Examination of Witness (Questions 208-219)
HON. PETER
CARUANA QC
5 MARCH 2008
Q208 Chairman: Good morning, Chief
Minister. We are pleased to see you. Will you introduce your colleagues
before we begin?
Peter Caruana: On my right is
Richard Armstrong, my senior principal private secretary. John
Reyes, on my left, is one of my private secretaries.
Q209 Chairman: As you know, we are
carrying out an inquiry on the Overseas Territories and we thought
that it was important to have evidence on the record from Gibraltar.
Committee members visited Gibraltar last year, so there has been
a recent visit. Obviously, that was some months ago so it will
be useful for us to have an update.
I want to ask you about the progress on the
Cordoba agreement. Before I come to that, are you satisfied with
the recent meetings of the trilateral forum and the outcome of
those?
Peter Caruana: Yes, it is important
to see the trilateral process as the political architecture or
structure of dialogue and the Cordoba agreements as simply the
first fruits of that. Committee Members will know about this because
many of them—indeed, the Committee collectively—were
instrumental in assisting us to fight for the terms that we eventually
obtained in the trilateral forum: that Gibraltar should have its
own voice, that it should be there on an equal basis and that
it should be free from agreements imposed on it against its wishes.
All three of those terms were secured and are
explicit in the Chevening agreement of December 2005, which set
up the terms and conditions of the trilateral forum. My Government
have been advocating that process of dialogue since 1996. We were
therefore overjoyed when we eventually secured it and put the
unacceptable aspects of bilateralism between London and Madrid
concerning our affairs behind us.
The Cordoba agreements were a bold political
investment by all three Governments because of the new way of
handling the political relations and the political issue between
Gibraltar and Spain. The UK lubricated the process and contributed
quite a lot of money to one element of it, namely, the pensions
agreement. The Governments of Gibraltar and Spain were also reasonably
bold by the standards of what was acceptable to their various
electorates at that time on some of the other issues, such as
the airport agreement, the frontier issue and the telephones issue.
All three Governments contributed an important
measure to make possible the Cordoba agreements, which in one
broad brush stroke removed from the table three or four of the
most emblematic, representative manifestations of the difficulties
of the previous 30 years. Of course, the fundamental difference
is not gone.
Q210 Chairman: We will come on to
the details and some of the specific points in a moment. Before
I bring in my colleagues, may I ask how the agreement and the
trilateral forum are perceived generally within the House of Assembly?
Is this just the position of your Government, or is there broad
consensus and support for what is happening?
Peter Caruana: In small places,
and Gibraltar is no exception, consensual government is not easy,
as you witnessed on interviewing the Leader of the Opposition
not long ago. The Government lead and try to secure as much support
as possible from opposition parties, but the support that matters
is among the electorate in the country. The Government cannot
go too far from that. The Government have to lead. If they want
to do so, they must be willing to put some distance between themselves
and public opinion, otherwise they are not leading. However, there
must not be too much distance because then we would not be leading
for very long.
The Cordoba agreements have been welcomed overwhelmingly
by the people of Gibraltar. Even many supporters of the opposition,
while not voting for us simply because we made the Cordoba agreements,
would nevertheless privately acknowledge—and indeed have
privately acknowledged—that the Cordoba agreements and the
trilateral process have been hugely successful not just for Gibraltar,
but for the general dynamics of our relations with our neighbour.
Q211 Mr. Horam: Chief Minister, one
of the specific aspects of the Cordoba agreement is that you can
now use Spanish airspace. As one who once experienced a rather
dodgy take-off from Gibraltar myself, is that working satisfactorily?
Is it safer and better now?
Peter Caruana: Yes, it is working
better. Discriminatory air restrictions are no longer in operation.
Aircraft flying in over the bay now take a much wider arc and
fly much closer to Algeciras. There is a proposal, in the context
of the airport agreement, that aircraft should fly straight in,
from above Algeciras and that area, on what is called a straight-in
approach, but that is subject to technical study and environmental
assessment.
Q212 Mr. Horam: What is the point
of that?
Peter Caruana: The point of that
is that you would avoid the L-shape altogether as you came in
through the bay. You would just descend from over the other side
of the bay.
There is much misunderstanding about the airport
agreement. It is not an agreement about shared control or jurisdiction
over the airport. The airport remains an exclusively British sovereign
territory. The agreement says that it remains under the exclusive
jurisdiction and control of the UK and Gibraltar authorities.
The management of all governmental, authoritative and statutory
functions of the terminal remain exclusively in the hands of the
Gibraltar Government.
Q213 Mr. Horam: What about immigration,
for example?
Peter Caruana: That remains exclusively
in the hands of the Gibraltar Government as well. Some concessions
have been made to Spain, of a non-political kind, in order to
make the airport more convenient, but without any loss of jurisdictional,
governmental authority or control on the part of Gibraltar and
the UK over such issues. For example, passengers entering the
terminal via its entrance adjacent to the Spanish frontier will
be treated the moment that they step across the frontier line
straight into the terminal building as air-side passengers in
transit. They will not, as a matter of administrative concession
by the Gibraltar Government, be subjected to immigration control
on entering Gibraltar, simply because they are walking 30 yards
into the airport. That is an administrative concession and the
agreement says that the Gibraltar Government, if circumstances
require, can remove that and revert to controls.
Then there are passengers flying to and from
Spanish destinations—for example, a flight from Gibraltar
to Madrid. Madrid is inside Schengen, Gibraltar is outside the
Schengen frontier chapters, as is the UK. We have agreed to do
something there because, importantly, when the aircraft arrives
in Madrid, the passengers will have mixed—those who entered
the aircraft from Gibraltar and those who originated in Spain.
We have been able to get around all passengers, including the
Spanish ones, having to be readmitted into Schengen by doing what
you do here now at St. Pancras—it used to be at Waterloo—on
Eurostar. Advance Schengen entry clearance is given in Gibraltar
by Spanish officials who are not physically in Gibraltar. The
passenger is in Gibraltar—I will explain the architecture
in a moment, which is interesting—but the Spanish official
is not. That is unlike the French and Belgian immigration officials,
who give advance Schengen entry clearance to you here at St. Pancras
station—they are actually situated in British sovereign
territory. That is not the case in Gibraltar airport. The Spanish
officials will be sitting on their side of the frontier line.
The corridor runs parallel to the frontier line, so the passenger
will always be on the Gibraltar side and the Spanish official
always on the Spanish side. It is an extraordinary piece of architecture,
but there it is.
That is what we have done, but there is absolutely
no question—I think you may have been left with the wrong
impression a few weeks ago—of Spanish immigration officials
exercising any form of control over entry into or exit out of
Gibraltar. What they are doing is giving Gibraltar passengers
advance Schengen entry clearance, and deferred Schengen exit clearance,
which is also required under the Schengen acquis.
There is no customs, by the way. I heard it
said recently that some of these arrangements affected customs
as well as immigration control. That is not the case. The arrangements
apply only to immigration control. There is nothing in any of
the Cordoba agreements about those aspects of customs control,
so customs control would carry on as normal.
Q214 Mr. Horam: Finally in this area,
will the new terminal provide value for money?
Peter Caruana: Value for money
has to be measured against various factors. You could say, "Do
I need it today? Do I need to invest in this facility today for
the demand that there is today?" The answer to that is probably
no, we could get away with a smaller airport for the use that
we put it to today, but public investment in expensive public
infrastructure that takes six or seven years to build is about
long-term vision. It is about what you think the demand will be.
In other words, you want growth space, too. We think that Gibraltar
airport will be an important part of the transport, social and
economic infrastructure not just of Gibraltar's future, but of
the future of the neighbouring parts of Spain immediately on the
other side of the border. We think it is a very good, sound, visionary
investment. Oppositions rarely share the visions of parties in
government, and my opposition are no exception to that rule.
Q215 Sir John Stanley: Chief Minister,
I understand that as far as aircraft are concerned, the Cordoba
agreement dealt only with civil aircraft. I should be grateful
if you could tell us whether any process is ongoing or contemplated
whereby there are plans to ensure that the indefensible restrictions
applied so far by the Spanish on the use of Spanish airspace by
NATO aircraft landing in or taking off from Gibraltar are removed,
as they should have been many years ago.
Peter Caruana: As you rightly
say in your question, Sir John, the Cordoba agreement dealt only
with civil air traffic—of all sizes, not just small aircraft.
It delivers for Gibraltar a normal EU airport subject to the obligations
of, and enjoying the benefits of, all EU liberalisation, open
skies directives in so far as civil aviation is concerned. Those
of you who are long-serving members of the Committee or who are
interested in the affairs of Gibraltar will know that a historical
grouse of ours has been that we were excluded from EU aviation
measures and did not therefore benefit from free movement. All
that has been swept away. The Cordoba agreement converts Gibraltar
into a normal British, European airport subject to the whole EU
regime.
What the agreement does not do, which is the
point of your question, is deal with the military side at all.
I think it is the view of Madrid and probably also of London,
although I have not actually asked, that defence relations are
a matter between them and not something that is my constitutional
competence or responsibility. It was not part of the agenda of
the Cordoba agreement on aviation, but I agree with the sentiment
that I think your question underlines, which is that Spain and
the United Kingdom have been for many years NATO allies; Gibraltar
is British sovereign territory by valid and binding, as far as
Spain and the UK are concerned, international treaty; and there
is no justification for Spain treating the British military any
differently from the military of any other of her NATO allies.
Spain does not dispute that Gibraltar is properly,
in law, British territory. Therefore, this is not disputed land.
She has a political claim to the return of Gibraltar sovereignty,
but she does not dispute the fact that in proper international
law, she ceded sovereignty to Britain in perpetuity and therefore
it is undisputed British sovereign territory. In those circumstances,
there is no justification, in my humble opinion, for Britain to
be treated in the way that we are discussing. I remember that,
when the late Robin Cook was Foreign Secretary, we came very close
to this being unravelled, but in the end, in bilateral discussions
between the UK and Spain, that did not materialise. I was not
privy to that, but I know that we came close at that time.
Sir John Stanley: Chairman, I wonder
whether we could have a note from the Foreign Office in answer
to the particular question I have raised.[1]
Chairman: I am sure that we can pursue
that with the Foreign Office after this evidence session. Sandra
Osborne.
Q216 Sandra Osborne: Chief Minister,
may I ask you about the pensions deal? Do you think that it is
satisfactory and fair, and do you believe that the UK should be
worried about the cost? The National Audit Office has estimated
that it will come to £100 million, but Mr. Bossano gave evidence
to this Committee that it was more likely to be in the order of
£250 million. What is your view on that?
Peter Caruana: Can I come to the
cost? I will give you the correct figures in a moment. The answer
to the question of whether it was a worthwhile deal has various
dimensions. I do not think that it lends itself to the treatment
simply of how much it cost, and whether it is too much or too
little.
There was also a political aspect to the deal
over Gibraltar, which was a huge obstacle to improving relations
between the United Kingdom, Spain and Gibraltar. This Committee
has looked in depth in the past into the pensions question and
made certain recommendations, to which I believe the UK Government
have been faithful. The Committee recommended that the British
Government should try to resolve the pensions issue and I think
that the Government did that.
The political aspect was that the decks needed
clearing to make the trilateral process possible, and all the
agreements have flowed from that. There was also an EU legal challenge,
which could have been far more expensive than the actual pension
settlement.
What is more, Spain had a parallel claim. Members
of the Committee will know, I am sure, in which case, shut me
up straight away, Mr. Chairman, that there are rules in Europe
whereby people who have worked in a host country and contributed
to its social security scheme, but who then return home to retire
in their own home country must be provided with health services
by the home country where they live. However, the home country
can then make a claim on the social security system of the host
country where the person worked, to recover that cost. I am not
sure whether I have made myself clear; I may have done.
Spain had such a claim, and tabled it in respect
of the thousands of Spanish workers who have worked in Gibraltar,
not least in the royal naval dockyard over the years. That claim
was settled and bought off as well. It could have been substantial,
because, as you know, there is an EU tariff—a certain amount
of money, which is not just so much money for the worker but is
upgraded for the worker's family. So there was a significant claim
in addition to that for pensions, in relation to the health service,
that was also negotiated away by this pensions settlement.
Of course, there was also the historical aspect
of how the matter arose. The problem was brought upon Gibraltar's
social security system by the UK Government back in 1982, in the
face of warnings from the then Gibraltar Government that what
they were doing should be prevented, but they did not listen.
All those aspects provide the backdrop and the various dimensions.
Remember, the settlement related to the question
of increases. The UK Government have effectively been paying Spanish
pensions since 1986 at frozen rates, as the Leader of the Opposition
told you when he was here. The deal was therefore about two things.
I must correct the Leader of the Opposition in respect of a couple
of the points he made, but the main essence of the deal was about
unfreezing the pensions for Spanish pensioners. Indeed, that permitted
us to unfreeze it for our own pensioners as well, which we did.
On the cost, let me give you the figures, which
I am sure you are most anxious to have. The UK Government said,
"Look, we will pay you an amount in compensation," which
the Leader of the Opposition described as discriminatory arrears
payment—completely politically opportunistically and erroneously,
in my view. The UK Government said, "We will give you compensation
if you will leave the scheme altogether." The Leader of the
Opposition told you that the only thing the Spaniards had to do
to achieve the payment was to agree to have the money sent to
a bank account, as opposed to coming to Gibraltar to collect it
in person. That is not the case. In return for this lump sum payment,
those who opted for it from among the Spanish payments had to
physically leave the Gibraltar statutory scheme. They had to cease
to be a member of it and to have any claim under Gibraltar statutory
pensions law altogether, which the vast majority did. I think
from memory—please do not hold me to this figure—that
fewer than 100 Spanish pensioners have stayed in the Gibraltar
scheme. The rest are no longer Gibraltar pensioners at all. That
was what the lump sum was for. That is what happened and that
is how the agreement describes it.
The lump sum element for that cost the UK Government
£25.25 million. Because they are now no longer Gibraltar
pensioners entitled to pensions under the Gibraltar scheme, a
special UK fund administered by Crown agents has now been set
up, and our information is that the ongoing cost of that—not
per annum—is £49 million for the frozen element and
£48 million for the uprating and future increases. I think
that you are looking there at £100 million for the future
and £25 million for the historical element. Some of that—£50
million—was already there. It is not the result of Cordoba;
the result of Cordoba is the £25 million for the historical
element and the £50 million for the future uprating. The
second £50 million for the future would have been paid, even
without Cordoba, because that is what Britain has been paying
since 1986—the frozen element. You could argue that Cordoba
has cost the British taxpayer £75 million.
Chairman: Thank you—that is very
helpful and comprehensive. No doubt we can pursue this in correspondence
with the Government to see if they give us the same figures.[2]
Q217 Mr. Pope: Relations have clearly
been transformed since the Cordoba agreement. We have heard about
the improved flights, and the border situation is a lot easier
and the phone line problems have been resolved. That is to be
welcomed. However, have these improved relations with Spain been
damaged by Spain's arrest last year of the Ocean Alert 3.5 miles
off Gibraltar and the whole Odyssey Marine Exploration saga?
Peter Caruana: I do not think
that it is had damaged relations because one of the main gains
for all sides of the trilateral forum is that it has established
a degree of normality of contact and relationship between the
three Governments. When you have contact and a relationship it
is easier to manage problems when they arise. All countries have
problems and issues with each other and Gibraltar and Spain, having
not been the exception to the rule, are not suddenly going to
become the exception so that there are no issues between us. We
are more likely to have such issues than other countries, but
now we have a political architecture that allows us to telephone
each other. I speak regularly to Spanish Ministers and Spanish
foreign office officials. There is thus the means to manage issues
when they arise. Spain will not stop doing things that she thinks
are important for the protection of her fundamental position on
the sovereignty dispute, just as we will not stop doing things
that are fundamentally important to us on our position on our
sovereignty and self-determination. The difference now is that
we pick up the phone and distil the issues to the minimum for
either side. In the case of the Odyssey, Spain did what she felt
she had to do to protect her national interest. The rest is subject
to political management. That is one of the great achievements.
We thoroughly oppose what Spain did as regards
the Odyssey. That is not because she sought to enforce her national
domestic heritage preservation legislation, which she is free
to do, and not even because she misbehaved in terms of enforcing
her laws in international waters, which is a matter for the UK,
as we do not strut around on that sort of global stage. Our concern
is that Spain was asserting that she was entitled to arrest the
Odyssey where she did not because they were international waters
but because they were Spanish waters. That boat was in the three
miles of water that are beyond Gibraltar's three British miles.
Spain was saying: "As we don't recognise that the first three
miles are under British sovereignty, therefore the next three
miles can't be anything other than Spanish. We think the first
three miles are Spanish, not British, and if the first three are
Spanish, then because Spain claims 12 miles, the next three and
the next six after that are Spanish too." Our objection to
the Odyssey saga was that, indirectly, Spain was denying the British
sovereignty of the first three miles. What Spain does outside
our territorial waters is of relative lack of interest to me,
except to the extent that it impinges on the sovereignty of my
three miles.
Q218 Mr. Pope: That is interesting,
because when we were in Gibraltar in the summer I understood that,
if you leave aside the first 3 miles and go into the 9 miles beyond,
Spain is now claiming a dog-leg of territorial waters surrounding
Gibraltar. Is not the answer to that, surely, that we should extend
our territorial waters 12 miles out from Gibraltar? We do that
with quite a few of our other Overseas Territories. That would
resolve the situation, would it not? It would resolve it from
your point of view if we were to do that. What is the view of
your Government?
Peter Caruana: Yes, it would certainly
resolve one issue; whether we would create different ones is a
matter for diplomatic balance sheet calculations. The position
of Gibraltar is simple. Gibraltar runs roughly on a north to south
axis. On the western side of Gibraltar—the Bay of Gibraltar—there
would be no point in extending beyond the 3 miles, because we
do not even have that now; the median line runs down the middle
of the bay, which is less than 3 miles, so you could extend it
to 200 miles in that direction and you would achieve nothing at
all. On the other side—for those of you who know Gibraltar,
the Catalan bay and the Mediterranean, rather than the bay side—you
could theoretically go 12 miles. In the straits, you could not
even go to 12 miles, although you could probably go to six, because
the straits are also subject to a median line calculation. The
straits of Gibraltar are only 15 km of water, so you could not
actually go 12 miles into the straits, but you could certainly
go more than three. You could go 12 miles on the eastern side
of the Rock.
We have no economic or social need for more than
3 miles of territorial water. There are some countries that claim
50 miles of territorial waters. Spain could do exactly the same
between 12 and 15 miles as she did between 3 and 6 miles if she
wanted to. That would not resolve the issue. The underlying fundamental
issue is that Spain claims that Gibraltar has no sovereign territorial
waters—a claim that is unsustainable, because there is a
1982 United Nations convention on territorial waters, which gives
every spot on the planet the treaty right to territorial waters
for a minimum of 12 miles. Spain subscribed to that treaty, making
no reservation whatsoever in relation to the Gibraltar question.
International law makes Spain's denial of territorial waters in
Gibraltar completely unsustainable in law. To us, that is the
important question.
Q219 Mr. Pope: It is a de facto recognition.
I thought that the Spanish were very clever, or certainly astute,
in making sure that they did not detain the Ocean Alert within
3 miles—it was 3½ miles.
Peter Caruana: I think that they
were politically astute. I honestly do not believe that in the
Odyssey saga Spain was motivated by any Gibraltar, still less
anti-Gibraltar, dimension. The respect for possible Spanish shipwrecks
lying in an unknown position somewhere near her coastline obtained
a huge domestic political dimension in Spain; it acquired a huge
momentum and the Spanish Government and authorities were responding
to that. It had Gibraltar manifestations and there were certain
issues that we had to do our best to safeguard, which we did,
but this was not an intervention by Spain that was in any sense
driven by her politics towards Gibraltar, it was driven by her
politics towards her own heritage conservation.
Chairman: Can we now move on to Fabian
Hamilton, please?
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