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‘Brexit’ Vote Stokes Fear on the Rock ‘Brexit’ Vote Stokes Fear on the Rock
(about 9 hours later)
GIBRALTAR — A referendum in June over Britain’s membership in the European Union has generated an intense debate, with recent opinion polls suggesting the outcome is too close to call.GIBRALTAR — A referendum in June over Britain’s membership in the European Union has generated an intense debate, with recent opinion polls suggesting the outcome is too close to call.
But in Gibraltar, a British territory at the tip of the Iberian Peninsula, nobody seems to question European Union membership. Only a handful of people attended a recent rally by anti-union campaigners visiting from London. The only badge worn by residents here bears a simple and clear message: “I’m in.”But in Gibraltar, a British territory at the tip of the Iberian Peninsula, nobody seems to question European Union membership. Only a handful of people attended a recent rally by anti-union campaigners visiting from London. The only badge worn by residents here bears a simple and clear message: “I’m in.”
If anything, the referendum has helped unite Gibraltar’s political parties and 33,000 inhabitants around the fear that this unique place — a British low-tax jurisdiction bordering Spain and within sight of North Africa — could face more uncertainty than the rest of Britain should voters choose to leave the European Union, or “Brexit” as Britain’s possible exit has been nicknamed.If anything, the referendum has helped unite Gibraltar’s political parties and 33,000 inhabitants around the fear that this unique place — a British low-tax jurisdiction bordering Spain and within sight of North Africa — could face more uncertainty than the rest of Britain should voters choose to leave the European Union, or “Brexit” as Britain’s possible exit has been nicknamed.
Spain has never stopped contesting British sovereignty over Gibraltar. Though Madrid is in the middle of political turmoil and faces new elections in June, the conservative government of Spain’s acting prime minister, Mariano Rajoy, has said enough to convince people in Gibraltar that a threat to close the border to isolate the territory is real.Spain has never stopped contesting British sovereignty over Gibraltar. Though Madrid is in the middle of political turmoil and faces new elections in June, the conservative government of Spain’s acting prime minister, Mariano Rajoy, has said enough to convince people in Gibraltar that a threat to close the border to isolate the territory is real.
José Manuel García-Margallo, Spain’s foreign minister, said in March that if Britain left the union, Spain would require “co-sovereignty” with Britain for maintaining Gibraltar’s access to the European Union market. In practice that would require flying the Spanish flag on the Rock, the dominant feature of this promontory of 2.6 square miles.José Manuel García-Margallo, Spain’s foreign minister, said in March that if Britain left the union, Spain would require “co-sovereignty” with Britain for maintaining Gibraltar’s access to the European Union market. In practice that would require flying the Spanish flag on the Rock, the dominant feature of this promontory of 2.6 square miles.
Gibraltar stands as a case where the European Union, for all its shortcomings, has acted as something of a salve for a lingering dispute over territorial sovereignty between two members. Removing it runs the risk of reviving old conflicts.Gibraltar stands as a case where the European Union, for all its shortcomings, has acted as something of a salve for a lingering dispute over territorial sovereignty between two members. Removing it runs the risk of reviving old conflicts.
Even the mitigating influence of the European Union has not prevented Spain from occasionally creating significant problems for Gibraltar in recent years by enforcing stricter customs controls, leaving people and vehicles waiting for hours to cross the border.Even the mitigating influence of the European Union has not prevented Spain from occasionally creating significant problems for Gibraltar in recent years by enforcing stricter customs controls, leaving people and vehicles waiting for hours to cross the border.
Fears of even greater disruption are widely shared among the 10,000 workers who commute daily to Gibraltar from nearby Spanish towns, an economically depressed area collectively known as the Campo de Gibraltar that is home to 267,000 people.Fears of even greater disruption are widely shared among the 10,000 workers who commute daily to Gibraltar from nearby Spanish towns, an economically depressed area collectively known as the Campo de Gibraltar that is home to 267,000 people.
Some of Gibraltar’s concern about the referendum have to do with how Gibraltar entered the European trade bloc in the first place. Some of Gibraltar’s concerns about the referendum have to do with how Gibraltar entered the European trade bloc in the first place.
When Britain joined the European common market in 1973, a precursor to the union, Gibraltar negotiated a special deal reflecting its isolation and precarious situation.When Britain joined the European common market in 1973, a precursor to the union, Gibraltar negotiated a special deal reflecting its isolation and precarious situation.
Four years earlier, in 1969, the dictatorship of Francisco Franco that ruled Spain closed the border with Gibraltar, leaving Gibraltar reliant on supplies and funding from Britain — similar to the Berlin airlift the United States conducted during the Cold War, said Fabian Picardo, the chief minister of Gibraltar.Four years earlier, in 1969, the dictatorship of Francisco Franco that ruled Spain closed the border with Gibraltar, leaving Gibraltar reliant on supplies and funding from Britain — similar to the Berlin airlift the United States conducted during the Cold War, said Fabian Picardo, the chief minister of Gibraltar.
The result was that Gibraltar was granted something of a hybrid European membership. As a free port, it was excluded from Europe’s customs union, allowing it to build up its trading and services activities on advantageous transit and taxation terms.The result was that Gibraltar was granted something of a hybrid European membership. As a free port, it was excluded from Europe’s customs union, allowing it to build up its trading and services activities on advantageous transit and taxation terms.
Once Spain returned to democracy and fully reopened the border in 1985, Gibraltar’s economy gained. In recent years, it has been a standout example of economic growth in southern Europe, even withstanding the euro debt crisis. “We’ve got to thank Franco for something,” Mr. Picardo joked.Once Spain returned to democracy and fully reopened the border in 1985, Gibraltar’s economy gained. In recent years, it has been a standout example of economic growth in southern Europe, even withstanding the euro debt crisis. “We’ve got to thank Franco for something,” Mr. Picardo joked.
Britain secured control of Gibraltar in the Treaty of Utrecht in 1713. To this day, the British government handles Gibraltar’s defense and international relations, while Gibraltar’s government has significant autonomy over trade and industry issues, as well as the ability to set its own tax rates, including a 10 percent corporate tax that is half that of Britain’s.Britain secured control of Gibraltar in the Treaty of Utrecht in 1713. To this day, the British government handles Gibraltar’s defense and international relations, while Gibraltar’s government has significant autonomy over trade and industry issues, as well as the ability to set its own tax rates, including a 10 percent corporate tax that is half that of Britain’s.
After the release of the Panama Papers — a huge leak of documents from a Panamanian law firm working for the world’s wealthy to keep their money offshore — Spain renewed its accusation that Gibraltar functions as a tax haven. That claim is firmly denied by Gibraltar.After the release of the Panama Papers — a huge leak of documents from a Panamanian law firm working for the world’s wealthy to keep their money offshore — Spain renewed its accusation that Gibraltar functions as a tax haven. That claim is firmly denied by Gibraltar.
Miguel Ferre, the Spanish secretary of state for budgetary issues, said in an interview in April with ABC, a Spanish newspaper, that “the goal is that there is no territory left that can be considered fiscally opaque, in particular Gibraltar.”Miguel Ferre, the Spanish secretary of state for budgetary issues, said in an interview in April with ABC, a Spanish newspaper, that “the goal is that there is no territory left that can be considered fiscally opaque, in particular Gibraltar.”
Gibraltar, however, says that it developed financial services, as well as a big online gambling sector, thanks to fiscal incentives similar to those used by Ireland and some other European countries.Gibraltar, however, says that it developed financial services, as well as a big online gambling sector, thanks to fiscal incentives similar to those used by Ireland and some other European countries.
Gibraltar’s location, at the entrance of the Mediterranean Sea, has also made it an obvious hub for bunkering — where ships avoid docking costs and instead refuel and change crews off Gibraltar’s coast.Gibraltar’s location, at the entrance of the Mediterranean Sea, has also made it an obvious hub for bunkering — where ships avoid docking costs and instead refuel and change crews off Gibraltar’s coast.
Four-wheel-drive vehicles made by Toyota that are used by the United Nations and other nongovernmental organizations in Africa travel through Gibraltar to be customized, without entering the European Union and having to comply with European regulations.Four-wheel-drive vehicles made by Toyota that are used by the United Nations and other nongovernmental organizations in Africa travel through Gibraltar to be customized, without entering the European Union and having to comply with European regulations.
“Gibraltar has a unique status within the European Union,” said John Isola, the vice president of the Gibraltar Chamber of Commerce. “Our whole economic model is based on the sales pitch that you can take advantage of low tax and an Anglo-Saxon legal system and then sell services to European countries.”“Gibraltar has a unique status within the European Union,” said John Isola, the vice president of the Gibraltar Chamber of Commerce. “Our whole economic model is based on the sales pitch that you can take advantage of low tax and an Anglo-Saxon legal system and then sell services to European countries.”
That marketing pitch would suffer should Britain leave the union. Gemma Vasquez, a corporate lawyer who is coordinating the pro-union campaign Gibraltar Stronger in Europe, said investors were already growing wary.That marketing pitch would suffer should Britain leave the union. Gemma Vasquez, a corporate lawyer who is coordinating the pro-union campaign Gibraltar Stronger in Europe, said investors were already growing wary.
“We are drafting clauses into contracts to say that, if Brexit would happen, it would be an element of force majeure,” she said, which would limit investors’ liabilities and obligations should Britain leave the union.“We are drafting clauses into contracts to say that, if Brexit would happen, it would be an element of force majeure,” she said, which would limit investors’ liabilities and obligations should Britain leave the union.
Gibraltar’s membership in the union, Mr. Picardo argued, has protected Gibraltar from Spain’s conservative government by ensuring that Europe opposes any sanctions that would violate its treaty obligations. Gibraltar’s membership in the union, Mr. Picardo argued, has protected it from Spain’s conservative government by ensuring that Europe opposes any sanctions that would violate its treaty obligations.
But, he said, “if we denuded ourselves of the protection of the treaties, it really would be down to, ‘Who is in charge in Madrid?’ ”But, he said, “if we denuded ourselves of the protection of the treaties, it really would be down to, ‘Who is in charge in Madrid?’ ”
Yet, should Spain squeeze Gibraltar, it would also significantly hurt Spaniards like Miguel Valencia, 51, who crosses from the border town of La Línea de la Concepción every day to work for a Gibraltar beverage distributor.Yet, should Spain squeeze Gibraltar, it would also significantly hurt Spaniards like Miguel Valencia, 51, who crosses from the border town of La Línea de la Concepción every day to work for a Gibraltar beverage distributor.
Mr. Valencia said he had recently been retraining as an electrician and had done some odd jobs in Spain “just in case I lose this job and really need to find work in Spain.”Mr. Valencia said he had recently been retraining as an electrician and had done some odd jobs in Spain “just in case I lose this job and really need to find work in Spain.”
Mr. Valencia said that his father had once worked for the same company in Gibraltar, but that he lost his job in 1969, when Franco’s government pressed Spanish sovereignty claims and closed the border.Mr. Valencia said that his father had once worked for the same company in Gibraltar, but that he lost his job in 1969, when Franco’s government pressed Spanish sovereignty claims and closed the border.
“It was a major blow, especially since my father was our family’s only breadwinner,” Mr. Valencia said. “If that happened again, when you look at Spain’s labor situation now, it could be even harder to find another job than it already was for him then.”“It was a major blow, especially since my father was our family’s only breadwinner,” Mr. Valencia said. “If that happened again, when you look at Spain’s labor situation now, it could be even harder to find another job than it already was for him then.”