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As Chief Minister Fabian Picardo flew to Brussels again to negotiate a post-Brexit treaty for Gibraltar’s border with Spain, there were fears on both sides that things could get worse, suggesting there are still challenges ahead.
Details remain scarce on the outlines of the agreement, which is described as a “general political line”.
But amid the information blockade, the British worry they may effectively give up control of their Gibraltar border, while the Spanish worry the deal will lock in Gibraltar’s status as a tax haven.
The local mayor fears that Gibraltar will effectively “colonize” the Campo area as the region becomes increasingly economically dependent on Gibraltar.
read more: Spain and UK agree ‘general political line’ on post-Brexit Gibraltar deal
Chief Minister Fabian Picardo insisted nothing in the agreement would infringe Gibraltar’s sovereignty.
However, Spanish Foreign Minister José Manuel Alvarez inadvertently revealed that negotiators had agreed to the “joint use” of Gibraltar airport – a red line for previous governments.
It is thought that such a compromise would remove the hard border between Spain and Gibraltar in exchange for relocating the Spanish border checkpoint to the airport.
A parliamentary select committee has warned that the move could leave British sovereignty over Gibraltar “in name only”.
Picardo clarified that “joint use” means different things to English speakers than Spanish speakers, a statement that Albarez has retracted.
“What we are talking about is the creation of a mobility zone between Gibraltar and Schengen for the people of the Schengen area, as a common migration space and a common travel area,” the Chief Minister said.
However, Spain’s biggest concerns go far beyond the use of the airport.
The Campo de Gibraltar’s economic livelihood has become increasingly dependent on its neighbors, with about 15,000 people entering Gibraltar from Spain every day.
The Popular Party (PP) has been sceptical about the possibility of reaching a deal acceptable to Spain, adding: “It is possible to have a deal, but not just any deal.”
The right-wing party likened discussions on creating a “shared prosperity zone” between Gibraltar and Campo de Gibraltar to a Miss World contestant wishing for “world peace”.
Key issues that Spanish observers believe have not been resolved include tobacco smuggling, pensions and the erosion of Gibraltar’s status as a tax haven.
Antonio Sanz, a military minister, called the income inequality between the two regions “shocking” and called for the Campo region to be given special tax status to allow it to compete.
“The agreement must promote the development of Campo de Gibraltar economically and socially and reduce the social, economic and fiscal gap with Gibraltar,” he said after a meeting with Alvarez and the mayor of Campo.
But when the gap that needs to be reduced starts at €16,000 GDP per capita in Campo and ends at €76,000 per capita in Gibraltar, even a compromise is unacceptable to Picardo and his government.
Sanz stressed the challenges still facing negotiators and warned that it would be “impossible” to open the border as planned and allow for the free movement of goods and people while Gibraltar “has a corporate tax rate of 10% and Spain has 25%”.
In addition, the BJP said that abolishing routine checks on vehicles crossing the border would effectively legalize large-scale smuggling that exploits different VAT systems.
Picardo clarified that while there would still be no VAT, Gibraltar might introduce a “domestic transaction tax” to align with European practice.
“It does mean that we will be approaching tariffs in a different way, one that will be closer to European rates in order to have that liquidity,” he told GBC News.
Meanwhile, British MPs heard from a Westminster select committee that Foreign Secretary David Cameron and Picardo were preparing to accept a deal that would “seriously undermine British sovereignty”.
Currently, tourists arriving by plane can only land on British territory and on the ground can only be met by Spanish officials at the Spanish border.
But proposals to move Schengen controls to the airport itself have sparked fears that arriving Britons and Gibraltarians could be forced to undergo EU biometric registration without ever setting foot on Spanish soil.
Critics said the move could hand over control of the South China Sea rocks to the EU and leave British sovereignty in name only.
The European Scrutiny Committee cited these concerns in calling for a suspension of negotiations with Spain and the European Union.
In a letter to Overseas Territories Minister David Routley, the House of Commons select committee added that it was still unclear “whether the time spent by British citizens in Gibraltar counts towards the 90 days of a non-EU citizen’s 180-day stay in the Schengen area”.
Both sides remain adamant that “nothing is agreed unless everything is agreed” in the “very complex” negotiations.
But Alvarez assured Spanish media that “all the parties involved are willing to reach an agreement as quickly as possible.”
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