House of Commons - Foreign Affairs

Select Committee on Foreign Affairs Eleventh Report

GIBRALTAR

1. In July 2001, the British and Spanish Governments relaunched talks on Gibraltar under the Brussels Process.[1] During November 2001, reports in the media suggested that the United Kingdom was prepared to consider agreeing to share sovereignty over Gibraltar with Spain.[2] It was in the light of these renewed talks, and their possible outcome, that we heard evidence on 28 November 2001 from Peter Caruana, Gibraltar's Chief Minister, and Peter Hain MP, Minister of State at the Foreign and Commonwealth Office (FCO).[3]

2. In the following months, relations between the British Government and the Government of Gibraltar appeared to be becoming increasingly strained. As well as tension over the direction of the Brussels Process talks themselves, and the decision by Mr Caruana not to attend these talks, there were also a number of accusations made against the Gibraltar Government, not directly related to the talks, some of which emanated from Whitehall. On 16 April 2002, Peter Hain spoke during Parliamentary Questions in the House of "a pensions scam that is down to the Government of Gibraltar".[4] In a press release, the Government of Gibraltar responded by describing Mr Hain's comments as "disgraceful and outrageous ... unbecoming any Minister of the Crown, let alone one who is duty bound to represent and protect Gibraltar's interests".[5] In early June, the Chief Minister was moved to accuse the British Government of "a pathetic and crude attempt to smear Gibraltar for political purposes".[6]

3. In January 2002, when visiting Madrid as part of our regular series of visits to countries holding the EU Presidency, we held discussions on Gibraltar with Spanish Government Ministers and with our counterparts in the Cortes. On 20 May 2002, we met Peter Caruana informally at Westminster. On 19 June, we heard oral evidence from the Foreign Secretary, Jack Straw MP and from James Bevan, Director for South-East Europe and Gibraltar at the Foreign and Commonwealth Office.[7] We visited Gibraltar from 30 June to 2 July, meeting the Chief Minister, the Governor and a range of other local leaders and representatives. A full list of those we met can be found at Annex ??. We are most grateful to those we met, as well as to the Governor and his Deputy for the programme they arranged for us during our visit to Gibraltar. We have received a substantial quantity of written evidence, which is published together with this Report.[8]

4. In this Report, we look first at how the Brussels Process talks have been handled by the British and Gibraltarian Governments, and where the talks might lead, particularly in the light of the Foreign Secretary's statement to the House on 12 July 2002, that "the principles that should underpin a lasting settlement ... include the principle ... that Britain and Spain should share sovereignty over Gibraltar".[9] We assess the British Government's efforts to enfranchise the people of Gibraltar for the next European parliamentary elections, and the validity of its criticisms of the Government of Gibraltar over pensions and statistics. We then look at some of the means through which Spain has continued to exert pressure on Gibraltar—telephone and aviation restrictions and border controls, in particular—and the extent to which the renewed Brussels Process has led to progress, or otherwise, in these areas. Finally we consider two fields which are crucial to Gibraltar's economic and political future: financial services and defence.

5. This Report builds on those of the last Parliament. Our predecessor Committee produced a thorough Report on Gibraltar in June 1999,[10] including an extensive historical background, followed in July 2000 by a follow-up Report with recommendations.[11] A further substantive Report was published in April 2001.[12]

Joint sovereignty and the renewed Brussels Process

RECENT HISTORY

6. In 1984 the United Kingdom and Spain agreed the Brussels communiqué, which provided for "the establishment of a negotiating process aimed at overcoming all the differences between them over Gibraltar". It was made clear at the time that "both sides accept that the issues of sovereignty will be discussed in that process".

7. Infrequent but regular meetings under the Brussels Process continued throughout the 1980s and 1990s, but with little progress. On 10 December 1997, at the last meeting under the Brussels Process before the Process was relaunched in July 2001, the then Spanish Foreign Minister, Sr Matutes, proposed joint British and Spanish sovereignty over Gibraltar—the Matutes proposals. Throughout the period between December 1997 and July 2001, the British Government conspicuously declined to reject the Matutes joint sovereignty proposals, saying instead that the British response would be made at the next Brussels Process meeting. As the then Minister for Europe, Joyce Quin, said in the House on 4 March 1999 "We have made clear that we will respond to Sr Matutes' proposal at the next meeting of that process [the Brussels Process]. The Foreign Secretary confirmed to Sr Matutes that we were happy to have such a meeting."[13] The Government took the same position in its response to the Foreign Affairs Committee's Fourth Report on Gibraltar in October 1999.[14]

8. On 22 June 2001, the Foreign Secretary announced in the course of a general debate in the House on Foreign Affairs and Defence that "We shall pursue a range of contacts, including bilateral contacts with Spain, on ... issues relating to Gibraltar, including the continuation of the Brussels process."[15] On 10 July, Europe Minister Peter Hain formally announced the resumption of the Brussels Process talks:

We discuss below in some detail the reasons for and implications of the Gibraltar Government's absence from the talks.[17] When the Foreign Secretary and his then Spanish counterpart, Josep Piqué, "relaunched" the Brussels Process on 26 July 2001, they "underlined their intention and political will to overcome all their differences over Gibraltar."[18] This time, the question of sovereignty was not only to be "discussed", it was widely understood to be an integral part of the negotiations with Spain.

9. After their first meeting under the relaunched process in November 2001, the British and Spanish Governments issued a joint communiqué, in which they announced that their aim was to reach "a comprehensive agreement" by the summer of 2002, which "will cover all outstanding issues, including those of co-operation and sovereignty."[19]

The content of a British-Spanish agreement

10. On 12 July 2002, following further meetings under the Brussels Process, the Foreign Secretary outlined in a statement to the House of Commons the principles on which the United Kingdom and Spain were in broad agreement as the basis for a settlement. These were:

"that Britain and Spain should share sovereignty over Gibraltar ... including the disputed territory of the isthmus; that Gibraltar should have more internal self-government ... that Gibraltar should retain its British traditions, customs and way of life; that Gibraltarians should retain the right to British nationality, and should gain the right to Spanish nationality as well ... that Gibraltar should retain its institutions—its Government, House of Assembly, courts and police service; and that Gibraltar could, if it chose, participate fully in the European Union single market and other EU arrangements."[

11. The Foreign Secretary also set out those areas in which agreement had yet to be reached:

"We and Spain have not yet resolved all differences. In respect of the duration of co-sovereignty, we must have a permanent settlement. Co-sovereignty cannot be just a stepping stone to full Spanish sovereignty, however long delayed. I know and understand that Spain has a long-standing historical aspiration to regain full sovereignty one day, but any agreement between us and Spain must be permanent. Gibraltar must have certainty. As for the British military facilities, we have made it clear that our current arrangements should continue. Unless we and Spain can resolve the outstanding issues, there will plainly be no agreement."

The original aim was to reach an agreement by the summer of 2002, but there have been no further meetings since 25 June. On 9 July 2002, a new Spanish minister for foreign affairs was appointed.

12. It is now clear that for most, if not all, of the year between the relaunch of the Brussels Process on 10 July 2001 and the Foreign Secretary's statement on 12 July 2002, joint sovereignty was under discussion between the British and Spanish Governments. There were extensive and continuing reports in the media to this effect. In November 2001, the Financial Times reported:

In January 2002, the Daily Telegraph reported

However, despite the continuing press reports that joint sovereignty was under discussion, together with repeated Questions in both Houses of Parliament, Ministers refused to acknowledge that this was indeed the case until the Foreign Secretary's Statement of 12 July 2002.

13. We conclude that Britain's negotiating position with Spain could not have been prejudiced by the British Government disclosing on, or shortly after, the relaunching of the Brussels Process in July 2001 that joint sovereignty over Gibraltar was under discussion as the Spanish Government was already fully involved in those discussions. We further conclude that the refusal of Ministers to make such a disclosure represented a serious failure in their accountability obligations to this Committee and to Parliament.

14. We are in no doubt that, as things stand, support within Gibraltar for any form of Spanish sovereignty over the territory of Gibraltar or its people is practically non-existent. Claims by the Foreign Secretary that a settlement involving joint sovereignty would represent a "great prize" for Gibraltar apparently do nothing to increase that support.[23] Peter Caruana has put it to us

that:

15. Joe Bossano, the leader of the opposition in Gibraltar and a former Chief Minister, is also opposed to any form of shared sovereignty, and has written that "the UK should drop its attempt to reach an agreement with Spain on the terms that have been suggested, especially in the knowledge that it will be rejected by us and, if anything, generate a worsening of relations with our neighbours than exist at present".[25] Dr Joseph Garcia, leader of the Liberal Party, the other party represented in the House of Assembly, has written to us in a similar vein, that "there is no support in Gibraltar for the route down which the present British Government has embarked".[26] Indeed, it is hard to find anyone in Gibraltar who supports the way the latest round of the Brussels Process talks has been conducted, let alone an outcome involving shared sovereignty.

16. Peter Hain has told the House that "the status quo is not sustainable, because Gibraltar's relations with Spain are abnormal and will remain so if the status quo prevails".[27] True or not, such remarks have been interpreted by the Chief Minister as "threats":

status quo

17. When British politicians attempt to convince the people of Gibraltar that an agreement involving joint sovereignty would bring them benefits, this is perceived by some as 'bribery'. When British politicians attempt to convince the people of Gibraltar that the current situation is unsustainable, this is perceived by some as 'blackmail'. We conclude that it will be a long time, if ever, before any agreement based on the principles outlined by the Foreign Secretary to the House on 12 July 2002—including joint sovereignty—can be made acceptable to the people or to the Government of Gibraltar.

Obtaining the consent of the people of Gibraltar: proposals for a referendum

18. Since the outset of the talks, the Foreign Secretary has insisted that there is "no question of any change in sovereignty against the wishes of the people of Gibraltar".[29] His words echo those of the Preamble to the 1969 Constitution of Gibraltar, which states "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." There has nonetheless been considerable concern in Gibraltar as to what the British and Spanish Governments might agree or put into effect, short of passing over sovereignty, without the explicit consent of the people of Gibraltar. The Chief Minister put his concerns to us in November 2001:

19. In subsequent months, it became clearer by what process the British Government intended to bring any British-Spanish agreement to the Government and people of Gibraltar. In June 2002, the Foreign Secretary explained:

20. It also became clear that a 'no' vote in such a referendum would prevent an agreement from being implemented:

21. The Foreign Secretary was thus envisaging a two-stage process: first, a bilateral agreement between the United Kingdom and Spain establishing the principles on which a detailed solution would be based; second, further negotiations between the British, Spanish and Gibraltar Governments to work out the details of a workable arrangement. Only the second stage (the detailed negotiations), not the first (the statement of principles), would be put to the people of Gibraltar in a referendum.

22. There are profound and unanswered questions begged by this blueprint, which appears to us to be unrealistic. Would the Gibraltar Government be prepared to participate in tripartite negotiations based on a structure to which it profoundly objected? What is the point of asking the people of Gibraltar to approve detailed proposals if they almost unanimously reject the principle on which those proposals are based?

23. The Gibraltar Government has concerns of its own: notably that if, first, the British Government enters into a joint declaration of principles with Spain and, second, the people of Gibraltar reject the implementation of those principles in a referendum, then that joint declaration might nonetheless "retain the status of an agreed Anglo Spanish declaration of the political principles applicable to the solution of the Gibraltar problem".[33] The Gibraltar Government's objection to the current talks is that an agreement between the United Kingdom and Spain, even if not implemented, will "set and limit the parameters of what is possible for us in the future, legitimises the Spanish sovereignty claim for all time in the eyes of the international community and will amount to a total betrayal of our right to self determination".[34] The Gibraltar Government is also concerned that in the event of a joint agreement, any referendum might not be conducted by the British Government for several years, a possibility it regards as "unacceptable".[35]

24. On 25 July 2002—a short time after the Foreign Secretary's announcement that the British Government was seeking a solution involving joint sovereignty with Spain—the Chief Minister announced that the Gibraltar Government would organise its own referendum on the principle of joint sovereignty, to be held on 7 November. The Foreign Secretary's response has been that the referendum result "will be there but it won't make any difference ... it is an eccentric and rather expensive idea to tell us what we knew already".[36] We observe that it is a curious notion of democracy that the British Government should agree to the principle of joint sovereignty, but should not give the people of Gibraltar the chance to accept or reject this principle, because it already knows that they are opposed to it. It is therefore quite understandable that the Government of Gibraltar should have decided to hold its own referendum. We reject the Foreign Secretary's view that it is "eccentric" for the Government of Gibraltar to hold its own referendum. We consider that in British Overseas Territories it is of great importance that democratic expressions of view should take place when territories themselves so determine. We recommend that the British Government take full account of the views of the people of Gibraltar as expressed in the referendum held on 7 November.

SHOULD JOINT SOVEREIGNTY HAVE BEEN NEGOTIATED WITH SPAIN?

25. In his statement of 12 July 2002, the Foreign Secretary began by explaining why he had "relaunched" the Brussels Process:

"We did so because we had reached the same conclusion as our predecessors—that the status quo was damaging to Gibraltar, and also damaging to Britain. It is damaging to Gibraltar because Gibraltar will not thrive while the dispute festers and its people have to put up with everyday disruption: queues at the border, insufficient telephones lines, inadequate air services and much else. Moreover, Gibraltar has an uncertain future in isolation from the European Union's single market and the global marketplace, and as tax havens are phased out.

The dispute is also damaging to Britain's interests because we are trying to build a strategic alliance with Spain to help deliver the European Union that we both seek, and because Spain has repeatedly blocked European measures we want—measures, for example, to make air travel safer, flights cheaper and delays shorter.

Above all, the dispute affects the 30,000 Gibraltarians; but it also affects 60 million Britons. It needs to be solved for good. I know that there are those who think we should simply tackle the practical irritants faced by Gibraltarians, but that has been tried for decades and it has failed. The only way of securing a stable and prosperous future for Gibraltar is through a comprehensive and permanent settlement of the dispute, and that means an agreement with Spain on all issues including—as flagged up by the Brussels communiqué itself in 1984—sovereignty."

The Foreign Secretary failed to point out the difference between the 1984 Brussels Process talks—when sovereignty was one of several subjects for "discussion"—and the 2001 Brussels Process talks, when the principle of joint sovereignty was negotiated between Britain and Spain.

26. While the official opposition in Gibraltar has been opposed to the principle of discussions with Spain on sovereignty, this has not been the position of the Gibraltar Government, which "wishes to engage Spain in a process of dialogue provided that it is both safe and properly structured".[37] In the event, the Gibraltar Government has not participated in the Brussels Process talks, for reasons we discuss below, but this was not a certain outcome when the talks were relaunched.

27. The British Government is often keen to stress that Spain has changed greatly since the years of the Franco régime, that it has become more open, accountable and democratic, and that Gibraltar has nothing to fear from an agreement on joint sovereignty. This picture of Spain—accurate in so many respects—would be more easily accepted in Gibraltar if Spain had not for over 30 years been responsible for a range of discriminatory and unreasonable measures against Gibraltar, such as excessive border controls, air and maritime restrictions, and limited telephone access.[38] These measures continued to have effect during the talks, with few concessions: the opening of an extra lane at the border, increased access to Spanish healthcare facilities, and an offer relating to telephone lines which proved on closer examination to be far less generous than it at first appeared.[39] We conclude that, without a prolonged period of wooing the people of Gibraltar, it was surely unrealistic of Spain to expect any change on their part.

28. As for the United Kingdom Government, it was not in any way obliged to place the question of joint sovereignty over Gibraltar on the negotiating table, but it must have concluded that it was in its interests to do so. Certainly, a resolution of the ongoing dispute with Spain would improve bilateral relations with one of the United Kingdom's most important allies and would facilitate an harmonious and productive relationship within the European Union and NATO. By agreeing to place the question of joint sovereignty on the negotiating table, the Government was able to create a more positive climate for discussions with Spain on the many other issues of concern to the people of Gibraltar. Arguably—although this is not an argument which finds favour in Gibraltar—by bringing about an end to Spain's sanctions against the people and territory of Gibraltar, an agreement would be in the interests of Gibraltar too.

29. It could also be said that it was in the Government's interests to negotiate over joint sovereignty even in the expectation that the negotiations would fail, in order to demonstrate its commitment to improving relations with Spain and to place the responsibility for rejection of joint sovereignty firmly on the Government and people of Gibraltar. However, we stress that we have received no evidence which would confirm this hypothesis. We are concerned that the whole process will have a damaging effect on British-Spanish relations. It was clear from our conversations in Madrid that Spanish expectations were aroused that could not be

satisfied.

30. It might be suggested that the Government should have foreseen that in agreeing to negotiate the status of Gibraltar it was walking down a blind alley. It must have been clear to Ministers that the people of Gibraltar were—to say the least—very unlikely to agree to joint sovereignty, even assuming agreement could be reached with Spain. They can hardly have been surprised when the details of such an agreement proved to be impossible to conclude, with the result that relations with Spain have not improved to the extent that the Government would have wished, while the petty restrictions imposed by Spain on Gibraltar remain in place.

31. We conclude that the Government was wrong to negotiate joint sovereignty, when it must have known that there was no prospect whatsoever that any agreement on the future of Gibraltar which included joint sovereignty could be made acceptable to the people of Gibraltar, and when the outcome is likely to be the worst of all worlds—the dashing of raised expectations in Spain, and a complete loss of trust in the British Government by the people of Gibraltar.

THE GIBRALTAR GOVERNMENT'S NON-ATTENDANCE AT THE TALKS

32. The Chief Minister has consistently maintained that he is willing to participate in dialogue with Spain on any subject "provided that it is both safe and properly structured".[40] The British Government's position has been that the "safety and the dignity that Mr Caruana seeks"[41] is provided by the ongoing Brussels Process talks, through:

(i) the standing invitation to the Gibraltar Government to attend the Brussels Process talks (which the Gibraltar Government has declined) with a separate voice, but without the ability to veto proposals,

(ii) the intention of holding a second round of talks with the Gibraltar Government on implementing a British-Spanish framework agreement (which the Gibraltar Government has promised to boycott if it has not been given the veto it seeks in the first stage of talks[42]), and

(iii) the promise that a final agreement will be submitted to the decision of the people of Gibraltar in a referendum.

The Chief Minister disagrees, and he seems to be supported in this view by the great majority of the people of Gibraltar.

33. According to the Foreign Secretary, the British Government and Spain have agreed to the conditions for negotiation originally demanded by Peter Caruana, who has since imposed further conditions which are incompatible with meaningful negotiation:

34. Peter Caruana has vehemently denied the allegation that his demands have changed, both in person to us when we visited Gibraltar, and in the written evidence that he has submitted. He has presented us with substantial documentary evidence, showing that the Gibraltar Government's position that it should have a veto over all decisions and agreements affecting Gibraltar which might be reached at Brussels Process talks has been consistent since at least 1996.[44] We sent this evidence to the Foreign Secretary seeking his response, and he has not sought to contradict Mr Caruana.[45]

35. The Chief Minister has also roundly denied that his position is unreasonable, pointing out that "negotiations between three parties are always and necessarily on the basis that nothing is agreed unless it is agreed by all three parties, otherwise the negotiations are only between the two parties who can agree or withhold their agreement."[46] He also asserts that both Malcolm Rifkind and Robin Cook, the two Foreign Secretaries in office before Jack Straw, agreed to his demand for a veto, an assertion which appears to be supported by the evidence he has supplied.[47] (This would have been at a time when Spain had not agreed to Gibraltar's demand for a separate voice at the Brussels Process talks, and the Gibraltar Government's policy was not to attend such talks for that reason.)

36. Paradoxically, while the British and Spanish Governments are now eager for the Gibraltar Government to participate in the talks with its own distinct voice (albeit as part of a British delegation—hence the formula "two flags, three voices"), the British Government is no longer willing to allow the Gibraltar Government to exercise a veto to which it had apparently previously agreed.

37. Because Spain does not recognise the status or validity of the Gibraltar Government, it would have been politically impossible for Spain to conduct tripartite negotiations with the United Kingdom and Gibraltar separately represented, hence the formula of "two flags, three voices". Something similar could be at issue here, namely the difficulty that Spain would have in seeking the agreement of a Government it does not recognise. If Gibraltar is not represented at the talks, then its veto is conveyed to Spain through a British negotiator, and Spain need not know if the veto is that of the British or of the Gibraltar Government. If, on the other hand, Gibraltar is represented at the talks, and it has a veto, this can easily be presented in the Spanish media as the Spanish Government accepting the legitimacy of the Gibraltar Government as an equal party.

38. Had it been the British Government's desire, however, it ought to have been possible to devise a discreet internal veto for the Gibraltar Government within the British delegation. It seems that what was at issue was not simply ensuring that the negotiations were acceptable to Spain. The British Government too has apparently decided that it is unacceptable for the Gibraltar Government to have a veto. The Foreign Secretary has indicated as much.[48] It appears, therefore, to be British as well as Spanish policy that the British and Spanish Governments should be able to reach agreement on matters concerning Gibraltar without the endorsement of the Gibraltar Government.

39. We have not seen an explanation of why, when it was apparently acceptable from 1996 until 2001 to allow the Gibraltar Government to have a veto, this is not now possible. We recommend that the Government in its response to this Report explain whether previous Governments had, as it appears from the evidence, made a commitment to the Gibraltar Government to seek the Chief Minister's specific endorsement before entering into any new arrangements affecting Gibraltar at the Brussels Process talks, and, if this is indeed the case, why the current Government decided not to renew that commitment.

40. A broader question is whether it would have been in the best interests of Gibraltar for the Chief Minister to have attended the Brussels Process talks under the conditions agreed by the British and Spanish Governments, albeit that these were not the conditions on which he had previously insisted and which had been contained in his political party's election

manifesto.[49]

41. The Gibraltar Government clearly believes that by attending the talks it would be appearing to legitimise not only the talks themselves, but also any resulting agreement, without actually having any power to accept or reject this agreement. By attending the talks, the Gibraltar Government might have been able to influence their outcome, but it also might have found itself associated with an outcome that it had tried unsuccessfully to influence. It could only have been in the best interests of Gibraltar for the Chief Minister to have attended the talks without a veto if he could have been certain that whatever the United Kingdom and Spain agreed at the talks would have been acceptable in Gibraltar. This would require an enormous amount of trust—trust which Spain had done little to earn, and which the British Government was fast losing. While we concede that a veto might well have been used by the Gibraltar Government to prevent any agreement from being reached, we conclude that it was politically impossible for the Gibraltar Government to participate in the Brussels Process talks without also having the power to limit the outcome of those talks.

HOW HAS THE GOVERNMENT HANDLED ITS RELATIONS WITH GIBRALTAR IN THE CONTEXT OF THE ONGOING TALKS?

42. As we have indicated above, relations between the British and Gibraltar Governments have deteriorated as the Brussels Process talks have proceeded and there have been mutual accusations.

1 ie. under the terms of the Brussels Agreement of 27 November 1984. See HC (1998-99) 366, paras 12-13. Back

2 eg. Financial Times, 20 November 2001. Back

3 Printed with the First Report from the Foreign Affairs Committee, Session 2001-02, Gibraltar, HC 413. Back

4 HC Deb, 16 April 2002, Col 453. Back

5 Government of Gibraltar Press Release, No. 64/2002. Back

6 Government of Gibraltar Press Release, No. 107/2002. Back

7 Published at pp Ev 1-Ev 9. Back

8 Ev 10-Ev 76. Back

9 HC Deb, 12 July 2002, col 1166. Back

10 Fourth Report from the Foreign Affairs Committee, Session 1998-99, Gibraltar, HC 366. Back