Members present:

Donald Anderson, in the Chair
Mr David Chidgey
Sir Patrick Cormack
Mr Fabian Hamilton
Mr Eric Illsley
Andrew Mackinlay
Mr John Maples
Mr Bill Olner
Mr Greg Pope
Sir John Stanley
Ms Gisela Stuart


Memoranda submitted by the Foreign & Commonwealth Office

Examination of Witness

THE RT HON PETER HAIN, a Member of the House, Minister of State, Foreign and Commonwealth Office, examined


  1. Order, order. Mr Hain, we welcome you, together with Mr John Macgregor, who is the Director, Wider Europe, and Mr Richard Jones, Deputy Head of the European Union Department (Internal) of the Foreign and Commonwealth Office (FCO). I believe you attended the earlier part of this session when we posed questions to the Chief Minister. You have talked about concluding the current talks by the summer of next year, that is the talks taking less than a year. Why the hurry?
  2. (Mr Hain) Thank you very much for inviting me to this session. If I may, I shall come directly to that point in just a minute. The sixth report of the Committee, that is your report of 3 April 2001, recommended that we take action to empower the citizens of Gibraltar to vote in the European elections. I am delighted to announce the Government=s intention that for the first time ever the Gibraltar electorate should be able to vote in the European parliamentary elections. The Government fully supports Gibraltar=s aspiration and right to be represented in the European Parliament. We are committed to achieving this in time for the new elections in 2004. This will require domestic legislation in the UK, so we shall be seeking the legislative time in order to bring in the necessary domestic legislation; we shall of course proceed in close consultation with the Gibraltar authorities.

    Sir Patrick Cormack

  3. Will Gibraltar be a constituency?
  4. (Mr Hain) That has as yet not been decided. We are going to explore the detail.


  5. That is a most welcome announcement. It is something the Committee have been pressing for and we shall watch the details with great care. Now to the question: why the hurry?
  6. (Mr Hain) I shall of course be happy to discuss the details with you and keep you closely informed. The situation is that we are dealing with a dispute which has run on for 300 years since the Treaty of Utrecht. We are dealing with a dispute which has aggravated life in Gibraltar for many, many years and with which all recent governments of Britain have had to contend, Conservative and Labour. More recently things have come to a head by a whole series of other aggravations, continuing border delays, about which we have regular and justifiable complaints from the people of Gibraltar and its Chief Minister almost on a weekly basis, denial of telephone opportunities, again about which we have consistent and regular representations and I have had personally from the Chief Minister, whether it is lack of mobile access or lack of external lines and so on. The obstacles in the way of Gibraltar airport, which should be the centre of the whole region. These are just some of the issues which have aggravated the situation. In addition we face a situation where Gibraltar has been suspended now from two EU regulations in respect of air safety and air security. The war of words continues between Madrid and Gibraltar. The European Union, our fellow Member States, do not understand why two very senior members of the European Union, who in other respects have a common agenda, continue to allow their dispute over Gibraltar to get in the way of important business which affects all our security such as air safety, including flights to Gibraltar. This has produced in our minds a situation where we must try to break the log jam and do so as soon as we can with fresh thinking in Madrid, as there is, with fresh thinking in London, as there is, which I hope in time will also produce fresh thinking in Gibraltar. You cannot change a situation of continuous enmity between Gibraltar and Spain with continuous aggravation for the people of Gibraltar except by dialogue, which is what we are embarking on.

  7. But you have set a short timetable. You know the result of the 1997 referendum, where almost 100 per cent of the people of Gibraltar voted effectively to stay with UK sovereignty, you heard the views of the Chief Minister today. What possible evidence is there that the views of the people of Gibraltar have changed in the interim?
  8. (Mr Hain) I am encouraged by the Northern Ireland experience. If you had asked me ten years ago whether we could achieve a situation in which the governments of both the United Kingdom and the Republic of Ireland could come to a common position, together with the people of Northern Ireland and their political representatives, if you had said that to me ten years ago, I would have said there was no prospect of it at all. How did we overcome those deep historic entrenched divisions; very different from Gibraltar in the sense that there was the most terrible violence, nevertheless common in this sense that there was a constitutional issue dividing opinion there, there was deep bitterness, there was a lot of aggravation? How did we achieve it? We got people around a table talking. We changed minds. Everybody changed minds. All I am inviting the Chief Minister to do, backed by the people of Gibraltar and backed also by opposition politicians in Gibraltar who should give him the right to come and have Gibraltar=s voice represented in these talks, is to say that by dialogue these are better ways of moving the situation forward for the people of Gibraltar.

  9. Clearly he is not going to tango. In retrospect, do you not think it would have been a wiser course to have had a dialogue within the UK, a dialogue in Gibraltar about the options before bringing in Spain?
  10. (Mr Hain) This has been a longstanding process. We are picking up the Brussels process discussions and meetings from the situation first begun under Baroness Thatcher=s Government when Lord Howe was Foreign Secretary in 1984. We are picking up that process. It has been a process pressed upon us by the European Council in Gothenburg. I was present at that Council. They urged us as two important Member States to get back together. This is what we are doing. I have detailed discussions with the Chief Minister and with others in Gibraltar urging Gibraltar=s voice be heard in those discussions. I think it is terribly important that their voice is heard in those discussions and I continue to urge that it be so. There is nothing to fear from talking, is there?

    Sir John Stanley

  11. As you well recognise, the precise wording using by Ministers in anything to do with Gibraltar and the Spanish relationship is of the utmost significance. Studying the parliamentary answers you have been giving in recent weeks, there is a very marked discrepancy in the answer you have given on the issue as to the entitlement of the people of Gibraltar to a referendum in circumstances where there is a change in sovereignty. The discrepancy exists between the answer you gave on 19 November with the earlier answer you gave on 30 October, to the same question in effect. On 30 October, in reply to Mr Andrew Rosindell, you said this. AThe Government stand by their commitment to the people of Gibraltar set out in the preamble to the 1969 Constitution which enshrines the principle of consent of the people of Gibraltar to any change in sovereignty@. I stress the phrase you used, Ato any change in sovereignty@. On 19 November, in answer to Mr Andrew Turner, you used this formulation, AThe Government stand by the commitment set out in the preamble to the 1969 Gibraltar constitution that we will not enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their freely and democratically expressed wishes@. It is self-evident that there is a huge difference between an undertaking to give the people of Gibraltar an entitlement to express their consent in a referendum, where there is in your words Aany change in sovereignty@ to the alternative position which you postulated on 19 November whereby a referendum would be available in the circumstances where Gibraltar would pass under the sovereignty of another state. So the question I would wish to put to you is this. Will you give an absolutely clear and unequivocal undertaking to this Committee that any change in sovereignty will require the consent of the people of Gibraltar in a referendum?
  12. (Mr Hain) Yes. I do not understand why there is any doubt in your mind. If I had answered the second question in exactly the same way as the first, I should simply have referred the answer to the first question as in the normal way. What I did in that other answer was put on record literally an extract from the legislation of May 1969 which says AHer 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@. In my mind I was answering the question in a slightly different way, but I was actually getting on record effectively the wording of the 1969 legislation.

  13. What I am seeking to clarify is that at the outset of this negotiation in which the British Government has apparently agreed to put sovereignty on the table C
  14. (Mr Hain) As did the Conservative Government before us, as does the Chief Minister accept would be the case.

  15. With sovereignty on the table. There are clearly three possible outcomes. One is no change in sovereignty. Two will be some form of joint arrangements, joint sovereignty. Three, theoretically only I trust, a total transfer of sovereignty from Britain to Spain. Those are the three possible areas of outcome. What I take away from the yes, which you have just given, is that if the British Government and the Spanish Government agree on a range of joint arrangements, in which there is a move from exclusive British sovereignty to some form of joint sovereignty, you have now given this Committee an unequivocal assurance that any form of joint arrangements will require the consent of the people of Gibraltar in a referendum.
  16. (Mr Hain) I do not accept that those are the only three options. I wish life were as simple as that. There is no question, and I am very happy to repeat that to the Committee, there is absolutely no question of this Government simply handing Gibraltar over to Spain full stop. Let us get that out of the story entirely. There is no question of us just handing over sovereignty to Spain, that would be against British law, it would be against the principles of democracy which we hold very dearly to.


  17. And it would not get through this Parliament.
  18. (Mr Hain) And it would not get through this Parliament. To come to your question, any alteration of present arrangements of sovereignty will be put to the people of Gibraltar full stop. It is absolutely crystal clear and I do not understand why anybody has the slightest doubt about it.

    Sir John Stanley

  19. Does that include all forms of joint arrangements?
  20. (Mr Hain) Anything which affects sovereignty. Anything which affects sovereignty. I am not getting into the detail of discussions which are very confidential at the present time. I do not want to set - though it obviously seems I have from the earnest sighs around your table - any hares running in false directions. I cannot conceive of joint arrangements being in any way implementable without some change in sovereignty. I cannot see how that is possible. Take the sighs and the laughs and the amusement back. The simple answer is that anything which provides for any joint sovereignty, if that is the outcome - and I have no way of knowing whether it will be - will go to the people of Gibraltar.

  21. What you are saying - and I am trying to put a totally accurate summation on it and correct me if this is not right - is that there could be the possibility of various joint arrangements which both the British and the Spanish Government deem not to be changes of sovereignty, which in turn would not be put to the people of Gibraltar in a referendum. That is what I believe you are saying to us.
  22. (Mr Hain) That is not on the table. I honestly tell you straight, that is not on the table. I do not think that would take the situation forward either with Spain or with the people of Gibraltar, therefore I think you are chasing false hares and it should not even come into the consideration of this Committee. May I say one other thing? May I take you back to the joint press communiqué, a very significant one issued last week by the Foreign Minister of Spain and our own Foreign Secretary, Spain for the first time agreed that we share a common objective of a future where Gibraltar enjoys greater self-government and the opportunity to reap the full benefits of a normal co-existence with the wider region. The guiding principle is to build a secure, stable and prosperous future for Gibraltar and a modern sustainable status consistent with our common membership of NATO and the European Union. If we are talking about increased self-government, that is something that Gibraltar has wanted, that it can look forward to if we can bring these negotiations to a successful agreement.

    Mr Chidgey

  23. Thank you for that. Just before we leave this particular point, I was very interested in your comments in your opening remarks that you drew your experience and hope from what has happened in the island of Ireland in recent years. From my memory, I understand that the Republic of Ireland had to change its sovereignty claim on the six counties of Northern Ireland in order for progress to be made. May I ask you therefore whether the Spanish Government shows any signs of being willing to compromise its long-standing sovereignty claim on Gibraltar?
  24. (Mr Hain) I am not going to get into the detail of discussions and you would not expect me to. If it had been appropriate for the Secretary of State for Northern Ireland to come to give evidence to this Committee or for that matter to the Northern Ireland Affairs Select Committee in the middle of the proceedings leading up to the Good Friday Agreement or subsequently to reveal what discussions were or were not going on, we would never had reached an agreement.

  25. So you are not able to tell us whether Spain have or have not changed their mind on their sovereignty claim for Gibraltar.
  26. (Mr Hain) What I can tell you is that there is absolutely no prospect of the British Government agreeing to full Spanish sovereignty over Gibraltar; no prospect of that at all.

  27. That begs the question.
  28. (Mr Hain) Somebody from the back row has just interjected Afull@. The trouble with this debate is that there is a kind of lawyer-like insistence on reading 50 different things into virtually everything I say. I am being absolutely straight and frank and some people have accused me of being too frank. We will not agree to hand Gibraltar over in any shape or form to Spain. That is not on the agenda, nor is Spain asking for us to do that.

  29. May I move on to another area and refer you to the Foreign and Commonwealth Office circular 015-01 which was kindly circulated to the Committee in which in the implementation of EC legislation the statement is made, AHMG has always taken the view that a further consequence of the Act of Accession is that measures adopted under Article 95 TEC which have as their objective the removal of barriers to trade in goods are not applicable to Gibraltar@. My question is: why did HMG come to take that view, particularly as it is now being challenged by the Commission and is before the European Court of Justice?
  30. (Mr Hain) That was part of Britain=s Accession Treaty. That has been the historic situation. What we have in prospect is an entirely new status for Gibraltar within the European Union if we are successful in the Brussels process negotiations. I think there would be clear benefits to Gibraltar from a closer relationship with the European Union and the erosion of the border with Spain, free movement of goods, services and people, greater scope for economic co-operation with the Campo and the wider region, full and free access for Gibraltar=s firms to the world=s largest post-enlargement market, larger than the US and Japan combined, by, for example, easier access to Spain and the EU by reducing and removing the Customs/passport controls at the border and all the extra business that would attract to Gibraltar=s port. There is more choice and better value for Gibraltar=s consumers, economies of scale and access to services which are impossible for a community of only 30,000.

  31. So the view on the applicability of those measures is probably misguided.
  32. (Mr Hain) May I just put this? Impossible for a community of only 30,000 people to realise on their own such as access to education, health, storage facilities across the border, easier access to Gibraltar=s English language, legal and business expertise by expatriates on the Spanish coast. The point is that if we could make the Brussels process discussions successful, there is a fantastic prize for the people of Gibraltar, an end to the aggravation with Spain, better access to all the opportunities the European Union offers, greater prosperity, more jobs and I think that is a prize which should invite the Chief Minister to come to the table and represent his people in the discussions.

    Andrew Mackinlay

  33. I want to put to you what is going to happen. I shall tell you what the game plan is and you can say I am completely wrong on all four counts, because if I am right I shall throw Hansard back at you. The first thing is that these discussions are very conveniently going to conclude, wham, bam, at the time of the parliamentary recess, so there will be no statement to the House of Commons. Secondly, there will not be a referendum and I shall tell you why there will not be a referendum, because the satisfactory conclusions of the discussions are going to fall short of sovereignty. Spain will have moved on a bit and you will not have conceded sovereignty in accordance with the terms of the replies you have given to Sir John Stanley and others today, so there will be no need, will there, for a referendum? Thirdly, there will be no primary legislation. Fourthly, any amendment to the Constitution will be done by Order in Council on which we are lucky to an hour and a half=s debate. Am I wrong on four counts?
  34. (Mr Hain) Yes. I disagree with my good friend Andrew on every point. No, there will be no agreement in the middle of the recess. Yes, of course the House of Commons will be fully consulted; of course it will. Yes, if any agreement is reached, and I do not know whether it will be reached, though we are pretty optimistic, then yes, there will be a referendum. Finally, if we did reach an agreement which covered sovereignty questions, and I do not know whether that is possible or not, but if we did, not only would there be a referendum in Gibraltar but of course there would have to be primary legislation in Britain as well.

  35. Just in passing, it is the same Government which told me that it was neither possible, nor should it happen that the franchise should be extended to the people of Gibraltar. That is this Labour Government. Now they are having to do it, not virtuously but because they have no alternative because the courts have told them to do it. My next question is this. You heard me say to the Chief Minister that Gibraltar is being traduced, I personally believe on the spin of the Foreign Office, but certainly the Parliamentary Private Secretary actually referred to smuggling in a broadcast in the past few days. You have heard his rebuttal of this. I put it to you, and this is your opportunity to say where you disagree with the Chief Minister, that, no doubt there is smuggling, there is smuggling in Tilbury, but there is not smuggling in the sense of a great scandal, no worse than elsewhere and it is containable. Secondly, the police are your responsibility not his, there is general fulfilment of European Union directives and the financial sector is as he has described. Is that right? We can stop all this humbug, this traducing by innuendo about the stewardship both of the Governor, who is your appointment, and the Chief Minister and his colleagues?
  36. (Mr Hain) I remember a little while ago driving up the Spanish coast, going onto Gibraltar and back off again across the border and then further eastwards and thinking how much easier it would be to smuggle things into Spain via a boat pulled up on the beach than somehow to pull a boat up onto the Rock where there was no beach and then get it through the border. That was my impression. If you were to invite my opposite number, the Spanish Europe Minister, Ramon de Miguel to give evidence to you - and I dare say he might even be prepared to do so - he would go on to you at length about smuggling.

  37. But what do you think?
  38. (Mr Hain) I am actually telling you what I think. My Private Parliamentary Secretary was expressing one of the criticisms the Spanish make of the Gibraltar Government absolutely consistently and they cite a lot of evidence which I have never seen about smuggling and it is an issue in the discussions and it does relate to good relations between Spain and Gibraltar. This is why it is important to get people round the table and discuss these issues.

  39. You cannot abdicate responsibility. You either have to say here today C
  40. (Mr Hain) I have seen no evidence on smuggling myself.

  41. No evidence whatsoever.
  42. (Mr Hain) I have seen no evidence.

  43. Why can you not be more generous than that and say everything is satisfactory, both the stewardship of the Governor, whom you appoint, and the local legislature are fulfilling their duties and obligations.
  44. (Mr Hain) I keep asking for evidence. The Spanish keep saying and producing lots of figures.

  45. Why so grudging? Why can you not repudiate the Spanish evidence. Why can you not tell them in the nicest possible terms. You are not being fair to British citizens.
  46. (Mr Hain) I would prefer to concentrate on what we ought to keep our eye on here and that is trying to resolve aggravation between Spain and Gibraltar - both ways, complaints made both ways - and the harassment which takes place at border controls, all of those issues which aggravate the people of Gibraltar and if I were living there I should also be aggravated by them. The way you get over these issues is by getting people round a table. That is the way to deal with it, that is what we are doing.

  47. Finally, why will you not agree to this matter being adjudicated at the International Court of Justice, the point of law, whether or not the overriding international law is the United Nations Charter which deals with the principles of self-determination, as distinct from the Treaty of Utrecht which gives Spain the right of first refusal? Why will you not agree to it being referred for resolution?
  48. (Mr Hain) The British Government did actually offer to put the sovereignty issues to the International Court of Justice in 1966, under a Labour Government, but the rules of the ICJ, and we have seen no basis to suggest that has changed in the interim period, are that both states affected - because remember there is a joint treaty between Spain and Britain over Gibraltar, both European states - have to agree to that referral and Spain has not agreed to that.

  49. Could you ask them again nicely?
  50. (Mr Hain) I do not think there would be any point.

  51. So you will not do it.
  52. (Mr Hain) Let us get away from Awon=t do@ things. What we have to do is concentrate on the business of serious government - not posing and putting questions which we know are not capable of resolution in that form - of negotiating politically to find a way forward which will liberate Gibraltar from its historic restrictions and difficulties and aggravation, give it a bright future, give the people of Gibraltar more self-government, which they ought to have. That is a fantastic prize and I do not understand why anybody around this table, whether or not they have visited Gibraltar, or the Government of Gibraltar, are not with us in that enterprise.

    Sir Patrick Cormack

  53. As one who has visited Gibraltar, not as a guest of the Gibraltar Government but as a visitor to Gibraltar privately, who has seen the impediments to progress placed by Spain, terrible difficulties getting across the border and all the rest of it, queue in a car to do that, may I just put one very simple point to you? Are you prepared for these negotiations at the end of the day to result in the British Government upholding the status quo?
  54. (Mr Hain) In the end, if we cannot reach an agreement with Spain and preferably with the Government of Gibraltar, or in the Brussels process, if that breaks down, the status quo will prevail. Let me remind you, what that status quo is. It is a status quo of continual aggravation across the border, all the things the Chief Minister complains to me about quite legitimately almost weekly.

  55. But not caused by Britain and not caused by Gibraltar.
  56. (Mr Hain) Continuous aggravation but also action by the European Commission of the kind he has recently referred to because of the EU=s code of conduct on tax and illegal state subsidies and illegal competition and so on. That case has continued, the Government of Gibraltar is before the Court of First Instance at the present time as a result of action by the Commission. That action is continuing. We have already had two suspensions; they were not exclusions. We would not agree to exclusions, but in the interests of the air safety of us all, including Gibraltarians we had to accept the suspension from the Single Sky. It actually makes very little if any practical difference to life in Gibraltar, nor does the other exclusion, but those things are in prospect in the future. What do we as a responsible Government do? Do we just say let all of that continue, let our dispute with Spain as a close partner in NATO, in the European Union, on vital issues of economic reform, which affect jobs and prosperity and business confidence here in Britain, on the fight against international terrorism, all this area where we have a common national interest and a common agenda with Spain? Do we allow all of those issues to have continual difficulty there or do we sit down and see whether we can find a solution? I am astonished that anybody can disagree without sitting down to try to find a solution. That is what we did in Northern Ireland. We produced dialogue, we got an agreement. I am just asking for the chance to do it again over Gibraltar, in quite different circumstances I understand, and I cannot for the life of me understand why the representatives of the people of Gibraltar or anybody on this Committee or in this House cannot support that basic elementary principle that dialogue is better than a war of words or all the aggravation which we have seen for so long and is still in prospect if we do not produce an agreement.

    Mr Illsley

  57. The answer to that is because nobody knows what is going to be contained in the dialogue, we cannot see any options for a result and it is that uncertainty which is causing the problems. I just want to ask a couple of questions. The first one is in relation to the suggestion that perhaps Spain is being rewarded for its intransigence in blocking EU directives, in using the European Union to forward their claim to Gibraltar. You began your remarks by saying that pressure was put on the UK at the Gothenburg EU Council.
  58. (Mr Hain) And on Spain.

  59. In other words, from other EU partners. If that is the case, perhaps the Chief Minister is right when he says that Spain=s policy was to engineer that result within the European Union, to frustrate everybody so that the Brussels process was brought into being. How do you answer that, that Spain has been rewarded, bearing in mind that obviously Gibraltar is looking for the status quo or self-determination? The only benefit likely to come out of this Brussels process, if the thing does move forward, is for Spain.
  60. (Mr Hain) Actually the only positive things which have come out of the Brussels process are to the benefit of the people of Gibraltar. First of all, Spain has dropped its opposition to our insistence on giving the people of Gibraltar the right to vote in the European elections. That is why we have been able to proceed. Secondly, an extra 70,000 telephone lines have been offered, more than triple the existing ones. That is a second benefit for the people of Gibraltar which never happened before. Thirdly, Spain has offered additional health facilities within its borders to the people of Gibraltar on a scale which cannot be provided on the Rock itself. Three tangible benefits already as a result of the discussions which have only lasted a few months. Just look at what could be in prospect for Gibraltar if we can continue these discussions. The rewards have been for the people of Gibraltar.

  61. That answer throws up another question. The right of the Gibraltarians to be part of the European Union and to vote in European Union elections was as a result of the Matthews case which I understand went before the European Court. You have just said that Spain has withdrawn its objections to the people of Gibraltar voting. Are you saying that Spain objected to the court decision and were not going to allow the UK to implement it?
  62. (Mr Hain) No, I am saying that there were two routes by which we implemented it. We either implemented it at an EU level or we implemented it through changing our domestic legislation.

  63. But the court case was against us. Why do we have to ask Spain?
  64. (Mr Hain) The fact is that you are talking about an amendment to the Treaty, therefore you require unanimity to do it. That is one route.

    Andrew Mackinlay

  65. That is not what Mr Vaz said incidentally.
  66. (Mr Hain) I am speaking for myself. The second route is the one with Spain=s acquiescence which we followed. The outcome is the same: the people of Gibraltar getting what they are entitled to. We have delivered it. It has come as a result of the relationship which has been built in the last few months. I think that ought to be cheered; I think that ought to be welcomed by the Committee, as, to be fair, you did, Chairman.

    Mr Illsley

  67. We do welcome it and it is something we argued about the last time we considered this, but the way you just presented that tended to suggest that Spain were even willing to contest a court decision against us which required us to give Gibraltarians a vote as though we were going cap in hand to the Spanish and asking them to let us implement a court decision in which the court found against us.
  68. (Mr Hain) It is a matter for the Court of Human Rights, but it is important for everybody round the table just to bear in mind - and I am not attempting to justify it at all; as a Government Minister responsible I have to deal with the facts as I find them - that just as there is passionate feeling in Britain about our longstanding relationship with Gibraltar and passionate feeling in Britain, which I share, that Gibraltarians should have the right to remain British citizens if they want to, whatever arrangements they agree to in a referendum for their future, so there is passionate feeling in Spain about its historic claim to the Rock. There is. We may not like it, the people of Gibraltar may resist it, may be angry about it, but the fact is that we are dealing with a Spanish Government which would not get support in its own Parliament unless we were embarking on the kind of discussion which we are. As a result of that, against the tide of exactly the kind of popular pressures in the rest of Spain that the Chief Minister faces from his own people in Gibraltar, we have persuaded Spain to make these three important advances for the people of Gibraltar. That is three wins for Gibraltar out of the process so far.

  69. I think we shall have to agree to differ on that. I want to come to another, very brief, question. Was there any reason why the Government decided to resurrect the Brussels process and negotiate with Spain on the future of Gibraltar? The reason I ask that is because you began your replies by saying the Government were looking for a new future for Gibraltar, new ways, clear thinking, new thinking. If that was the case, why could we not have a different process from the Brussels process? Why resurrect something which was last used in 1984? Why not simply get all three parties around the table, no pre-conditions, just talk about Gibraltar and everybody with an equal participation?
  70. (Mr Hain) The Brussels process is one which has been recognised by agreements, not just by the European Union but by both the Spanish and British Governments for some years now and has been a process of attempts to make progress over that period. It is a recognised forum. I do not think people should be obsessed with the label. I do not think they should be paranoid about the history. The truth is that when we talk, as we have done and as we could do with the Chief Minister if he did not leave an empty chair, that discussion, that negotiation, is open, no vetoes are brought by anybody. We have so far made progress in respect of the three items I mentioned. There could be further progress and that is why I put the simple question again: why not join the discussions because there is an enormous opportunity for Gibraltar if you do.

  71. The other point is in relation to whether primary legislation will be required. It just struck me that if the end result of this were an amendment to the Treaty of Utrecht, the process for ratifying treaties would not require primary legislation in the House of Commons.
  72. (Mr Hain) There is the 1969 legislation; yes, an Order in Council. If we got an agreement - if we got an agreement - if that were backed in a referendum, if legislation then followed, as it would have to do both in Spain and in Britain, we would obviously want to have legislation. You could not do this under Royal Prerogative or any kind of sleight of hand like that. May I just add that an amendment to the European Communities Act would be necessary as well, because it would change the status of Gibraltar under the European Treaty?


  73. Which could only be done by primary legislation.
  74. (Mr Hain) Indeed.

    Mr Hamilton

  75. May I be rash and put this to you? Spain is interested in one thing and one thing only and that is to regain sovereignty over Gibraltar. It is not really interested in what the people of Gibraltar think at all. It certainly would not recognise any referendum which was taken in Gibraltar itself because that is its primary aim and that is what all these discussions are about. Could you respond to that?
  76. (Mr Hain) I do not recognise that description at all from the discussions we have had. First of all, Foreign Minister Piqué said at his press conference that he accepted that Britain was going to hold a referendum and that he would abide by the result. There was no alternative for him. Indeed in our discussions that has been an accepted fact. Spain has an historic claim to full sovereignty, just as the people of Gibraltar, or many of them, want full independence. Neither of those are achievable, nor could they be the outcome of the discussions to which we are party. We have to look for a different alternative, show a bit of creativity, show a bit of flexibility, try to get people to show a bit of give and take and modernise their thinking. This is a dispute which has gone on for too long. It is very similar in that respect to Northern Ireland. How did we solve Northern Ireland or at least move it in a huge direction forward? By getting people round the table, thinking in new ways, throwing off their old prejudices and fears and trying to come to terms with a modern Europe, which is changing very fast, and we do not want to see Gibraltar left behind on that.

  77. Are there any circumstances in which you would ask the UK Parliament to pass legislation which would change the sovereignty of Gibraltar against the wishes of the people of Gibraltar? Are there any circumstances?
  78. (Mr Hain) The logical sequence must be, surely, that there is a referendum and if the referendum says yes, then there is primary legislation.

  79. Then it is not against the wishes of the people of Gibraltar. The question really was whether you would consider any circumstances against the wishes of the people of Gibraltar.
  80. (Mr Hain) I cannot see how primary legislation, which it would have to be for the reasons that European treaties have to be amended amongst other things, could be put through the House of Commons or the House of Lords and Parliament as a whole without a referendum authorising it from the people of Gibraltar. Indeed Spain recognises that because that has been spelled out in the discussions so far. In that sense, the people of Gibraltar do have their veto over the whole process, but that does not stop us trying to make progress. What I do object to, if I may say so - questions have been put very fairly and forcefully to me and I not mind that at all, that is the job of the Committee and it is my job to answer - what I object to is people thinking that the status quo is sustainable and failing to come up with an alternative. There is literally no alternative to what we are doing: trying to get everybody round the table and make progress.

  81. May I put another alternative to you, which I know has already been rejected by the Foreign Office in the past and that is doing what the French do with their former colonies and what the Spanish do with Teneriffe and Ceuta and Melilla and that is to make Gibraltar part of mainland Britain with its own Member of Parliament here, with all the laws we enjoy here being extended to Gibraltar, in other words making it exactly the same as mainland Great Britain?
  82. (Mr Hain) The difference between Ceuta, for example, which was passed formally to Spain under the Treaty of Lisbon in 1688, and Gibraltar which was a subject of a Treaty of Utrecht in 1713 is that in that Treaty it was jointly agreed between Spain and Britain that sovereignty would be vested with Britain unless Britain relinquished that fully, in which case Spain would have first refusal on it. That is what the difference is. That is one of the reasons why we are grappling with an entirely different situation. I can say as a matter of policy in addition, even if that were not the case, that it is not this Government=s policy to integrate Gibraltar with the rest of the United Kingdom. It is not and nor will it be.

  83. Why not?
  84. (Mr Hain) For the Treaty reasons I have given, that is not possible. Secondly, in modern Europe, to have a territory off the Spanish mainland, indeed linked to the Spanish mainland, some 1,800 miles from Britain somehow integrated into mainland Britain is not what the modern Europe is about. The modern Europe and Gibraltar=s place in it could be about an open border, people going freely across that border, Gibraltar=s businesses probably being the financial hub of the entire region, prospering in the entire region, Schengen arrangements, Common Customs Union arrangements and all the rest of it. Modern Europe and certainly this British Government are not about seeking to bring a territory into the United Kingdom=s ambit. That is not really where we are and I am really surprised that this is suggested.

    Mr Pope

  85. I am taken with this idea of comparison with Northern Ireland and the peace process and the run-up to the Good Friday agreement. It does strike me though that one of the differences is that no matter how unreasonable the different factions were in Northern Ireland they did all participate in the process. It seems to me that the Government of Gibraltar is being intransigent in not participating in the Brussels process, not exercising its voice. We have heard from the Chief Minister that he thinks they would be better of being represented by an empty chair. Do you think that is in Gibraltar=s interests?
  86. (Mr Hain) I do not; I really do not. Those discussions would be enormously enhanced in their quality and in their credibility if the voice of Gibraltar were heard at them. We could have a better outcome, we could have better quality discussion on a lot of the detail. It stands to reason that the elected representative of the people of Gibraltar is better able to express the voice of Gibraltar than a British Minister or a Spanish Minister. As you suggest, the comparison with Northern Ireland is instructive in that we have the same experience of Unionists refusing to talk to Nationalists, the same bitter enmity between those different groups as you now find between Gibraltarians and the Spanish, politically at least. We overcame it in that respect and we could overcome it in this respect as well with a bit of flexibility, a bit of modern thinking instead of sticking to past positions which get the people of Gibraltar nowhere very fast indeed.

  87. I certainly agree with the assertion that the status quo is not really sustainable in the long term. I also strongly believe that the status quo is not in the UK=s interests. I really do not think it is in Gibraltar=s interests. Presumably what is on offer here through the talks is a much more stable and secure future for Gibraltar than we have seen over the last ten years.
  88. (Mr Hain) I absolutely agree with that. The prize for Gibraltar is the sovereignty issue no longer impeding the proper development of Gibraltar economically, socially, in terms of human rights, democratically and in every other way. The prize is good relations with Spain. The prize is access to the Spanish market, to the European market as a whole. The prize is the European Union=s institutions supporting Gibraltar instead of Gibraltar seen as being caught in a dispute which stopped progress on matters like air safety and so on. That is a fantastic prize and it ought to be seized.

  89. A final question on a separate issue and that is tax. Last year OECD named Gibraltar as one of 35 tax havens which need to improve transparency with overseas investigators. We are aware of the longstanding allegations from the Government of Spain that Gibraltar engages in economic and fiscal dumping. I just wanted to know whether the UK can do something about that and if it can, will it?
  90. (Mr Hain) Gibraltar is involved in court action against the Commission, the Court of First Instance, at the present time as a result of actions which have been brought by the Commission for harmful state aids. This is another instance where if we had been able to negotiate a different situation and Gibraltarian compatibility and with EU codes in respect to taxation and other matters, then we could have got a lot more assistance from the European Union and from the Commission for Gibraltar, instead of the Commission feeling it was obliged to take action for what it regards as unfair tax practices and harmful state aids. Yes, that prospect could be a great prize for Gibraltar too.

    Ms Stuart

  91. In your opening remark you made the historic reference, that we are dealing here with an historic problem which has its roots 300 years ago. It is also becoming quite clear to many of us that there are very entrenched positions on both sides, some justifiable, some unjustifiable. You also made reference to possibly needing some kind of new thinking. May I fly a kite with you? If Spain is in some areas as intransigent as it seems to be, like not producing evidence on smuggling, what would you say to a suggestion that we say to them that there are some comparisons to be made between the position of Gibraltar and Britain and to some of the territories in Morocco, despite the fact there are historic differences? Why do Spain, Morocco, Britain and Gibraltar not sit round the table and talk about territories as a way of breaking the deadlock?
  92. (Mr Hain) I have enough problems on my patch.

  93. It would make it very easy.
  94. (Mr Hain) Gibraltar, issues in Europe, Afghanistan, sanctions busting in Angola and Sierra Leone let alone dealing with the problem of Ceuta. I will not take that on board frankly. I am not seeking to defend the situation either. I am seeking to modernise the whole of the world frankly, which is a longstanding ambition of mine which I am sure will have the unanimous backing of the Committee. On the narrow issue of smuggling, if I may be so bold as to suggest it, I think there might be a case for inviting my Spanish counterpart and hearing his argument on all these matters. Perhaps it would improve understanding on it. Yes, there are bitterly entrenched positions, a lot of them totally unjustifiable, but it is the job of Government and the duty of a responsible Minister to seek to overcome them. I do not need this. The Foreign Secretary does not need this. We could continue with the status quo, continue getting weekly phonecalls from Gibraltar about this complaint or that complaint, continue to be appalled about border delays, continue to be irritated by EU business being hampered by the dispute between us and Spain. The duty of this Government is to try to resolve it. That is what we are honestly trying to do. If we are unable to do it, at least we shall have tried.

    Sir John Stanley

  95. On more than one occasion you have asserted that the status quo is not sustainable. Why do you believe that is the case?
  96. (Mr Hain) For reasons I have given, because of the aggravation facing Gibraltar, because of the stance of the European Union which wants to see the interests of all Europe=s citizens on matters like air safety, including flights to Gibraltar enhanced, our safety and security enhanced, matters like this. All sorts of issues are actually impeded by the dispute which continues to exist between London and Madrid over Gibraltar and including Gibraltar. We ought to try to resolve this triangular dispute. It is not sustainable, it is not sustainable at all. If we walked away from our duties here, life would become worse for the people of Gibraltar. It would not become better. We are trying to make it better. I cannot for the life of me understand why we are criticised for trying to give the people of Gibraltar a better life.

  97. May I put to you another view for your response? The present situation has been sustained over a long period. The reason why the aggravation to which you referred continues is because this present Government, any more than the previous Conservative Government, is not prepared to stand up straight and to use its legal powers which it has as a member of the European Union to enforce compliance by the Spanish Government with its legal obligations towards Gibraltar in relation to free movement of people, free movement of goods and the economic union. Is it not about time that this Government, as the previous Government in my view should have done, takes its position that it is not prepared to tolerate another Member State of the European Union engaging in economic sanctions against a British dependency?
  98. (Mr Hain) First of all, I find the sanctions, as you describe them - your words, not mine - as being just as objectionable as you do. Why have successive governments not done that, including your own? Why have we not done that? If it were so easy, we could just have gone to the courts. It not so easy. Take the question of telephones, for example. The Chief Minister asserted that this could be resolved by court action. I am not sure that it could. Gibraltar does not put VAT on its telephones. The Spanish continuously complain that if they ceded all of Gibraltar=s rights over telephones - and we put Gibraltar=s case very strongly directly over the negotiating table - in effect they would be setting up a telephone tax haven as it were to take over and compete unfairly with their own telephone operators. There are all sorts of issues like that which are not as simple as they sound and not capable necessarily of being resolved by court action. There is an additional argument here, which is that these things are not best sorted out by lawyers, with all due respect to lawyers, and my own boss is a lawyer, as is the Chief Minister, as is the Chairman, so I am treading on difficult ground here. I do not think they are best sorted out by lawyers or judges in courts. They are best sorted out by political discussion and negotiation and agreement. You are dealing with historically fiercely entrenched views, like you were in Northern Ireland and you solve them by talking.

  99. You have made a lot of parallels with Northern Ireland and we are all wise in this business to be fairly distrustful of parallels because every situation is different, but as you put one parallel on the table, may I offer another one for consideration? The Falklands. We have probably the best relations with Argentina in relation to the Falklands now because following the failure of the previous Government=s diplomatic policy towards the Falklands we proceeded with Argentina on the basis that sovereignty was off the table and that we would talk about anything with Argentina but we would not talk about the sovereignty of the Falklands. May I ask you, before deciding to go down the present path, whether the Government gave serious consideration to saying that the Brussels process initiated by the previous Conservative Government was fundamentally misconceived and we should proceed in our dialogue with Spain on the clear understanding that sovereignty is off the table?
  100. (Mr Hain) One of the many differences involved, apart from the fact that the Argentinians actually invaded the Falklands, one of the very many differences involved, is that Gibraltar and Britain and Spain are part of the European Union and that imposes quite different obligations on us all, a quite different approach to life and even the Conservative Government, our predecessors, even the Chief Minister, as he told you only a little while ago and as he has consistently said publicly, agree that sovereignty will be on the table. I do not think anybody disputes that. Spain would not come to the discussions unless it could at least raise its sovereignty issues. May I just clarify one other benefit of the Brussels process, since I am reminded of it. The reason that the Chief Minister was able to meet Carlos Bastarreche the very senior official in the Spanish Foreign Office was because I set it up as a result of the Brussels process meetings. I said I thought it was important for them to talk to each other. That meeting followed directly. I phoned the Chief Minister and I phoned Carlos Bastarreche and I got them talking to each other. That meeting was a very productive one. It lasted many hours. There was no agreement, but you would not expect there to be. It started dialogue. The next stage of that dialogue could be another meeting with him or it could be a meeting at a higher ministerial level; another product, another win for Gibraltar out of the Brussels process. Dialogue wins over a war of words or over all the other aggressive actions we have seen in this context.


  101. In our sixth report in the session 2000-2001 we urged the Government to rebut, refute inaccuracies of fact in relation to Gibraltar put forward by the Spanish Government. We know a number of those have related to smuggling, you have received no evidence; we know a number of those relate to financial controls. Can you give examples as this Committee sought, where the Government has stood up for Gibraltar and refuted inaccurate statements made by the Spanish Government?
  102. (Mr Hain) I did so only in the House on 7 November when I complained about border delays and about the denial of telephone access. I have done so publicly in Gibraltar.

  103. And smuggling?

(Mr Hain) We had a very intense conversation with the Spanish about smuggling and we have said we object to the imposition of border controls as a result of allegations they make about smuggling. They come back to us equally fiercely and we shall continue to put that argument. I have seen no evidence of smuggling.

Chairman: We have had two robust statements today. We thank you very much indeed for clarifying the position.