Government defies Europe

In a dramatic move last night, the Gibraltar Government decided to defy the European Commission which has called on Gibraltar to stop issuing tax-exempt certificates forthwith and to definitely abolish the tax-exemption regime by the end of 2005 at the latest.

But the Government says it will pay no heed to what the Commission has decided. As such, the Government says it "will not agree to stop issuing exemption certificates, nor will we agree to repeal the Tax Exemption legislation."

According to the Government, the Commission's decisions "have no binding effect whatsoever unless they are accepted by the Member State (in this case Gibraltar, through the UK)"

The following is THE FULL TEXT of what the Government said last night:

This statement is issued by the Government to clarify and explain the background to and implications of Wednesday's decision by the EC Commission in relation to Gibraltar Tax Exempt Companies. At the time of issue of this Government statement the letter by the Commission communicating its decision in full has not been received. This statement therefore comments upon the Commission's press release.

The Background

On 11th July 2001 the EU Commission launched an enquiry into the Gibraltar Tax Exempt Status legislation. It did so by following the procedure applicable to cases of alleged "New Aid" (that is alleged aid regimes which were not in existence when the country entered the EU, i.e. in Gibraltar's case 1973).

The Government of Gibraltar objected to the investigation proceeding under procedures applicable to "New Aid" because our tax exempt status dates back to 1967, i.e. before our entry into the EU. The Gibraltar Government's view was that the correct procedure to follow was that applicable to investigations of alleged "existing aid" regimes (that is alleged aid regimes which were already in existence when a country entered the EU).

The consequences for Gibraltar of one procedure or the other being applied were crucial. Under the "New Aid" procedure the tax regime must be suspended during the investigation and, if found in the investigation to be illegal state aid, the Commission could order all aid received during the last 10 years to be returned by the recipients (recoverability). Applied to this case, that would mean payment by all exempt companies of the tax that they have been exempted from during the last 10 years. The exercise of that power by the Commission is discretionary, but the Government took the view that it was vital to eliminate even the possibility.


The EU Commission disagreed with the Gibraltar Government's view that they had used the wrong procedure. The Gibraltar Government took legal action against the Commission and won. The Court agreed with the Gibraltar Government and ordered that the investigation under "New Aid" procedures be quashed. 

The Commission was of course free to start again using the correct procedure.

The Commission's decision on Wednesday

On Wednesday the EU Commission decided to start again the July 2001 investigation into our exempt status tax regime, but this time using the correct procedure, i.e. the procedure applicable to "existing aid" regimes, as the Gibraltar Government had argued from the outset.

What is the procedure applicable to this "existing aid" investigation?

Under this procedure, the Commission writes to the member state concerned, giving its reasons why it thinks the scheme is incompatible with the single market. The procedure requires the Commission, at the same time, to recommend "appropriate measures" that would eliminate its concerns. At this stage there has been no formal investigation. In this case, the Commission has proposed the following "appropriate measures" that would eliminate its concerns:- 

(1) That no new tax certificates be issued; and

(2) That the tax exempt status legislation be repealed by end 2005 (a date which has been lifted from the unrelated Code of Conduct of Business Taxation); and

(3) That new state aid compliant tax legislation be publicly announced by 31st January 2003.

What is the status of these "appropriate measures" that the Commission has "recommended?".

They have no binding effect whatsoever unless they are accepted by the Member State (in this case Gibraltar, through the UK).

The Member State must reply to the Commission, either accepting the finding and recommendations (in which case they become legally binding) or rejecting all or part of the recommendations. In practice, where the member state does not accept the Commission's proposals in full, the Commission is empowered to open an in-depth state aid investigation into the tax system under the existing aid procedure. A formal investigation would then take place.

What happens in the meantime? What are the immediate practical implications?

Nothing needs to happen if the Commission's recommendations are rejected and while the formal investigation takes place. The exempt status legislation can remain in place, exemption certificates can continue to be issued and there is no risk of the Commission being able to order recoverability (i.e. payment back later of the exempted tax). This remains the case even if the investigation goes against us, while we challenge it in court. This was precisely the importance of the Government commencing and winning its case against the Commission, namely that under the procedure that the Commission has been forced by the Court to follow the regime can continue during the investigation without risk of recoverability.

What is the Gibraltar Government's position?

The Gibraltar Government will not accept the first two Commission Recommendations unless and until a version of our tax reform proposals acceptable to the Gibraltar Government has been approved by the Commission. In other words we will not agree to stop issuing exemption certificates, which will continue to be issued. Nor will we agree to repeal the Tax Exemption legislation.

In so far as the third recommendation is concerned, the Gibraltar Government has already publicly announced new tax legislation. These new tax legislation proposals include the repeal of the Tax Exemption legislation. Accordingly the repeal of that legislation, which has been recommended by the Commission, represents no challenge to Gibraltar, given that we intend to repeal it anyway. Indeed, it would have been repealed on 1st July 2002 if the Commission had been able to quickly approve the new tax regime.

Could there be a time gap between the two?

The Commission has recommended that we repeal the Tax Exempt legislation by 2005. We have already submitted our Tax Reform proposals that will replace and repeal that legislation. Ordinarily the Commission's review of our proposal would not take more that 18 months. Some people have asked whether there is a risk that Gibraltar may become legally bound to repeal the tax exempt legislation before we are in a position to implement the replacement. The Government does not believe that this danger exists in practice, for the following reasons: -


(1) The inter-relationship of the two time scales i.e. 18 Months against December 2005 (37 months);

(2) GOG will not agree to implement the recommendations in Wednesday's decision and if they become a formal Commission ruling after a formal investigation, can be appealed to the Court.

(3) GOG expects to obtain Commission approval to an acceptable reform proposal in good time before that. 


Spanish Media Comment

The Spanish media have chosen to present this, actually unchallenging decision, as the "extinction of our finance centre by 2005."

This is political wishful thinking of the part of those in Spain who still hanker to see the ripe pear fall from the tree. The Tax Exempt Company is not essential to the survival of our finance centre. The Government's Tax Reform Proposals demonstrate that.

Local Political Comment

Some of the local political comment has also been mistaken.

The Opposition has said that "instead of launching a new investigation, the Commission has issued a recommendation to the United Kingdom to phase out the existing company by the end of 2005." This is incorrect. As explained above, the recommendation is a mandatory element of the investigation procedure under the procedure applicable to investigations of "existing aid" regimes.

Another political party has tried to point the finger of blame at the Government, and tried to claim credit for itself, by chastising the Government for not entering into negotiations earlier with the Commission as it claims to have suggested. As the Government has said before, and the European Court have made clear, while the Commission was embarked upon an investigation under the "new aid" procedure investigation it had no legal power or ability to enter into negotiations. Discussions are taking place with the EU Commission in relation to GOG's tax reform proposal which HMG is supporting. Now that the EU has commenced an investigation under "Existing Aid" procedures, negotiations are legally possible under Community law.

Clear Strategy

Some local political quarters have called for a clear strategy from the Government to ensure the success of the Finance Centre. Those calls choose to ignore that the Government has a clear strategy, and has successfully deployed it, as follows: -


1. Devising a Tax Reform proposal (and drafting all the necessary and voluminous legislation) to secure the finance centre future even without the Exempt Status Company;

2. Securing the British Government's support for the tax reform proposals and support for defending it in the investigation of the Reform proposals by the EU Commission.

3. Successfully suing the Commission to ensure that the existing exempt status regime could continue in the meantime without risk of recoverability.


Such has been the clarity of the Government's strategy and the imagination of its reform package, that it has been copied by Isle of Man, and Jersey and Guernsey are now also looking at it. Ironically, those countries may be able to implement the package before us because, not being in the EU, they do not need EU Commission approval under EU State Aid Rules to implement it.

Globetrotting Holliday must attract more cruise liners, says Garcia

The Opposition is concerned at the drop in the number of cruise liners calling at Gibraltar. “The last set of figures supplied by the Government to the Opposition show that both the number of cruise ships and the number of cruise passengers have dropped substantially from previous years. 

It is incredible that despite the amount of money that the Government is spending on marketing, and despite considerable globetrotting by Tourism Minister Joe Holliday, Gibraltar gets less and not more,” says Opposition spokesman Dr Joseph Garcia.

The figures supplied by the Government show that in the period January to September 2002, a total of 99 cruise ships called at Gibraltar. 

This compares with 113 in the same period in 2001 and with 131 in the same period in 2000. It is significant to note that this trend was already there before the September 11th tragedy, and although cruising has generally picked up it is obvious that Gibraltar is not experiencing any upturn.

DECLINE 

When the Opposition has accused the Government in the past of a downturn in the number of ships, the Government has argued that because ships are getting larger, the key indicator should the number of cruise passengers as opposed to cruise liners. However, on examining the figures provided by the Government in relation to cruise passengers, the same declining trend is also apparent.

The figures show that in the period January to September 2002 there were a total of 75865 cruise passengers calling at Gibraltar. 

This compares with 91312 in the same period in 2001 and 100161 in the same period in 2000. It is therefore not a case of more people coming in less but larger ships. 

It is a case of less ships coming and less people also.

CONCERNED 

The Opposition is seriously concerned at this trend and at what this represents for the economy of Gibraltar. 

Cruise passengers are generally regarded as being high spending tourists who have plenty of disposable income to spend in our shops, restaurants and elsewhere. 

The tourism expenditure survey for 2001 suggests that each cruise passenger that year spent £36. In 2000, the survey says that each passenger spent £39. This means that from 2000 to 2001, according to the Government survey, Gibraltar lost just over £ 318,000 from the drop in cruise passengers. 

If the latest passenger figures for 2002 are used, based on the 2001 expenditure of £36 per passenger, then already this year already over £ 556,000 has been lost. The Opposition says it wants more cruise ships and more cruise passengers to come to Gibraltar. The latest figures available to the Opposition stand as testimony to Mr Holliday’s failure to attract more cruise liners to Gibraltar despite spending more money on marketing.

Controversial Rock Hotel project gets separated

A Town Planning Notice appeared in the official gazette at the beginning of this month seeks to separate the controversial development planned by the Rock Hotel from the works at their staff quarters.

The Rock hotel had planned a residential development of 71 apartments in seven blocks with basement car park. This provoked a furore at the time.

According to Dr John Cortes of GONHS, the Notice that has now appeared refers to the same development they have previously commented on. 

It states that before the main project can go ahead, a full environmental impact assessment is required, but that the minor project (the conversion of the existing staff quarters to which GONHS have no objection) does not require such an assessment. The Notice said that pursuant to the opinion received from the Town Planner, after consultation with the Development and Planning Commission and after being informed that the applicant is no longer seeking to have both planning applications submitted on 1 October 2001 considered together, “I have determined that BA 9310 in respect of the site of the Staff Quarters, Rock Hotel is not an EIA development in its own right for the purposes of the said regulations. 

The applicant is therefore not required to submit an environmental statement to accompany this application for planning permission,” said Keith Azopardi, minister for trade, industry and telecommunica-tions.

Talks are about solving the historic problem, says Palacio

The Spanish foreign minister Ana Palacio says that the Anglo-Spanish negotiation over Gibraltar is"not a negotiation for co-sovereignty, but to solve the historic problem that we have with the UK over Gibraltar."

She saw Gibraltar as an "incomprehensible situation". It continued being a colonial relation, one member state having a colony over another member state.

It is not an easy matter, she added. There were many elements, historical and otherwise, that made it complicated.

When talks are initiated they can be more spectacular than when you reach the period when you are discussing details.

She was being interviewed on Spanish TVE1. The interviewer said that, as a result of the Prestige, they had learnt about life in Gibraltar - money laundering, drug trafficking, non-adherence to EU norms, a territory within the EU which does not comply with EU obligations; is there no way they can be made to comply with the law?

Ms Palacio did not get embroiled in all the allegations made by he interviewer, instead remarked that in Gibraltar there are problems. She spoke of Gibraltar being one of the world's principal investors in Russia.

She went on to talk about a solution not being an easy one. The issue preceded Spain's entry into the EU. There was a need to convince other EU members. Everything has to be discussed, you need to have very clear proof of non-compliance.

GBC transmission problem

An unidentified transmission is causing interference to the GBC Television UHF Channel 53 transmission that services the South District.

The UHF Channel 53 has been internationally co-ordinated and assigned for use by the GBC from its transmitter located at O’Hara’s Battery.

The GBC assures viewers it is doing everything reasonably possible to identify the source of the interference and the matter has been reported to the Gibraltar Regulatory Authority.

Whilst the source of the unauthorised transmission is identified and the matter resolved some viewers may be able to improve the quality of their reception of the GBC Television transmission by re-tuning their receivers to the VHF Channel 12 transmission and re-orienteering their TV aerial towards the North Mole.

The GBC says it apologises for any inconvenience caused to viewers and assures them the interference is beyond its control.

Coffee morning raises over £ 800 for cancer relief 

The Coffee Morning held last Monday at the Lady Williams Centre in Devil’s Tower Road proved very successful as it raised about £ 825 in aid of the Gibraltar Society for Cancer Relief, to provide home nursing and extra care to cancer patients throughout Gibraltar.

Three hampers were raffled, one full of fruit and vegetables, for which the Centre wishes to thank GibMaroc, and two overflowing with Christmas goodies, together with a homemade Christmas tree shaped chocolate cake, baked by Mrs. Ramagge.

The Centre opens three days a week and welcomes a maximum of 12 cancer patients daily to spend the day there, between a cup of coffee, lunch prepared by volunteers and an afternoon tea, including of course fun and activities, such as Bingo or various handicrafts, like painting with the art material recently purchased with the funds raised at the World’s Largest Coffee Morning recently held at the Garrison Library.

Gibraltar’s tax-haven status: The End

Gibraltar’s tax haven status had its fate finally sealed yesterday when the European Commission said that the exempt-company regime must be closed to new entrants and definitely abolished by the end of 2005 at the latest. It also asks on the UK, as the member state, to make a public statement, by the end of January next year, on the steps it will take to repeal or reform the regime.

The Commission’s view is that the tax exempt company constitutes State aid and should be phased out.

All this caused a storm in financial and other sectors last night, even though there was advance warning of what was coming. An enquiry into the exempt company was initially launched on 11 July 2001, but a subsequent court ruling annulled the decision to open the formal investigation procedure. The Commission notes that the exempt company regime “forms part of the Gibraltar offshore sector together with the Qualifying Company regime, also subject to an ongoing investigation. It is also investigating Gibraltar’s planned reform of its company taxation system.

As soon as the Commission announced its decision yesterday, international media was drawing attention to it. Commission spokesman Tilman Lueder said it was rare that an EU member state would fail to comply with such a recommendation. 

Opposition calls on Govt for strategy to protect financial services

The Opposition has called on the government to come up with a strategy to protect financial services.

This comes in the wake of the European Commission accepting the proposal of Commissioner Mario Monti that it should make a ruling declaring Gibraltar's Tax Exempt Company status as incompatible with State Aid Rules.

It will be recalled that in the European Court of First Instance ruled in April 2002 that the Exempt Company did not fail under "new aid" and that it was up to the Commission to start a new investigation under the "existing aid" procedures. Instead of launching a new investigation, the Commission has issued a recommendation to the United Kingdom to phase out the existing company by the end of 2005.

CUT-OFF DATE

When the Opposition raised this question of a 2005 cut off date in the House of Assembly, the Government's reply was that there was no such cut-off date. However, in the course of the court proceedings, the Commission had stated that there was indeed a cut-off date for exempt companies, that no new ones were being authorised since 2001, and that in the course of the court proceedings these statements had not been questioned by the Government of Gibraltar.

In the light of the recommendation made yesterday by the European Commission to the United Kingdom, the Government of Gibraltar must now state publicly whether any new Exempt Companies are going to be authorised and what the position is regarding all those companies that have an unexpired period in their tax exempt certificate beyond 2005 the Opposition considers that it follows that if the the Opposition considers that the environment which this situation creates is one of confusion which must make it very difficult for service providers in the industry to advise their customers as to the fiscal structure in which they can be expected to operate in the immediate future.

This necessarily puts the industry in Gibraltar at a competitive disadvantage.

It is relevant to note that Jersey and Guernsey have just announced their intention to abolish company tax for all companies and maintain a level of corporation tax for financial services companies. This does not require EU Commission approval because State Aid Rules do not apply in those territories. The statement made in the two dependencies suggest that they are working on the premise that they can implement the changes without the consent of the European Commission. It is difficult to see how Gibraltar can compete with this given the question marks raised by the Commission.

The Opposition believes that there is now a need for the Government to come out and reassure the industry that there is a strategy that will enable the sector to retain the business that it has and attract new business to Gibraltar.

Government is going to proceed with the removal of all corporation tax, then the distinction between tax exempt companies and other companies would vanish and the question of phasing out by 2005 would be immaterial. The Commission also says that they are continuing the investigation into the Qualifying Company regime as "new aid" and the proposed reform of company taxation is the subject of a separate investigation. At this stage it is unclear whether it will be approved or disapproved.

Further uncertainty

The Labour Party says it notes the announcement by the European Commission which follows a report in El Pais on Monday which predicted that such an announcement would be made. It is obvious that the Spanish media has access to information which the Government of Gibraltar does not and even before decisions are officially taken.

Be that is it may, the proposed phase-out date (05) "gives rise to further uncertainty in the finance centre given that the Government's own tax proposals to replace our Tax Exempt Companies are under consideration by the EU Commission and there is no guarantee that they will "pass muster", thus requiring further legal challenges which could take us beyond the date recommended by the Commission for the abolition of our Tax Exempt legislation," said the party.

It adds: We repeat our public statement this week (something we have said for over a year) that the Government needed to negotiate a phase out for our Tax Exempt legislation with the Commission over a reasonable period of time. In the context of the EU Commission's investigation of the Government's tax proposals, the recommended deadline of 05 is not reasonable.

ERROR

The Labour Party further believes that it was an error of judgment to put a new tax system before the European Commission for approval after we won the Court decision in April which clearly established that our Tax Exempt legislation was "existing aid", not "new aid".

The finding of "existing aid" gave the Gibraltar Government the perfect opportunity to engage the Commission in negotiation to phase-out our Tax Exempt legislation, at par at the very least with the phasing out date of other state aid measures within the Community. The Government's tax proposals, on the other hand, were intended to preserve as much of the "status quo" as possible. The response of the Commission to commence a further investigation only helped to heighten the level of uncertainty in Gibraltar. Now that uncertainty has been compounded further by yesterday's announcement.

PHASE-OUT

"We maintain that we would have been much better off in securing generous transitional arrangements for the phase-out of our Tax Exempt legislation first than putting an entirely new tax system before the Commission (something which had never been done before and which has implications for all other Member States)," it says.

And adds: "In making this criticism of Government it is not intended to mount on the pressure we are all currently facing, but making statements of considerable public interest. Gibraltar's financial stability depends on any decisions we now take and it is imperative that all political and interested parties are consulted by the Government as we go forward. The future of everyone in Gibraltar will be affected one way or another. We either take a step forward together as we all did on the eve of the Referendum or the Government faces up to sole responsibility for any future failures."

IN FULL: What the European Union decided yesterday 

Brussels, 27 November 02

Commission proposes reform of Gibraltar tax regime

The Commission has today adopted a recommendation to the United Kingdom for the abolition or reform of the Exempt Company regime in Gibraltar. Under the regime, an Exempt Company pays no income tax on its profits. Instead, it is subject to a low, fixed annual tax. The Commission has decided that this tax exemption constitutes State aid favouring Exempt Companies and should therefore be phased out by the end of 05 at the latest.

The Exempt Company Regime

A company registered with the Gibraltar authorities as an Exempt Company is subject to a fixed annual tax of between A3225 and A3300. It is exempt from any further taxation in Gibraltar. An Exempt Company is a financial services company domiciled in Gibraltar that may not conduct any trade or business within Gibraltar. No Gibraltarian or Gibraltar resident may have a beneficial interest in the shares of an Exempt Company.

The Exempt Companies scheme can be classified as State aid as it fulfils the four relevant criteria for State aid: The exemption from tax grants Exempt Companies an advantage compared with other companies subject to the general company taxation regime in Gibraltar, under which the standard rate of tax on profits is 35%. This advantage is selective, is financed from State resources and is liable to distort competition. The regime satisfies none of the criteria set out in Articles 87(2) and 87(3) of the EC Treaty under which State aid may be approved.

The Commission's proposal

In its proposal of appropriate measures to the United Kingdom, the Commission has recommended that the United Kingdom close the Exempt Company regime to new entrants and definitively abolish the tax exemption by the end of 05 at the latest. The United Kingdom should also make a public statement on the steps it will take to repeal or reform the regime by the end of January 03.

Under the State aid rules, measures which were in place before the Member State concerned acceded to the European Union are treated as existing aid. Article 88(1) of the EC Treaty requires the Commission, in co-operation with the Member States, to keep existing aid schemes under constant review. If it is found that a scheme is not or is no longer compatible with the Treaty rules on State aids, the Commission must propose appropriate measures to the Member State concerned in order to abolish the scheme or bring it into conformity with the State aid rules. If the Member State accepts the proposal, it is legally bound to implement the appropriate measures. If it refuses, the Commission may open the formal investigation procedure provided for in Article 88(2) of the EC Treaty.

Background

The Commission originally launched an inquiry into the Exempt Company regime on 11 July 01. However, following a legal challenge by the Government of Gibraltar, the Court of First Instance annulled, on 30 April 02, the decision to open the formal investigation procedure. The Court ruled that in attacking the whole of the Exempt Company regime as illegal aid rather than treating the original 1967 legislation as existing aid, the Commission had breached the rules on State aid procedure.

The Exempt Company regime forms part of the Gibraltar offshore sector together with the Qualifying Company regime. Qualifying Companies are subject to an ongoing investigation also launched on 11 July 01. Separately, the Commission is investigating Gibraltar's planned reform of its company taxation system.

Flooding of Dr Giraldi Home is a disgrace, says Opposition

The Opposition considers that the flooding of the respite flat at Dr Giraldi Home following the recent heavy rains last month is an absolute disgrace. There are five beds in the respite flat at present. It is shameful that the water ingress was so widespread that residents had to be evacuated and the premises ruled to be uninhabitable.

Opposition spokesman Pepe Baldachino understands that over the last three years the problems with the leaking roof at Dr Giraldi home have been brought to the attention of the Government with representations having been made to have the roof repaired. The roof was not repaired and the end result is the evacuation of persons in the home after a serious flood. The Government has now had to rush repairs to the roof and this is expected to take three months.

Some residents have been housed at Vineyards on a temporary basis and the services provided by the home like respite have been suspended.

The Opposition considers that this is a sorry state of affairs and that the Government should have acted earlier in order to avoid this problem from escalating. The Minister for Social Services Yvette del Agua has much to answer for.

Netto must clear up house sales confusion, says Opposition

The Opposition says it has received representations from residents of several housing estates following the news that the delay in approving sales of flats in these estates is because the Government is reviewing the policy applied last year to waive the restriction on sales to persons not on the housing waiting list. It is not clear at this stage whether the Government plans to abandon the policy that has been applicable until now or not.

However, the possibility has created enormous uncertainty among persons who were thinking of buying the Government half of the 50/50 ownership.

The Opposition considers it is incomprehensible that Minister Jaime Netto should be offering incentives so that residents buy out the Government half of the 50/50 ownership, and then restrict who the property can be sold to after it is owned 100% by the owner-occupier.

Home owners living in Montagu Gardens, Montagu Crescent, Harbour Views, Brympton and Sir William Jackson Grove and other such estates are all likely to be adversely affected by a change in Government policy. 

The Opposition considers that it is totally contradictory for a part home owner to be encouraged to buy a full stake in the property and then have a restriction placed on whom they can sell it to afterwards. Buying a home is the largest investment that people are likely to make during their lives and it is important that everyone knows where they stand and what freedom they will have to dispose of their property at a future date.

The Opposition considers that it is the duty of Housing Minister Jaime Netto to explain the conflicting policies of the GSD Government, and clear up why the policy of the last six years has been changed overnight. 

Postal problem: Where there is agreement and where there is disagreement

There is a broad measure of agreement between the Government and postal grades. Both agree that there needs to be a reversal of the historic under investment in premises (that is why this Government has built a new Sorting Office and a new Parcel Post Office and has refurbished the Main Street/Irish Town Post Office building) Both agree that there are vacancies that need to be filled and that, in fact, there needs to be recruitment of extra staff over and above the vacancies in the historic compliment, Both agree on the need to review some of the more difficult postal walks, and both agree on the need for new investment in vehicles.

Government is also willing to offer pay increases to secure a modernisation of working practices to ensure an efficient and resilient postal service to users on a sustained basis.

There is only one major issue which separates the parties. Government wants to introduce a system that guarantees delivery of mail within 24 hours (after providing the extra manpower and financial incentive to be able to achieve this). The postal grades on the other hand wish to hang on to a system that allows them (through abuse of absenteeism and other practices) to create backlogs which they can then earn extra money to clear later. It is the Government's firm view that a system that allows those who can manipulate the system to cause backlogs and to benefit financially from clearing it up later, will never result en an efficient postal delivery service.

The Government has written to postal grades individually asking for confirmation that they are willing to enter into bona fide negotiations with the Government to achieve these objectives on an urgent basis. All negotiations during the last two years have failed for the reason stated above.

It is true that there are currently some vacancies which have not been filled. This is because Government is awaiting a negotiated agreement so that new staff can be recruited on the new terms. Government has from the very beginning over two years ago, offered to, employ on a permanent and pensionable basis new staff on the basis of the pay conditions and working practices accepted in the UK 2 years ago. The staff, on the other hand, are insisting that new staff be recruited on a permanent basis on the old terms. 

This is not acceptable to Government since it would simply increase the number of people who would have to agree to the reforms. Government is however offering to recruit postal grades on the old terms, on a temporary basis to deal with both the vacancies and seasonal high volumes of mail, pending the conclusion of an agreement.

Council Chairman congratulates Lalit

Budding accountant Lalit Khatwani recently received personal congratulations from Sir Peter Phillips, Council Chairman, Cardiff University, for his outstanding examination success at the university. Lalit, a former pupil of Bayside Comprehensive School in Gibraltar, is studying BSc Accounting and Economics at Cardiff Business School. He won the KPMG Prize for the Best Performance in the Professional Accounting & Information Management 2 module and was joint winner of the Colonel Page Fund Prize for the Best Performance on the First Year of the BSc (Econ) Accounting and Economics Degree Scheme.

Lalit received his total prize cheque of £450 at the Business School's Annual Prize Giving. The event, now in its twenty-fifth year, is an important occasion in the School's calendar. In addition to distributing more than £15,000 in Scholarship and prize money to students, it is an opportunity for the School to reinforce its commitment to teaching and rewarding quality. It is also a chance for high calibre students to present themselves to prestigious companies who, in addition to sponsoring their prizes, may ultimately be their employer.

Cardiff Business School is the largest department of Cardiff University, and is one of the most successful business schools in the country, regularly placed in the top ten of the 100 business schools in Britain. Extensive links with public and private companies, government agencies and universities throughout the world have helped earn it an international reputation. It has expertise in research and teaching across a wide span of specialist areas, including economics, business, banking, human resource management, finance and accounting, marketing and strategy, operations management and quantitative methods. In the most recent independent assessment of research work in British universities, the School was awarded a Grade 5 rating, the top category, indicating research of an international standing.

Government gone bunkers over siting of control centre 

No.6 Convent Place and The Convent are regarded as targets for a terrorist attack, says an emergency management consultant. While the former would be of a 'symbolic' nature, the latter would be a 'principal target'.

The establishment of the ‘Incident Command Centre’ (Incident Room) at No.6 Convent Place makes "absolutely no sense and jeopardises any emergency management response," says Joe Bishop.

He adds: The fact is that No. 6 Convent Place is itself a symbolic target and therefore at greater risk of terrorist attack. More importantly it is just a stones throw away of one of the principal targets of any attack, the Convent, which is after all the official residence of the representative of the Queen in Gibraltar. Gibraltar could lose its Command and Control function in seconds. Therefore, to place the nerve centre of emergency management inside a major target and so near one of the principal targets puts a huge question mark on the Governments ability to plan for a major contingency and therefore its judgment.

THE LAST PLACE...

In a scathing attack Mr Bishop, who is also a member of the Labour party, goes on to say that the basement at No.6 Convent Place is probably the last place in Gibraltar any Emergency Management Agency would set-up their Command Centre. It is situated in the middle of the Town Centre. There is heavy traffic congestion in the immediate vicinity. There is no ‘stand-off’ distance (clear perimeters to prevent car bomb approach); the building and surrounding buildings are not ‘hardened’. Moreover, basements are renowned for suffering severe flooding as the result of ‘car bomb’ craters fracturing water mains. Further the building does not provide a ‘secure appearance’ which would prompt, would-be attackers to look for a softer target.

Long gone are the days when Command Centres were basement bunkers, designed to protect key decision makers and operators from nuclear fallout. Modern Command Centres tend to be stand alone single storey hardened buildings, with their own fresh air system management, positive pressure in-house atmosphere, completely autonomous in-house utilities, high tech microwave and satellite communications, redundancy built in every support and utilities systems and with physical barriers to prevent vehicular movement within 100metres around its perimeter, to mention but a few design features. Let us not forget that over the past decades, the single most effective way for terrorists to continuously inflict death, injury and destruction has been through the use of car bombs.

White boards, maps on walls and banks of telephones surrounding a conference table are a thing of the past, modern Command Centres operate with ‘real time’ information, using GIS (Geographic Information System) Technology with the necessary level of ‘hot stand-by’ and redundancy, allowing for computer modelling and incident information management, which could never be collated, analysed, processed, prioritized and tasked using ‘wall maps’ and ‘charts’. Command Centres are established using the ‘cellular model’ with tasks such as logistics, gas plume plotting, communications, planning, management, coordination etc as ‘decentralized’ tasks within the Command Centre and not squeezed into the confines of restricted space in a basement. This again shows how remote No.6 Convent Place is from the realities of modern emergency management and how little has been learned locally, from the events surrounding 911.

Government would have been wise "to have engaged the services of recognised experts in their field to conduct a vulnerability study of suitable structures, building, sites or installations, which could be ‘hardened’ to provide the necessary level of safety to personnel, equipment etc. and maintain a high level of operability under different threats. These would have been followed by proposals, utilizing tried and true methods, for securing buildings as Command Centres, including plans, systems and schemes for the design, conversion or construction (including state of the art software for incident management). These are critical issues that cannot be left in the hands amateurs. After all the Government has been willing to spend thousands on consultants in areas where they were less necessary and I cannot for the life of me think of anyone within the Government who has the necessary expertise in this field," said Mr Bishop.

'KNEE JERK' REACTION

He adds: One cannot help but think, that in the best tradition of Government’s planning policy and as a ‘knee jerk’ reaction to recent events. Little thought, however, appears to have been given to the need to conduct proper research, consultation and perhaps look outside our borders, to see what the rest of the Emergency Management Agencies worldwide are doing vis-à-vis Command Centres. Placing the Incident Command Centre at No.6 Convent Place has only further increased the ‘target value’ of Government House in Gibraltar.

Gibraltar to be included in Canada’s Quilt of Belonging

Gibraltar will be included in the Canadian Quilt of Belonging which will hung in Canada's Museum of Civilization in Ottawa. This follows the vigilant efforts of Ana Tosso ,a member of the Liberal Party of Canada, and locally the work of the International Officer of the Gibraltar Liberals Rebecca Faller.

The quilt of belonging is a huge quilt made up of different patches representing the parts of the world from which people have immigrated into Canada, and in this way contributed to the formation of the modern-day Canadian. There are many people from Gibraltar over the years who have gone to that country and as such it was thought relevant to include a section or patch from Gibraltar in the quilt.

The contact between the Liberal Party of Gibraltar and Ms Ana Tosso dates back to November 2000. Ms Tosso, who is an active member of the Liberal Party of Canada, at the time was Political Assistant to Canada's Secretary of State for Multiculturalism. She traces her Gibraltarian roots through her father who left Gibraltar for Canada in the 1960s at the time of the border closure.

Through the internet, she made contact with the Liberal Party of Gibraltar. Ms Tosso then met up with Liberal Party Leader Dr Joseph Garcia and Secretary General Steven Linares in Ottawa during the Congress of Liberal International which took place in Canada at the end of 2000. After that meeting, Rebecca Faller was tasked with the production of the patch for the quilt and after much hard work has now produced the final patch which will be sent to Ottawa. 

The Gibraltar patch consists of applique and embriodery work depicting the castle and key with a sea background (small waves) on one square. Then the Rock with apes on the other square. All is bound with fine gold braid with a gold key and tassle. The key was donated to the Liberal Party by the Voice of Gibraltar Group from their key collection. The cross stitch sections on the quilt was expertly done by Mrs Paola Purswani. Rebecca Faller said that she was delighted to have been involved with this work and she was very grateful to Ana Tosso for her initiative. This was a very good way to promote Gibraltar and at the same time encourage links between Gibraltar and Canda. It is relevant to note that two Senators from the Liberal Party of Canada attended the recent conference of Liberal International which took place in Gibraltar.  

The Commons debate in full

Motion made, and Question proposed, That this House do now adjourn.—[Derek Twigg.] 

Mr. Andrew Rosindell (Romford): I am delighted to have been granted this debate today, for it is Parliament’s first opportunity to reflect on the momentous referendum held in Gibraltar on 7 November. As official observers of that referendum, I and 10 other colleagues from the House were able to witness at first hand the open, fair and democratic manner in which the Government of Gibraltar conducted the entire exercise. From the preparations in the weeks leading up to polling day and the conduct and organisation of the polling stations to the speedy delivery of the result in the early hours of Friday 8 November, the referendum was one that any democratic society could be proud of. 

Of course, as we all know, the referendum was not the first of its kind to be held in British territory during the past few years. On 11 September 1997, the people of Scotland voted democratically to establish their own Parliament, with 74 per cent. of them in support. On 18 September of that year, the people of Wales decided democratically to create an Assembly for the Principality, even though by a much closer margin of just over 50 per cent. On 7 May 1998, the people of London voted democratically for a Mayor and an Assembly, with 72 per cent. support. On 22 May 1998, the people of Northern Ireland also chose democratically to create their own Assembly, with 71 per cent. of the vote. 

Now, the British people of Gibraltar have conducted their own democratic referendum on a constitutional question: the principle of sharing sovereignty with the Kingdom of Spain. With 99 per cent. of Gibraltarians voting against joint sovereignty, it was by far the most convincing of all the referendums so far. 

I am sure that I speak for most Members of Parliament, and for most citizens of this country, in welcoming the Gibraltarians’ overwhelming vote to remain British. On an 87 per cent. turnout, 99 per cent. of the vote in favour rejecting joint sovereignty with a foreign power is probably more than one could expect from any town within the United Kingdom—with the possible exception of the patriotic market town of Romford. 

Before continuing, I would like to take this opportunity to warmly welcome the Minister to his new portfolio. It is with genuine relief that I and many other hon. Members here today greet that change on the Treasury Bench. In Gibraltar, there is great hope that the Minister will prove to be a true friend to the people of the rock. 

In the past year, Gibraltarians have, understandably, felt bruised, let down and betrayed, but now, with a clear result in the referendum and a new Minister in office, I sincerely hope that a line can be drawn under a sad episode in relations between the Government of the United Kingdom and the people of Gibraltar. I urge the Minister to examine the issue carefully especially as we move into a new era of the debate. We must now enter a period of reflection to determine how the policy on Gibraltar will progress. 

I hope that in view of the near unanimous vote, the Minister will acknowledge that the referendum result has, once and for all, exploded any claim that Gibraltar’s situation resembles that of a divided society. Northern Ireland is a wholly false comparison. I hope also that he will agree that the referendum reflects the freely expressed will of a united community to retain its sovereignty and identity, and that, just like the referendums held in Scotland, Wales, London and Northern Ireland, the wishes of the Gibraltarian people should be respected, accepted and upheld. 

I call on all Members of Parliament to recognise that now, in the light of the referendum result, Gibraltar’s sovereignty, like the sovereignty of the Falkland Islands, must be regarded as a settled matter. In particular, the Brussels process should be abandoned immediately and the issue of sovereignty firmly removed from that or any other Anglo-Spanish agenda. 

Some argue that it does no harm to keep Gibraltar’s sovereignty on the agenda in a merely nominal fashion—the Spanish could raise the issue, but we British would have nothing to say on the subject. I utterly reject that dangerous argument. Retaining sovereignty as an agenda item, however nominal, offers hope to Madrid that one day, a British Government will give way. “Sit tight and wait for more favourable circumstances,” our opposite numbers in Madrid will think. Their hope will be that one day, whether on the 50th or 250th time of asking, a British Foreign Secretary will give way. 

Allowing claimants against British interests to foster the hope of securing their prize has been a bane of our foreign policy for nearly a century. While the device has, no doubt, helped relations in the short term, it has stored up trouble in the longer term. The trouble comes when we must either dash the nurtured hopes of a claimant state such as Argentina, or concede under the weight of their expectations. 

If retaining sovereignty as a nominal agenda item is mistaken, locking the issue into a so-called process is doubly mistaken. Locked into a process, the issue is passed down from Government to Government—some more steadfast than others—until one day, almost inevitably, one Government, probably under pressure from the European Union, decide to concede Gibraltar’s sovereignty. The people of Gibraltar deserve better treatment than to live under this permanent cloud of uncertainty. 

However, on one point, I must congratulate Her Majesty’s Government—on now honouring their pledge to enfranchise the people of Gibraltar in time for the European parliamentary elections in 2004. That is not before time. I understand that the Electoral Commission will be looking into which constituency Gibraltar will join. The incorporation of Gibraltar into a United Kingdom constituency for the European Parliament is a welcome development. 

I express the hope that the Government will now also examine the case for another form of integration and allow Gibraltar to elect a Member to this Parliament. It is intolerable that the people of Gibraltar still have no elected voice on a whole range of issues that directly affect them. Why should they not be treated more directly as British subjects by having a place in our sovereign Parliament? I refer not just to foreign affairs and to defence matters, which remain the responsibility of the British Government, but to health care, higher education and many other vital services for which Gibraltarians must come to the United Kingdom. The Minister will be aware that a precedent exists for parliamentary constituencies with small populations—the Western Isles, for example. Granting the people of Gibraltar their own Member of Parliament would not only bridge the democratic deficit that I have outlined, but would send out the unambiguous message that Gibraltar is and will remain British. 

The Minister will also be aware that every other European country has long since incorporated its overseas territories. We, however, retain our overseas territories in colonial limbo, a status that has been given a limited shelf life by the United Nations, that disadvantages those who live under it and encourages the hope among claimant states that they will eventually inherit after decolonisation. Of course, only the people of Gibraltar must decide their future constitutional status, but it is my sincerely held belief that devolved integration offers a remedy to all those defects and more. One thing that it would certainly do is slam the door firmly shut in the face of claimant states. Such action, although resented in the short term, prevents the far more awkward problems that I referred to earlier over nurtured expectations. 

Integration also allows territories varying degrees of autonomy to suit the culture and the circumstances of themselves and their mother country. Although the French overseas territories are administered largely from Paris, the Dutch Antilles and Aruba, for example, have considerably more autonomy yet remain part of the Kingdom of the Netherlands. Equally, the Faroe Islands and Greenland have their own elected Governments while sending Members of Parliament to the Danish Folketing in Copenhagen. European membership and tax status are also no barriers to integration. Spain’s Moroccan enclaves, the sovereignty of which she wisely refuses to discuss, both levy no VAT yet remain integral to Spain and inside the European Union. As the Minister must acknowledge, even within the United Kingdom, varying constitutional arrangements are present and are being extended, so why not apply the same logic to Gibraltar? 

Never again must the Gibraltarians be forced to hold a referendum to tell their own UK Government what most Britons take for granted—that they want both themselves and their territory to remain British. They want it to remain British not just for this Parliament, not just until a future UK Government decide to reheat the Brussels process and not just until the Spanish Government decide to put pressure on British Ministers in the course of EU negotiations. They want a Gibraltar that is British in its entirety and in perpetuity.

Mr. Lindsay Hoyle (Chorley): I congratulate the hon. Member for Romford (Mr. Rosindell) on securing the debate. I also welcome my hon. Friend the Minister for Europe to his new position. 

The hon. Member for Romford is right. It is important that we calmly reflect on what has happened. No one can forget the 98 per cent. “No” vote in Gibraltar. That was listened to in London and it must be listened to in Madrid; the Spanish Government have to reflect on the vote. 

It is right to pay tribute to the people of Gibraltar. They used their democratic vote to express their democratic wish. It was good to see the Government and Opposition in Gibraltar coming together, along with Albert Poggio, Gibraltar’s representative in London, who played an integral part in ensuring a fair and democratic vote. They and all the people of Gibraltar deserve our congratulations. 

Surely we are at a new beginning. The vote should mark the end of the Brussels agreement. We need new discussions with Spain on border queues and the rights and security of air travel for the people of Europe and Gibraltar. I hope that my hon. Friend the Minister will take up the mantle and rise to the challenge. It lies with him to ensure that the aspirations of the people of Gibraltar are realised so that they get proper representation and an end to the wrongs done against them. 

It is important that a clear message goes out to Europe and Madrid: let us stop the bully-boy tactics. Surely Madrid realises that people do not expect to be hit with a stick. What people will say is, “No, we don’t more of this”, and they will stand up for themselves. What better way of ensuring that the small population of Gibraltar—it has 30,000 people—has its agenda known throughout the world than by those people fighting for their democratic rights? We must ensure that the House respects that, as I am sure hon. Members will, and we must move on to a better Gibraltar. 

The people of Gibraltar should have the right to consider integrating into the United Kingdom or having a new constitution so that they can move away from the old colonial governor with the feathers who walks up and down Main street. There is a new hope and a new challenge, and the people of Gibraltar deserve that. It is a new beginning for them. We should ensure that the House listens to and respects their voice. 

We need to move on. I know that the Minister will take up the new challenge. The hopes of many people rest on his shoulders and he will not shy away from that responsibility. I am sure that he will rightly say that he will meet the Government of Gibraltar as soon as possible and listen to their views, which are important. The sooner the meeting takes place, the better it will be. It is important that we put the people of Gibraltar first, and we look to the Minister to give them comfort. 

The Minister for Europe (Mr. Denis MacShane): This has been the most remarkable Adjournment debate that I have experienced at this time of night in my short life as an MP and my even shorter life as a Minister. I congratulate the hon. Member for Romford (Mr. Rosindell) on his powerful speech. I also congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on his contribution. I hope that, at the end of this debate, hon. Members will agree that I am a friend of Gibraltar— 

Mr. Desmond Swayne (New Forest, West): Who speaks slowly. 

Mr. MacShane: My hon. Friend the Deputy Chief Whip told me to choose my words with care and said, “It’s Denis against 40 Conservative MPs”—[Hon. Members: “And some Labour MPs.”] Indeed, but they are all my friends—we are at one on this issue. 

There are not quite as many people in the Chamber as the 18,000 who voted in the referendum in Gibraltar a couple of weeks ago, but there are remarkably more Conservative Back Benchers present now than there were for the debate on Iraq. I had prepared part of my speech on the assumption that in the six days of debate on the Queen’s Speech Opposition Front Benchers would call a debate on foreign policy, and would raise their deep concerns about Gibraltar. Instead, the subject has been put before the House late at night in an Adjournment debate. That is certainly a tribute to the hon. Member for Romford, but whether it provides a true analysis of the interest that Conservative Front Benchers take in the issue I leave to the judgment of the people of Gibraltar. 

The presence in the Chamber of hon. Members from nearly all parties is a clear sign of their genuine concern for the people of Gibraltar and their future. We all share the concern that there should be a better future for the people of Gibraltar. It is precisely that desire—[Laughter.] The Opposition are laughing with me. I can take them when they are laughing at me; I can take them when they are jeering or shouting me down. However, I ask the assembled ranks of the Opposition to calm down and let me make my own speech— 

Mr. Keith Simpson (Mid-Norfolk): In my own time. 

Mr. MacShane: Indeed. The desire to secure a stable and prosperous future for the people of Gibraltar continues to drive the Government’s policy, but the current situation, with the continuation of the 300-year-old dispute, does not yet offer hope of that better future. The hon. Member for Romford, in his powerful and eloquent speech, said that the Gibraltarians were British in perpetuity. If he reads the treaty of Utrecht, whether in the original Latin or Spanish, he will find that the Spanish conceded Gibraltar in perpetuity to the British Crown, so that is not an issue. We want to see what the House can do to try to improve the quality of life for all Gibraltarians—the people who voted in the referendum—who deserve a future free of the worries that they have had throughout my lifetime about border delays, restrictions on air services, telecommunications and so on. The assumption that the House can at a stroke remove those problems may not be justified. We need to shape an opportunity that will promote better economic development for Gibraltar and the surrounding region to enable Gibraltar fully to realise its potential. With that process in mind, the Prime Minister and the Foreign Secretary decided to relaunch the Brussels process talks in July last year. 

I am very happy so far in my new job as Minister for Europe. I should like to stay in it. I want to do right by the people of Gibraltar. I seek no promotion to the Cabinet. 

In taking their decision to relaunch the Brussels talks in July last year, my right hon. Friends were recognising, as Margaret Thatcher did almost 18 years ago to this day, that the only way to secure a more prosperous future for Gibraltar was through a negotiated resolution of the dispute with Spain on all issues, including sovereignty. That was the position of the former Prime Minister, Baroness Thatcher. The hon. Member for Romford seemed to think that we should bury the former Prime Minister and drive a stake through the Brussels process, which was her initiative. I am not confident enough, and I do not have the mandate at the Dispatch Box, to be so cruel or unkind to the former Prime Minister, Mrs. Thatcher. 

From the start, we have been absolutely clear that this Government would stick by the pledge given by the Labour Government of Harold Wilson in 1969 that there would be no change in sovereignty without the consent of the people of Gibraltar. Let me say it again: no change in sovereignty without the consent of the people of Gibraltar. Hence, if we could reach agreement with Spain—please notice the two conditionals, “if” and “could”—on a comprehensive settlement, the whole package would be put to the people of Gibraltar in a referendum and they would decide. That is a cast-iron assurance to the people of Gibraltar, and I do not know how I can make it any plainer to my hon. Friends or to the hon. Gentleman. 

We were also clear from the start that we wanted the Chief Minister of Gibraltar, Peter Caruana, to be involved in the process so that the Gibraltarians could help shape it. That invitation remains open. As hon. Members are aware, three Brussels process meetings took place—in July 2001, November 2001 and February 2002—and were fully reported to the House. A further meeting was due to take place in July this year, but, due to Cabinet changes in Spain, it did not take place. My right hon. Friend the Foreign Secretary, conscious of his undertaking to keep Members informed of progress at every stage, therefore made a statement to the House on 12 July in which he reported on where we had got to in the talks and on Her Majesty’s Government’s policy towards Gibraltar. 

As hon. Members will, I hope, recall, that statement set out a number of principles that we believe should underpin a lasting settlement, on which we had reached broad agreement with Spain. Those included the principle of joint sovereignty, which has been the focus of so much attention since, as this debate has shown. Other principles were included, too—that Gibraltar should have more internal self-government; that it should retain its British traditions, its customs and its way of life; that Gibraltarians should retain their right to British nationality; that Gibraltar should be free to retain its institutions; and that Gibraltar could—again, the conditional—choose to participate fully in the EU single market and other arrangements. 

The statement also set out some important “red lines” on the need for a permanent settlement, and on the need for current arrangements for the British military facilities to continue. It made clear again that any agreement must be acceptable to the people of Gibraltar in a referendum. It was absolutely clear throughout the statement that no agreement had actually been reached, and that there would be no such agreement unless Spain met the conditions—the “red lines”, as we would call them—in full. There were therefore no proposals to put to the people of Gibraltar, and that remains the position. That statement is a matter of public record. 

The hon. Member for Romford attended the Gibraltar referendum on 7 November and saw it at first hand. He made a powerful speech about it, but I want to tackle the suggestion that we sought to dismiss the idea of the referendum out of hand or ignore it. I do not ignore any expression of the people’s will, whether it is made in a Countryside Alliance march or any other mass mobilisation, demonstration or referendum. 

The principle of the consent of the people of Gibraltar is central to our approach. Our commitment is firm that if we reach agreement on a comprehensive settlement the whole package will be put to the people of Gibraltar in a referendum and they will decide on it. I again give that cast-iron pledge from the Dispatch Box. No proposals were on the table on 7 November and even the most pro-Gibraltarian Member would agree that the result of the referendum was what we expected. 

However, we are not deaf or stupid, and we have listened to the views expressed by Gibraltarians on 7 November and in the run-up to the referendum, just as my right hon. Friend the Foreign Secretary listened when he visited the Rock in May. We shall also reflect on the report published by the Select Committee on Foreign Affairs, which has not been mentioned. I hope that before long those on the Opposition Front Bench will table a substantive motion or give up a whole Opposition day to foreign affairs policy, so that the whole House can debate this issue and the other great issues that divide it. 

On Gibraltar, my cast-iron assurance is there: there will be no change in sovereignty without a referendum of the people of Gibraltar. 

Question put and agreed to. 

Wishes of people count for nothing with Labour government, says Alliance

The Opposition has come out condemning the decision of the British Government to continue the Anglo-Spanish negotiations on the sovereignty of Gibraltar under the Brussels agreement. This was announced by the Minister for Europe Denis Macshane in the House of Commons during the debate on Gibraltar.

It is clear from the statements made by Mr Macshane that the freely and democratically expressed wishes of the people of Gibraltar count for nothing in the eyes of the British Government. He has made it clear that if the talks with Spain collapse it will be because London and Madrid cannot agree on the so-called red line issues and not because the people of Gibraltar have voted overwhelmingly against joint-sovereignty with Spain.

The Opposition note that once again the British Government have invited the Gibraltar Government to attend the talks. 

This will continue so long as there is no categorical and unambiguous rejection of the Brussels process in Gibraltar.

END BRUSSELS! 

There was, however, one positive side to the debate. 

The Opposition welcome the calls for an end to the Brussels process that were made in the House of Commons last night. It is significant that both Conservative MP Andrew Rosindell and the Chairman of the Gibraltar Group in Parliament Labour MP Lindsay Hoyle called for the Brussels negotiating process to come to an end. Mr Rosindell declared that the question of the sovereignty of Gibraltar had now been settled. 

Therefore the Brussels process should be abandoned and sovereignty removed from the agenda.

The Opposition “totally support and endorse the views against the Brussels process expressed by both Andrew Rosindell and Lindsay Hoyle.” 

The Opposition has long maintained that the sovereignty of Gibraltar is not a matter to be negotiated with Spain.

It is relevant to note that on 5 December there will be a motion taken by the Leader of the Opposition to the House of Assembly calling for an end to sovereignty negotiations with Spain. 

This motion, say observers, was down for the last meeting of the House but the government did not take it.

Integration is the answer, says Integration movement

The Integration With Britain Movement, on behalf of the people of Gibraltar says it wishes to thank both Andrew Rosindell MP and Lindsay Hoyle MP for their defence of Gibraltar in the House of Commons on Monday night. 

In particular Mr. Rosindell, for actually setting out the motion of support for the Debate. 

Once again, Andrew Rosindell has come out giving sound ideas why Devolved Integration is the way forward for Gibraltar. 

Both he and Lindsay Hoyle of course say that it is up to the Gibraltar people to ask for this, for “ a future free from worry” that is, security. 

In Gibraltar, the IWBM is committed to making the people more aware of the importance of Devolved Integration as opposed to any other option for our future. 

In the Commons debate, Mr.Hoyle said that the people of Gibraltar should get what they want, whether it is Devolved Integration or (more generally) Self-Determination. 

The IWBM claims that the two are closely connected. We regard self-determination as the means by which we would choose the end, Devolved Integration. 

This is the future simple and natural status for Gibraltar. In this regard we would quote Dr. John Marek, former chairman of the all-party British Gibraltar Group in Parliament.. 

In 1998, Dr.Marek said “ If the Giraltarians want Integration the U.K. Government should do everything possible to bring it about” and “Decolonisation can be self-determination and it can be integration since the two in some ways are very similar”.

The IWBM welcomes the appointment of Denis MacShane MP as Europe Minister but disregards his statement in the Adjournment Debate as routine and predictable.

What was important in what Mr.MacShane said and reiterated is that the Labour Government is committed to the undertaking given by Harold Wilson in 1969 that nothing would be done against our wishes. 

The IWBM recalls that Mr.Wilson was also the Prime Minister who offered Integration to Gibraltar in secret. 

This was equally secretly turned down by the Gibraltar government at the time. 

This is why we are now in the political mess we find ourselves in today. The IWBM wishes to restate that Andrew Rosindell M.P. and others in the U.K. have asked to become members of our non-partisan Movement and the IWBM Committee has been pleased to extend honorary membership, says IWBM chairman Joe Caruana.

Respect referendum minister told

by our Parliamentary correspondent in London

GIBRALTAR must enjoy the same long-term guarantee of remaining British as the Falkland Islands, the government has been told.

Tory backbencher Andrew Rosindell used a Commons debate to demand the same security for the people of the Rock as the absolute pledge given to Falkland Islanders.

Sovereignty had not been an issue in the Falklands since the 1982 war - in contrast to Britain's attempt to share sovereignty over Gibraltar with Spain.

Mr Rosindell said: "In the light of the referendum result, Gibraltar's sovereignty, like the sovereignty of the Falkland Islands, must be regarded as a settled matter.

"In particular, the Brussels process should be abandoned immediately and the issue of sovereignty firmly removed from that or any other Anglo-Spanish agenda."

Mr Rosindell also used the examples of the referendums in Wales, Scotland, Northern Ireland and London to emphasise the strength of feeling in Gibraltar.

There was 74 per cent support for a parliament in Edinburgh, 72 per cent support for a London assembly, 71 per cent support for one in Northern Ireland - and only just 50 per cent support for one in Wales.

All the expressions of support fell far short of the rock solid 99 per cent in vote in favour of remaining British by Gibraltarians, on an 87 per cent turnout.

Mr Rosindell said: "The referendum result has, once and for all, exploded any claim that Gibraltar's situation resembles that of a divided society.

Northern Ireland is a wholly false comparison.

"Just like the referendums held in Scotland, Wales, London and Northern Ireland, the wishes of the Gibraltarian people should be respected, accepted and upheld."

Denis MacShane, the Europe minister, denied that the government had ignored the overwhelming expression of the wishes of Gibraltarians, seen in the referendum.

He said: "I do not ignore any expression of the people's will, whether it is made in a Countryside Alliance march or any other mobilisation, demonstration or referendum."

More bad news as Crown Resources 'closes down'

For some time now there have been reports circulating that Crown Resources, part of the group now associated with the 'Prestige' incident, were cutting down or closing down.

This has now been picked up by the Labour party who say that if the speculation is true "this is further bad news for the finance centre and extremely bad news for the employees of the company just before Christmas".

Crown Resources have been established in Gibraltar since 1996. They are a qualifying company. "Again we have to question how far the uncertainty surrounding the Commission's investigation into qualifying company status and our new tax proposals has played a role in their decision to leave Gibraltar," said Daniel Feetham. "Last year in a public debate on this issue we criticized the Government for not reforming our tax system earlier."

He adds: One of the points we made was that the Government should have either negotiated an orderly and planned phase out of our existing legislation with the Commission or should have planned the phase out and replacement of

our current system with new tax proposals at a far early juncture. The Government was issuing tax exempt and qualifying company certificates for a period of 25 years right up to the end of last year. Moreover right up to 1999 the Government was marketing our existing tax system on the basis that it would guarantee those certificates for the full 25 years. "That was sheer incompetence on the Government's part," he added.

Our role as an opposition party, a statement adds, is to point out the deficiencies in the way the Government has dealt with this and other matters and point to ways in which things could have been dealt with and indeed should be dealt with differently.

"The Government should accept the invitation we have extended to them in the past and it should meet with us and other political parties to discuss this situation in order to see what is the best way forward. If it does not, it cannot then be heard to complain that we are doing our job as an opposition political party by criticising their management of this issue," he said.

Banking on the rocks

Down goes another bank...

The confirmation of the closure of Hispano Commerzbank in Gibraltar is a further blow to the banking sector in Gibraltar. News of a scaling down in their operations was made public by the Government at the last meeting of the House of Assembly in answer to questions from Opposition Trade and Industry spokesman Dr Joseph Garcia.

At the meeting of the House in October, Dr Garcia asked the Government whether they had been informed by Hispano Commerzbank of any intended changes to their banking operation in Gibraltar.

The Government replied that one of the General Managers of the bank had met with the Finance Centre Director on 6 August 2002 and informed him, in confidence, of the bank intentions to scale down their operation in Gibraltar over a period of time. The staff of the bank had already been told also in confidence of these plans. The Government added that "In the meantime the bank continues to have a banking license and as far as we are aware has not made any public statement as to its intentions." Given that Dr Garcia had tabled a question in the House on this matter, the Bank had agreed to waive confidentiality so that the Gibraltar Parliament could be informed.

The confirmation that Hispano Commerzbank will leave Gibraltar by the end of the year is more bad news for the banking sector in Gibraltar, both in terms of employment and in terms of its impact on the economy as a whole. The Opposition says it takes "a very serious view" of the fact that after the departure of Credit Agricole and Hispano Commerzbank, Gibraltar will be down to 17 banks authorised for deposit taking business under the 1992 Banking Ordinance. This compares with 26 when the GSD came into office. The departure of these banks will also have a negative knock-on effect on the total amount of deposits held by banks in Gibraltar, which are already down.

The Opposition believes in the development of the finance centre and that it is possible to attract more banks to Gibraltar. This will serve to generate economic wealth and as a source of employment for our people. It is therefore a sorry day for Gibraltar that the exodus should continue.

Govt must reverse trend

The Labour Party says it notes that Hispano Commerzbank will be closing its Gibraltar operations by the end of the year. Yet again, the public appear to find out about these matters not through the Government but through the press. " We hope that the employees themselves were themselves told before the story appeared," said the party. "We are now seeing the lowest number of banks in Gibraltar since 1987. This is very serious for the banking industry and a very unpleasant announcement for the employees affected in the eve of the Christmas festivities."

The Government must do everything in its power to reverse this trend. The fact is that it cannot claim the plaudits of success in the Banking Sector as it did in 1997 and 1999 and then shun away from the consequences of failure. Some of these banks are leaving to consolidate operations in other jurisdictions. What are those jurisdictions doing that we are not?

"Further the Government should also come out with a public statement about what it knows (if anything) about reports that further Banks will be leaving Gibraltar or scaling down their operations. The fact that we are not elected will not deter us from asking legitimate questions, which require very simple answers," they say.

British policy remains unchanged

The new Europe minister Denis MacShane signalled a policy of ‘no change’ on Gibraltar in his 10-minute speech during the adjournment debate in the House of Commons late last night.

He defended the July 12 Straw statement on joint sovereignty, said there were no proposals to put to a referendum and that “the result of the referendum was what we expected.”

In this manner, he dismissed the political meaning of a 99% decision against joint sovereignty with Spain.

Andrew Rosindell made what the minister called a ‘powerful’ speech.

Mr Rosindell had winessed the open, fair and democratic manner the Gibraltar government had conducted the referendum. Any democractic society would have been proud.

There had been a genuine relief at a change of Europe minister, and hope in Gibraltar that he would be a friend.

The wishes of the people should be respected and upheld, said Mr Rosindell. Gibraltar’s sovereignty must now be regarded as a settled matter. The Brussels process should be abandoned immediately and sovereignty removed from the agenda.

CALL FOR OWN MP

He called for Gibraltar to have its own MP in parliament. He wanted to send an unambiguous message that Gibraltar is British and would remain so. He wanted the door slammed on Spain’s face.

Never again must Gibraltar be forced to hold a referendum to tell the British government that they wish to remain British. Gibraltar is British in its entirety and in perpetuity, said Mr Rosidenll.

Lindsay Hoyle said that after the 99% referendum result, the people of Gibraltar must be listened to, not only in London, but also in Madrid.

He said: It was a tribute to the people of Gibraltar, with the government and opposition coming together. He called for a new beginning, and the end of the Brussels agreement.

The minister waffled on for quite some time before getting anywhere. He thought that the people of Gibraltar would see that he was their friend, but at the end of his speech no one was convinced.

He spoke of the genuine concern of all parties for Gibraltar. There was laughter when he started to say that the Labour government wanted a better future for Gibraltar.

Mr Rosindell wanted Gibraltar to be British in perpetuity, but that is what the Treaty of Utrecht says, remarked Mr MacShane.

What we can do, added the minister, is to improve the quality of life for all Gibraltarians, a future free of border delays etc - as if it was a page from a speech by his predecessor.

It was an opportunity to promote better economic development for the future of Gibraltar, with its surrounding region.

This was why the Prime Minister and the Foreign Secretary had decided to relaunch the Brussels process, he said to shouts from the benches.

Mr MacShane tried to blame Mrs Thatcher for everything.

There was a repetition of the pledge that there would be no change in sovereignty without the consent of the people of Gibraltar.

If we could reach with Spain a comprehensive settlement, the whole package would be put to the people of Gibraltar, he said.

They also wanted the Chief Minister to be involved in the process. The invitation remained open.

The July 12 statement by Straw set out a number of principles for a lasting settlement with Spain, including joint sovereignty but other principles as well.

But he made it clear that ‘red lines’ had brought any deal to a close.

Mr MacShane repeated thatconsent was central to their policy.

Maltese ship detained after Gibraltar oil spill

The Gibraltar authorities have detained a Maltese ship after an oil spillage in Gibraltar bay. "The spill, of about 3,000 litres of light fuel oil, occurred from the Maltese flag vessel 'Pivi D' as she was taking bunkers from the Vemaoil VIII," said a Gibraltar government statement.

The Gibraltar authorities say that the causes of the spill are under police and port authority investigation. "However, the early indications are that the spill occurred from the cargo vessel 'PIVI D' as a direct result of inadequate vigilance and supervision of the bunkering process by the crew of that ship," said a spokesman.

The Gibraltar government revealed Monday that the incident occurred in Gibraltar waters on Saturday evening. The vessel has been detained and the Gibraltar police and Attorney General chambers are considering whether there have been breaches of the law calling for prosecution.

"Much of the spilled fuel oil was recovered from the sea before it reached the shore," said a Gibraltar government spokesman. But "a considerable amount " of oil polluted an area near Rosia to the south of Gibraltar, with 50 personnel deployed in the clean-up operation. None of the oil went outside of Gibraltar's territorial waters.

The spokesman said that the government here "takes a very serious view" of an oil spill "and will apply the appropriate sanctions against those responsible."

When the spill was detected on Saturday, the Gibraltar Oil Spill Response Plan was deployed immediately in very inclement weather. Vessels and personnel from various local shipping companies participated as envisaged in the Response Plan.

The government described the spill as "a rare incident of an oil spill during a bunkering operation in Gibraltar."

It says it is gratified to see that Gibraltar's oil pollution plan has been so effectively and quickly deployed by the Captain of the Port. Government would like to thank all those who have participated in the response to this oil spill in very difficult weather conditions.

Tax exempt companies "to be abolished by 2005"

Gibraltar's tax exempt companies must come to an end by 2005, says EU competition commissioner Mario Monti. It has been confirmed in Brussels that this will be proposed on Wednesday and that the final decision will depend on the Commission as a whole.

The aim is to bring Gibraltar's company legislation in line with that of the EU. 

The tax exempt legislation has been in force since 1967, whereby for a fixed annual fee offshore companies are exempt of paying company tax.

While the EU Commission is investigating the new Gibraltar tax plan, and further information has been requested by Brussels, the tax exempt companies must cease to exist, said reports from Brussels.

Reports first appeared in the Madrid daily El Pais which was later picked up by other media.

The Bloomberg financial news service said that the EU would demand on Wednesday that the UK abolishes the tax exempt companies.

The service quoted El Pais as saying that other fiscal benefits in Gibraltar that may constitute illegal aid to companies were being investigated. 

"A quarter of all money laundered in Russia comes from the British colony," it was claimed, citing Spanish government data.

Government must explain what is going on 

The Opposition says it is concerned at reports that European Competition Commissioner Mario Monti is set to recommend to the Commission on Wednesday the abolition of the Gibraltar Tax Exempt Company by 2005. This will only serve to add to the uncertainty already surrounding the sector.

It will be recalled that the European Commission opened an investigation into the Gibraltar Tax Exempt Company and the Gibraltar Qualifying Company on 11 July 2001 as "new aid". The case against the Tax Exempt Company collapsed because the European Court of First Instance held that this fiscal measure was not "new aid" but "existing aid", having been in place since 1967 before the United Kingdom joined the EC. This left the Commission with the option of re-opening the State Aid investigation against the Tax Exempt Company, this time as "existing aid".

This possibility was raised by the Opposition in the House of Assembly in April. The Government's view then was that that they expected that the tax reforms would lead the Commission to decide not to proceed with the Qualifying Companies and not start again with the Tax Exempt ones and that this was one of the advantages the Government expected by having taken the court case.

It is clear that the advantage that the Government expected to obtain is now not going to materialise. The action which Commissioner Monti intends to persuade the rest of the Commissioners to take against the Tax Exempt Company on Wednesday, is actually separate to and independent from the Commission's investigation into the new tax reforms. 

The reports suggest that Commissioner Monti intends to seek the end of the Tax Exempt Company by 2005, whether or not Gibraltar has put anything in its place.

In answer to previous Opposition questions on this possible 2005 deadline, the Government argued that this deadline for rolling back such tax concessions was not legally binding since it was only a political agreement which the Government was not bound to observe. In these circumstances, the Government should explain whether certificates for new tax exempt companies are still being issued. 

Moreover, it is also important to know what will happen to the existing tax exempt

company in place already which has a twenty-five year exemption guarantee if these have to be phased out by 2005.

According to reports in the industry, recently the Government has refused requests for Companies seeking Qualified status. However, in the House of Assembly the Government stated that they continued to authorise the setting up of Qualifying and Exempt companies. 

If there has been a change of policy this should also be stated publicly so that everybody knows where they stand.

The Opposition maintains that if there are policy changes taking place on how the finance centre is allowed to operate, then the public, as well as the industry itself, have a right to know what these changes are. There is a change in how the finance centre operates if they are not allowed to incorporate new companies. This lack of information can only lead to uncertainty and speculation which does not help anyone.

Job losses in coach sector

The T&G says is extremely concerned with the job losses and redundancies that are taking place and which are affecting T&G members in the coach tour sector. The T&G without getting involved in the commercial war that seems to exist between tour operators, are obviously worried with the detrimental effect this is having on employment.

"Staffing levels are being reduced to the bare bones and companies are replacing full time staff with part-timers and casual labour, which we consider to be a retrogressive move and which closes the door for any future job prospects on a full time basis for coach drivers" they say.

And add: "We hope that all interested parties should get together and agree a strategy that is beneficial and satisfactory to all concerned.

Chamber condemns Loyola’s conduct

The Gibraltar Chamber of Commerce joins with the International community in expressing its concern at the environment threat posed by vessels carrying ecologically sensitive cargos but which nevertheless do not comply with the highest standards of maritime safety. We also extend our sympathy to the people of Galicia who face an environmental hazard following the sinking of MV Prestige with consequential losses for their fishing and tourist Industries and the cost to the maritime habitat of the region.

The Gibraltar Chamber of Commerce condemns the efforts of the EU Commissioner Loyola de Palacios for breach of her duty to Impartiality. The Chamber of Commerce considers that her statements derogatory of Gibraltar’s Financial Institutions and of the Port Authorities are evidence of her partisan conduct and render her unfit to serve as a Commissioner of the European Union.

The Chamber of Commerce awaits the outcome of the Commission’s findings on the issue of any blame that may attach to Gibraltar In the matter of the MV Prestige and will pursue the issue of the Commissioner’s impartiality pursuant to these findings. The Chamber of Commerce denounces the continuing barrage of propaganda and the campaign orchestrated against Gibraltar from Madrid. It expects however that the European Union will not allow its Institutions to be used in like manner as instruments of the Madrid Government to further their policy of economic and political blockade. 

Private airport plan for campo area

Undeterred by Gibraltar’s airport, which is ‘limited in use’ whatever happens in the future

A group of investors, largely British and led by an Irish developer, say that they will go ahead with buildig an airport in Jimena, if any impediments are ironed out.

But the first problem has already arisen. The preferred location is in Castellar, but it clashes with plans by the local council to build a golf course there. Others point at Malaga’s and Jerez’s airports being close enough, and that what needs improving further are road and railway links.

However a second site has already been identified, known as finca Barria in Jimena, just across from Castellar, and not far from the hamlet of Marchenilla where many Britons and Gibraltarians have a home.

The idea has the support of the mayor of Jimena -but ecology groups and others have raised objections.

The ‘Partido Andalucista’ has described the private airport plan as a ‘monstrosity’. Poking fun at it, the PA asks whether the mayor intends to install the control tower atop the castle that dominates the area.

NOISE FACTOR

More seriously, there is concern about noise and the negative impact it would have on property in the area, where tranquility has been a factor that has attracted buyers of property.

The developers are led by Irishman Robert Noonan, who is bullist about the project. If the Madrid government gives it the go-ahead, the plan will begin to unfold. 

He is also undeterred by what may happen as regards Gibraltar’s own airport, arguing that it will always be of limited use.

The Jimena project would have a 2,500-metre runway,capable of handling Boeing 757-200 aircraft.

The plan is to complete it by 2005. Studies suggest that 1.24 million passengers would use it the first year, leading to 2.75 million after the first ten-year period.

It would open for 18 hours daily, thus able to attract regional and charter flights.

NOTHING NEW

Having an airfild in the area is nothing new. It is believed it was used as a landing strip during the Spanish civil war. In 1947 there was a study made about wind directions and other such matters.

Again in the 1960s, an exhaustive study of such a possibility was put in motion by the Franco government in the wake of the problems with Gibraltar, which led to the frontier closure.

The idea was to give the Campo area its own airport to dwarf that of Gibraltar. But after years of studying, nothing materialised. Instead, a refinery was built across the bay which,it is said, would be too close for a civilian airport to be given the green light.

NOT POLITICAL

The new project appears not to be politically motivated, and has not been aired to try and put pressure on Gibraltar to accept joint use with Spain of its own airport. It is a private initiative.

Indeed, there has been opposition to joint use of the Gibraltar airport ever since the Anglo-Spanish airport deal of 1987, which has now received a mortal blow with the referendum opposing the principle of joint sovereignty. Thus, only a purely commercial deal is now possible, which Madrid would not want.

Further, the MOD has now come out saying that they wish to retain controlof the airfield, so again this puts the brakes on any plan that could affect military use.

Act NOW to save the finance centre

The impending departure of Credit Agricole Indosuez bank has left many questions unanswered, not least the attraction of Gibraltar for financial services.

Th bank says that their departure “is not driven in any manner whatsoever by any Gibraltar-related factor” and it is to do with its global strategy of concentrating its private banking operations “within a limited number of locations.”

If that is the case, it is clear that they have chosen other financial centres in preference to Gibraltar. The Opposition has already pointed in his direction, saying that it “begs the question as to why they did not close down in another jurisdiction” - and keep their local branch open.

The bank’s first major mistake was to close down its local retail operation after so many years. This was interpreted then as the tip of the iceberg.

The Labour group, for its part, say they are “extremely concerned by the role uncertainty within the finance centre generally has played in its departure.”

MADE WORSE

Clearly, this uncertainty was made worse by the recent EU decision to re-open an investigation into Gibraltar’s new tax plans. It exposes the naivity of the Finance Centre Council in saying at the time that they welcomed such a move! In any other part of the world, there would have been resignations.

The bank’s closure is a big blow for the Government, which only weeks ago in the House of Assembly was professing that they knew nothing about it.

To say that “this is a further example of the current consolidation in the banking sector” is to say the opposite of what is happening, which is a dramatic downturn in the number of banks, from 26 in 1996 to 18 now.

If there is to be an attempt to reverse the downturn in finance centre activity, there is a case to recognise the problem for what it is and to face it with realism and resolve, bringing in other players who can contribute by offering fresh ideas to help arrest the dangerous trend that could set in. 

PANORAMA has already pointed at the possibility of a collapse in the finance centre. The answer is not for the Finance Centre Council to criticise those who are not blind to see an incipient trend, but for some of them to throw in the towel if they are incapable of leading such an important sector of the economy and to allow others to join in a concerted effort to try and save our finance centre before it is too late.

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