that e-business should become the fourth pillar of the local economy; currently diversified in financial services, shipping and tourism. Indeed they deem that Gibraltar is the only location that offers all of the following: a favourable fiscal environment exempt from Value Added Tax, a liberalised telecommunications market, an e-commerce legislation enacted and a strong professional and financial infrastructure.
Chapter Two : Gibraltar, a Split Territory
When one thinks of Gibraltar, one always thinks of a territory that causes many tensions between Spain and the United Kingdom , particularly since the second half of the 20th century. But one should know that Gibraltar has been agitated by great inner quarrels as well.
Gibraltar, a Territory torn between the United Kingdom and Spain
• What is stated in the Treaties of Utrecht
In the 1713 Treaties of Utrecht , Spain ceded Great Britain ‘ the full and entire propriety of the town and castle of Gibraltar, together with the port, fortifications, and forts thereunto belonging … for ever, without any exception or impediment whatsoever. ‘, as part of the settlement of the Spanish Succession War . If the United Kingdom would decide to sell Gibraltar , Spain is guaranteed first purchasing rights but also right of refusal.
• What is stated in Gibraltar’s Constitution
Unlike most other British colonies, Gibraltar has not been offered independence. It remains an overseas territory of the United Kingdom , with full internal self-government under its 1969 Constitution. The preamble to that Constitution states that ‘Her Majesty’s Government will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their freely and democratically expressed wishes’. Although Gibraltarians have frequently been asked about the transfer of sovereignty to Spain , they have always refused. In response Spain has been implementing series of restrictions towards Gibraltar .
• Thirteen years of closed borders
From 1969 to 1982, Gibraltar was a city under siege since General Franco cut off the territory by land and by sea and imposed restrictions that we previously evoked.
The closed frontier years saw several attempts being made to remove these restrictions, which were given a new impetus by the death of General Franco in 1975.
An agreement was drawn up at Lisbon in 1980 which declared that both the United Kingdom and Spain were committed to solve all their differences over Gibraltar, in return for which Spain would lift the restrictions. This did not happen, and several dates set for the opening of the border went by with the gates remaining firmly shut.
The election of a socialist government in Madrid produced a slight improvement: on December 15 th , 1982 , the Spanish Authorities partially opened the frontier for pedestrians only, but restricted this to British passport holders resident in Gibraltar and Spanish nationals. Moreover, persons crossing the frontier were not allowed by Spanish Customs to export goods from Gibraltar .
The full opening of the border came about after an agreement between the British and Spanish Foreign Ministers at Brussels on November 27 th , 1984 . The United Kingdom would put the sovereignty of Gibraltar on the table in exchange for the lifting of the restrictions.
• More integration into the United Kingdom ?
Some in Gibraltar have spoken out in favour of a far closer relationship with the United Kingdom, in the form of integration or incorporation into the United Kingdom itself, similar as was offered to Malta in 1955 , in which the Rock would be represented in the British House of Commons , while retaining internal self-government. This would be a similar status to France ‘s Overseas Departments, and indeed to Spain ‘s North African enclaves, Ceuta and Melilla , claimed by Morocco . One of Spain ‘s arguments in rejecting comparisons between Gibraltar and these territories is that they are part of Spain , whereas Gibraltar is merely a British crown colony , and not part of the United Kingdom .
However, the British Foreign Office rejected the idea in 1976 , along with independence, on the grounds that any further constitutional reform or decolonisation would have to take into account the so-called ‘Spanish dimension’.
Many in Gibraltar have also argued against integration on the grounds that it would mean the surrendering of many powers of self-government. While there is still emotional attachment to the idea of Gibraltar being British, some see the Rock’s future as being within a larger ‘Europe of the Regions’, rather than as part of one nation state or another.
• Spain’s drastic measures against Gibraltar
The aforementioned Spanish accession into the European Community on January 1 st , 1986 revived the debate about Gibraltar since the Spanish government decided to use the Community as an argument to advance their claim.
Thus in December 1987 Gibraltar airport was excluded from a measure of European law on civil aviation unless the Gibraltarians accepted joint control of their airport with Spain .
Previously Gibraltar had become liable to pay pensions to the Spanish workers who were employed in Gibraltar before Franco closed the border, even though they had not made pension contributions during sixteen years of a closed frontier.
In the summer 1991 Spain held up the signing of the external frontiers convention of the European Union, arguing that Gibraltar should not be included within the frontiers of Europe . The position of the British government was and remains that Gibraltar must be included, and the definition of Europe ‘s external borders remains held up on this point.
• The Constitutional reform
In 1999 , the Government of Gibraltar established a Select Committee on Constitutional Reform, to consider how the 1969 Constitution should be reformed. It envisaged decolonisation by creating a modern and non-colonial relationship with the United Kingdom .
A draft Constitution was published in 2002 , which envisaged the following:
The right to self-determination being enshrined in the preamble, as in the Falkland Islands .
The replacement of the Governor by a Lieutenant Governor, as in the Channel Islands and the Isle of Man , as the Queen’s representative, with the office of Deputy Governor being abolished.
The abolition of the office of the Financial Development Secretary, whose functions would pass to an elected member of the Council of Ministers, with the Attorney-General being similarly appointed.
The House of Assembly to consist solely of elected members.
The abolition of the Gibraltar Council, and its replacement by a Consultative Council for European Union matters, consisting of Gibraltar and British Ministers
The right of the Government of Gibraltar to dispose of Crown lands in Gibraltar
• A self-governing condominium?
The idea of a condominium , with sovereignty shared between the United Kingdom and Spain finds little support in Gibraltar . Some have spoken in favour of a status similar to that of Andorra , in which Queen Elizabeth II and King Juan Carlos would be joint heads of state , in the same way that President of France and the Spanish Bishop of Urgell are Co-Princes of Andorra.
While this would give Spain a symbolic constitutional role in Gibraltar, this would not go far enough in moving towards effective Spanish control of the Rock, and even a symbolic role would be a step too far for many Gibraltarians.
In a referendum organised by the Government of Gibraltar on November 7 th , 2002 , voters overwhelmingly rejected the principle that Spain and the United Kingdom should share sovereignty over Gibraltar , by 17,900 votes to 187 on a turnout of almost 88 per cent.
• Spain’s pressure over Gibraltar
As of 2003 , Spain continues its policy of harassing Gibraltar both politically and economically in order to pressure the Gibraltarians into accepting Spanish sovereignty.
Spain has a policy of non-recognition of the Government of Gibraltar as a ‘competent authority’, therefore refusing to recognize Gibraltar ‘s courts, police and government departments, driving licenses and identity cards. It bans ferry and air services between Gibraltar and Spain , and motorists crossing the frontier are subjected to long delays and searches. Madrid refuses to recognize Gibraltar’s international dialling code , 350 thereby restricting the expansion of Gibraltar’s telephone numbering plan, as well as not allowing roaming for Gibraltar mobile phones in Spain .
It also tries to prevent Gibraltar from participating in international sporting and cultural events as it wants to create the impression that Gibraltar is a ‘pure colony’ with no separate identity from the United Kingdom .
This summer, Gibraltar received the visit of various British officials to remind that it is a British territory. The Spanish government qualified these visits as ‘inopportune’. Actually it seems that they interpreted it as a kind of provocation since the British Defence Minister visited Gibraltar to celebrate the 300 th anniversary of the colony.
To show their disapproval, Spanish authorities are going to implement a ‘filter operation’ at the frontier, that is stricter customs and police controls. The measure will produce from one to three waiting hours at the frontier: this will create incommodity for the Rock’s inhabitants and tourists and also for the Gibraltarians that live in Spain but work in Gibraltar . This will also be a terrible stroke to Gibraltar ‘s economy since it mainly depends on traffic possibilities.
Spain already resorted to this type of measure. The United Kingdom answered by threatening Spain to bring the case before the European Court since it regards these controls as a breach of the Schengen Agreement.
The Inner Struggles between the British Politicians and the Civilians
Initially Gibraltar was a fortress whose inhabitants did not have any rights. They struggled in order to be granted civil rights and civil representation in the political institutions.
• Institutions with a very limited powers and an omnipotent Governor
In 1739 Gibraltar was granted a criminal and civil jurisdiction. However this jurisdiction was limited since it did not include courts and was exercised by the military, headed by the Governor himself.
However eminent they were, civilians were excluded from the only library available, the Garrison Library. In 1817 the Exchange and Commercial Library was founded, largely to rival the Garrison Library. The Exchange Committee, concerned with forwarding the interests of the merchants, initially had no political objectives and concentrated on matters of a social and economic nature in so far as they affected the merchants.
• 1830: a year rich in improvements
Gibraltar was granted a Supreme Court, a resident chief justice and jury system. Moreover civil rights were bestowed on its inhabitants. We previously evoked that these changes were vitally important since they acknowledged the inherent duality in a fortress-colony as Gibraltar , and sought to grant its civilian inhabitants with some kind of administration.
• Robert Gardiner’s governorship: high tension with the merchant group
Sir Robert Gardiner’s appointment as Governor in 1848 put an end to these political advances. Indeed the new Governor had strong views on how a fortress should be administered, and this is why he came into conflict with the Exchange Committee, a body that by then claimed to be representative of all the civilian inhabitants of Gibraltar . Gardiner contended that the population of Gibraltar could not aspire to the political freedoms granted to other British Colonies because Gibraltar was primarily a fortress. In strongly worded correspondence he accused the Exchange Committee of encouraging ‘notions of political rights which it has never been the intention of any British Government to concede to the commercial settlers on the Rock.’ With reference to the Gibraltarians, Gardiner was adamant that ‘ there are no grounds on which they can, with any shadow of right or claim, demand elective franchise.’
In 1852 the Governor banned a meeting that merchants, landowners and other local inhabitants had arranged to petition the Secretary of State for the Colonies to set up an enquiry into the civil administration of the Rock. The merchants were deeply critical of Gardiner’s government of Gibraltar , arguing for the necessity of creating some form of municipal administration, and a consultative council of civilian inhabitants. Relations were strained to the extent of the Governor banning members of the Exchange Committee from functions at Government House. In order to silence the increasingly virulent attacks on his administration, Gardiner issued a press ordinance in 1855, bestowing upon himself as Governor the power to control publications in Gibraltar . When Gardiner started to threaten the economic interests of the merchants, they used their links with Chambers of Commerce in Manchester and London to lobby Members of Parliament against him, and their enemy was finally recalled in 1855.
• Decrease in civilian representation within the institutions
In 1865 a severe cholera epidemic led to the ‘Sanitary Order for Gibraltar ‘. Yet, in 1880 it was decreed that four of the twelve were to be non-civilian, and in 1891 that only four were to be Gibraltarians. The Exchange Committee appealed at regular intervals for a larger representation of Gibraltar ratepayers on the Sanitary Commission, as it was the case when it was created. But the Secretary of State insisted that as Gibraltar was a fortress, he could not accede to the Committee’s demands.
• A first step towards the recognition of the Gibraltarians’rights
In 1889 an ordinance issued by the Governor decreed that only native-born inhabitants had a right of residence in the Colony. Everyone else, including British subjects, but excluding officials of the Crown had to obtain permission to live on the Rock. Inadvertently perhaps, the definition of a Gibraltarian had been created, as natives of a territory possessing exclusive rights of residence, entrenched in their birth on the Rock, which not even British subjects could claim. The ordinance of 1889 was thus a landmark in the political history of Gibraltar and in the development of its inhabitants. It was in part the response to local resentment at the number of aliens on the Rock, but it was also a tacit recognition by the London government that the local people of Gibraltar could boast certain rights in the colony which others could not.
• The City Council: an advance still subordinate to the military group
In 1921 Gibraltar was rewarded for its services in World War I by the creation of a City Council; yet it was not incorporated as a borough in the English sense since no Charter of Privileges was granted to the municipality, no aldermen were created, and the City Council was presided over by a Chairman, not a Mayor. The presence of representatives of the three fighting services (officials, civilians and servicemen) in the Council stressed the fact that any future political advances would always be subordinate to the requirements of the military base.
• A limited right to vote
On December 1 st . 1921 the civilian inhabitants of Gibraltar had a right to vote for the first time since 1704. However the nature of the suffrage was limited (only male ratepayers could vote), and the powers of the representatives as well. It is interesting to compare the very limited suffrage in Gibraltar with the suffrage in force at the time in the United Kingdom , where three years earlier the vote had been granted to all adults, male and female.
• A still very powerful Governor
On October 14 th , 1922 a consultative Executive Council was established to advise the Governor but it consisted entirely of appointees, four official and three unofficial members all nominated by the Crown. The Governor remained a military man, with all legislative and executive authority vested in him, and was at the same time Commander-in-Chief of the garrison.
Demands for greater local representation continued throughout the twenties and thirties. In February 1926 the call for a majority of elected members on the City Council was rejected by the Governor, Sir Charles Monro, as was a further request by the Exchange and Commercial Library three years later. In 1934 the Exchange Committee, the Chamber of Commerce and the Transport and General Workers’ Union all independently agitated for greater representation of the people of Gibraltar in the government of the colony. A mass meeting was held in August 1934 and a petition to the King-in-Council signed by 3,152 out of an electoral register of 3,890. It was supported by the Transport and General Workers’ Union , but the Chamber of Commerce held aloof. The petition was rejected and no more significant advances were made on the road to self-government for the time being.
• World War II: a serious blow for the civilian population
What happened, in the event, was a retrogression, with the concessions that had been so gradually won destroyed by a single blow. That blow was World War II, which made military considerations paramount over civilian rights.
As Franco was probably going to involve Spain in the war, Gibraltar was thus deemed to be in great danger. At the beginning of 1941, the Governor assumed all the powers of the City Council, and the Executive Council was suspended, but more important than this was the earlier action taken to evacuate approximately 16,700 civilians who were judged to be a hindrance to a fortress at war. It seemed that all the political gains made in over 230 years of British rule had been lost.
At the same time, a group of people on the Rock got together to agitate for a greater say for the civilian population in the running of the colony. That group was formally launched in December 1942 as the Association for the Advancement of Civil Rights in Gibraltar (AACR). Albert Risso was its first President, and Joshua Hassan, a young lawyer who had drawn up the movement’s constitution became its Vice President.
The Association became the spearhead of the demands for greater political reform that took shape after the war. In 1945 the City Council was reconstituted for the first time with a majority of elected members over nominated officials. In 1950 the Duke of Edinburgh opened the Rock’s Legislative Council, which contained a majority of members who were not officials of the Crown, but not an elected majority.
• Hassan and the political reform
Hassan made the internal political reform resume: by the end of the decade the Gibraltarians had obtained a Legislative Council with a majority of elected members, and a Speaker replaced the Governor presiding over the Council’s meetings.
The changes continued and in its 1964 constitution, control over the civil service and over policy was vested for the first time in a democratically elected Government of Gibraltar, with Sir Joshua Hassan as the Rock’s first Chief Minister. This has been the climax of decentralisation in Gibraltar .
• The European election problem
The latest big issue that agitated Gibraltar was that Gibraltarians could not vote in the European elections. Although Gibraltar is bound by European laws and has implemented the European legislation more fully and promptly than some other members, Gibraltarians and other European nationals resident in Gibraltar had been denied the vote in elections for the European Assembly.
The reason given is that the British Government had failed to make the necessary legal arrangements. Lord Bethell moved an amendment to the 1998 European Parliamentary Elections Bill in the House of Lords to make a provision for the right to vote, however it was defeated by the Labour Government, who were supported by the Liberal Democrats.
The Gibraltar Self-Determination Group (SDGG) took the case to the European Court of Justice with Matthews vs the British Government in 1994. In 1999 Gibraltar won the Euro Vote case before the full European Court of Human Rights by 15 votes to 2.
The Court has found that the United Kingdom is in violation of the European Convention of Human Rights as a result of its failure to make arrangements to enable the people of Gibraltar to vote at elections for the European Parliament. Moreover, the Court has found that legislation made by the European Community affected the people of Gibraltar . Also the very essence of the Gibraltarians right to vote to choose that legislature as guaranteed under Article 3 of Protocol I of the European Convention of Human Rights had been denied ruling that this is a violation of that Convention and contrary to effective political democracy.
Eventually Gibraltarian voters could vote for the first time in the European Elections that took place last June.
Chapter Three : The British, Gibraltarian and Spanish View about Gibraltar
Why does the United Kingdom refuse to hand over control of Gibraltar to Spain ?
• Gibraltar ‘s Constitution statement
The United Kingdom cannot hand over control of Gibraltar to Spain since it would break Gibraltar ‘s 1969 Constitution. As already mentioned, the preamble to that Constitution states that the people of Gibraltar can pass under the sovereignty of another state only if they express this wish freely and democratically. As every referendum on this matter showed that Gibraltarians wish to remain under British control, the United Kingdom will not set up any arrangements with Spain .
• A different situation than that of Hong Kong
The Spanish government argue that the United Kingdom could hand over Gibraltar to Spain as it did with Hong Kong to China in 1997. But both situations are completely different since the agreement that placed Hong Kong under British control in 1898 also considered its return to China 99 years later, that is in 1997. On the contrary, the Treaties of Utrecht do not mention that Gibraltar should return to Spain .
• Gibraltar: a strategic position in Europe
Nevertheless, one may wonder whether the United Kingdom ‘s refusal is justified solely by its commitment before the Gibraltarian people or if it is willing to keep control over Gibraltar because of its strategic position. Indeed Gibraltar is a door over the Mediterranean Sea , that is a privileged enclave militarily speaking. It is also a key seaport for trade in the Mediterranean Sea .
Why do Gibraltarians refuse the transfer of sovereignty to Spain ?
• Their British culture
Gibraltarians are strongly linked to the United Kingdom culturally speaking. Gibraltarians have historically been proud of their British heritage, and unlike other colonial subjects, sought to strengthen, rather than loosen their ties with the United Kingdom and the British Crown, seeing themselves as ‘more British than the British’.
This sense of being British was particularly strong when the frontier with Spain was closed in 1969 , and all communications links were severed. To this day, the only flights from Gibraltar’s airport , are those to the United Kingdom . Consequently, British influence also remains strong, and this is not confined to the Britishness of bobbies on the beat, red post boxes, fish and chip shops or pubs serving warm beer.
Spanish may be widely spoken, but it is a vernacular language only, English being the language of government, commerce, education and the media. Gibraltarians going on to higher education attend university in the United Kingdom , not in Spain , as indeed do those requiring medical treatment not available on the Rock. Many university graduates remain in the United Kingdom to pursue careers there.
Moreover, after World War II, most evacuees were repatriated, but some stayed on, while many also moved to the United Kingdom , thereby increasing family ties with the ‘Mother Country’.
While television from Spain is easily received and widely watched, the availability of British television via satellite , particularly Sky and the BBC , means that Gibraltarians are as familiar with British news and popular culture as British people themselves.
Consequently, transferring sovereignty to Spain would produce a lot of cultural changes that the Gibraltarian people are not ready to accept: a new nationality, a new official language, a new currency and of course new taxation conditions.
• Their favourable tax regime
Gibraltar enjoys a particularly interesting tax regime as we have already seen. Transferring sovereignty to Spain would represent the end of that regime with the instauration of the Value Added Tax among other reforms. This would damage Gibraltar economy since many businesses are set up in Gibraltar for the attractiveness of its tax regime.
• Their relative independence
Moreover passing under Spanish rule would also be a loss of political independence. Gibraltar is a nearly self-governed territory that could not be satisfied with the status of Autonomous Community in the Spanish Kingdom . It is true that Spanish Autonomous Communities have wide legislative and executive autonomy, with their own parliaments and regional governments but they remain subject to the Spanish State to a large extent.
Why does Spain want to get Gibraltar back?
• The Gibraltarians: a colonising people?
Spain has often denigrated the Gibraltarians, who it describes as ‘the present inhabitants’, on the grounds that they are not indigenous, and that the original Spanish inhabitants were expelled when the Anglo-Dutch expedition force seized the Rock in 1704 . It has used these arguments to argue that Gibraltarians are not a ‘colonial’ people, but rather, a ‘colonising’ people.
• Gibraltar’s location in Spain
In addition Spain considers that Gibraltar should belong to Spain since it is located on the Spanish territory. It also argues that the United Kingdom should not keep a colony in the 21 st century and should return it to the country it belonged before, that is Spain . In exchange, Spain would grant Gibraltar with the status of Autonomous Community.
• Gibraltar ‘s tax regime
Another point on which Spain disagrees is Gibraltar favourable tax regime.
On the one hand many businesses have their registered office in Gibraltar in order to enjoy the tax regime but do not exercise their activity in Gibraltar . In other words, anyone can go to Gibraltar and have any lawyer register his/her company in the same address as others. They are then fictitious companies that carry over their activity in Spain from which they evade taxes. This is then a tax-heaven that Spain would like to dismantle.
On the other hand, many Gibraltarians work in Gibraltar but live in Spain , close to the frontier (called ‘ la Verja ‘). They use Spanish infrastructures for which they do not pay any taxes and they do not pay many taxes in Gibraltar either so that Spaniards are under the impression that Gibraltarians are getting the benefits from every part.
In the Gibraltar ‘s question, many factors are at stake. This is why the Rock of Gibraltar, in spite of its little surface, is the centre of many conflicts.
After almost 300 years of inner struggles, it has been agitated for more than 50 years by quarrels between the United Kingdom and Spain . Not determined to let Spain rule them, Gibraltarians claim they want to remain under British control. In order to stick to its commitment, the United Kingdom is not ready to hand over Gibraltar . This is why Spain keeps implementing drastic measures to bother both Gibraltar and the United Kingdom , which respond by other actions that disturb Spain .
It could be regarded as a mere little disagreement without severe consequences; nonetheless we should keep in mind that the United Kingdom and Spain are part of a union, the European Union. This can lead us to wonder how such a situation can take place within a union of countries and what consequences it could have on the future of this union.
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Spanish view about Gibraltar
Spanish view about Gibraltar
Information for each part of the work
Information about the inner and external quarrels
British view about Gibraltar
Gibraltarian view about Gibraltar
Information about politics
Information about economy
Information about the inner and external quarrels
British view about Gibraltar
Gibraltarian view about Gibraltar
Information about quarrels between the United Kingdom and Spain
Spanish view about Gibraltar