Gibraltar : Interview with The Hon. Peter Caruana

The Hon. Peter Caruana

Chief Minister

The Hon. Peter Caruana
Can you please give us your thoughts on, and hopes for, the new trilateral negotiations taking place between the UK, Spain and Gibraltar?

The agreement to take part in the new three sided talks responds to, and represents acceptance by the United Kingdom (UK) and Spain of the terms which we have been asking for eight years now, of what would be required if the process of dialogue were to be safe, fair and viable for all sides.We are happy with these trilateral talks because we believe that they are indeed fair to all parties, in that no one should be made to compromise their positions as the price for approaching the discussion table.We also believe the structure of the dialogue process is such that all parties can take part without prejudice to their position in the dispute.It was a lack of these conditions in the past which obliged us to not take part in the bilateral talks between the UK, our colonial power, and Spain, the sovereign claimant, because a bilateral process between those two parties simply does not show sufficient respect for our view, which is that we are a colonial people with the same right to self-determination as any other colonial people in history. Given that the discussions were about our homeland and its decolonisation, it was simply unacceptable for any conversations about Gibraltar’s affairs to take place in a process in which the people and the government of Gibraltar were not the primary player.

We believe these trilateral talks are a breakthrough in the historical obsession with bilateralism which benefited nobody in the past because the democratic realities of the 21st century are that it is not possible for the UK and Spain to agree on anything and then expect to implement it over the heads of the people of Gibraltar.For the first time in history, we have a process of dialogue in which all three sides attend on the same basis, in which we have our own separate voice, not represented by our colonial power the UK, and in which agreements need the approval of all three parties. There is a completely open agenda, as consistent with both our right to self determination as it is with the sovereignty claim of Spain, therefore the structure excludes nobody’s position. I think that a lot of people have come to a very sensible, albeit belated decision, regarding these trilateral negotiations.

What do you think will be some of the implications of the new EU ruling against the UK and Gibraltar?

The ruling is very complicated with technical jargon, so I will try to provide a little background. Gibraltar has historically been what was originally called a tax-haven, then an offshore center, and now an international financial center. However, to put Gibraltar into this category is quite unfair because Gibraltar is an integral part of the European Union (EU), we are also part of the EU Single Market and Financial Services, subject to EU laws and regulations related to financial services, so we are completely EU compliant.

For years the OECD (Organization for Economic Co-operation and Development), the IMF (International Monetary Fund) and the EU Code of Conduct Group have had ambitions of eliminating certain harmful tax measures of international financial centers.When the OECD first expressed it unhappiness with “ring fencing,” which is having different, discriminatory tax regimes for onshore and offshore companies, we knew the days of our discriminatory regimes were limited.We therefore developed a completely new tax system to replace this old tax regime, which the EU then ruled was a breach of state aid regulations for two reasons: 1) the material selectively ground, which is to say there are things within the scheme itself that violates some rule within the state aid body of law, and 2) the regional selectively ground, which would regard Gibraltar as little more than a region of the UK, and just as regions of the UK are not entitled to discriminate, we would then also not be allowed to discriminate.We believe both of these reasons, and especially the second one is not valid because Gibraltar, according to international law and European treaties, is not regarded as a region of the UK. Therefore, both the UK and Gibraltar governments are challenging the European courts regarding this latest ruling.

In the meantime, the existing regime will be allowed to continue until this issue is settled in the courts.If the court were to rule for us, on material and regional selectivity, we could then decide whether to implement the “notified scheme,” which is a payroll tax system, or whether to abandon that and add a new scheme.The essence of the commission’s regional selectivity argument is that because Gibraltar is a region of the UK, and therefore that we are not entitled to have a tax regime different from the UK.

If we were to lose, which I seriously doubt, then the effect of it would be that Gibraltar could not have a tax scheme more favourable than that in the UK.In terms of possible outcomes of the litigation and its consequences, it depends on what grounds the courts rule. However, it is important to note that one possible consequence of the courts ruling against us on the issue of regional selectively would be a political one, in which the UK would have no other option than to formally and fully integrate Gibraltar politically into the UK, because state aid rules do not just apply to taxes, but apply to government as well.Of course the UK finds that possible prospect as difficult and complex as we do, which is why we have both rushed to challenge this ruling.

Do you see the United States government playing any role concerning the issues of Gibraltar’s political situation?

There is no economic link between Gibraltar and the UK.The economy of Gibraltar is entirely self sufficient, we get absolutely no aid or financial contributions from the UK, we raise all our own taxes and revenues and we make all the spending decisions. There is no fiscal or economic link whatsoever and no budgetary link between Gibraltar and the UK.In political terms, we value our British sovereignty and we do not wish to alienate it, however we do want to modernize our relationship so that it ceases to be colonial in nature and that it becomes a more dignified relationship moving into the 21st century.In other words, we want pur relationship with the UK to be non-colonial in nature.

I suspect that the American government views both the UK and Spain as valuable allies and has opted not to complicate its relationship with either and therefore has chosen to take a back seat with regards to the Gibraltar question. However, this should not disguise several important facts: 1) Gibraltar is a hugely supportive port for the American Navy which is free to use and enjoy the port with much freer restrictions and with a much more welcoming feeling than almost any other port in the Mediterranean, and 2) whatever maybe the pragmatic or diplomatic motivation of the US in not wanting to visibly take sides, there are certain essential characteristics of the US, as a country with a system of values, which are inescapable and cannot be forgotten in the case of Gibraltar. These values are the subscription to democracy, human rights and the right to self determination of a people.The idea that the American philosophy can allow an American government to say “we believe Gibraltar should be Spanish,” even though the totality of the population of Gibraltar are opposed to that, is about an un-American as I can think.

Therefore, I have always proceeded on the assumption that whatever might be its publicly stated position, both the American government and the American public, have got to side with the colonial peoples who are saying “this has been our homeland for 300 years, we, like all colonies before us, have the right to self determination,” as the Americans themselves did when they were a colony. I therefore have no doubt as to where I would expect Americans to stand with regards to this dispute.

Is Gibraltar actively seeking the United States government’s political support?

There is something called the Gibraltar American Council which is run out of Washington D.C. by a gentleman named Perry Stieglitz, who is a retired US diplomat.The chair of the Gibraltar American Council is Toby Roosevelt, who is the widow of Ex-President Roosevelt’s son.She is just one of an impressive group of leading US citizens that have come to know the Gibraltar case and have espoused the principles and views that I suggested earlier, which would come quickly, easily and inevitably to the average American citizen, and have taken up the cause.The Gibraltar American Council is the result of these peoples’ efforts and passions regarding Gibraltar’s cause.

How will the Gibraltar government continue to develop the port in order to support the business community as well as the growing cruise line industry?

Gibraltar is an important port both militarily and commercially. The US Navy uses our deep dry docks whenever it needs to, as a ship did recently on its way back from the Iraq theatre.It is a very strategically located ship repair facility, and that facility is an important part of the infrastructure of our port. There are other hugely important dimensions to our port and therefore to its value to our economy. Gibraltar is the largest ship bunkering port in the Mediterranean Sea by a large margin and that delivers a huge amount of business to port operators, not just in bunkering supply but in general ship maintenance and servicing.

There is also the tourism side to the port. Gibraltar is one of the most popular cruise ship ports of call in the western Mediterranean Sea, particularly popular with American cruise companies as Gibraltar has a resonance in circles of American society.We have responded to those American companies, understanding the particular security requirements of those companies by adopting airport type security for our port long before any other port in Europe, scanning passengers and luggage before they embarked on cruise ships, as would be done in any airport.We did this to enable and allow American cruise companies to transmit and inform their potential passengers who, at a certain period of time, did develop a particular security concern.

The port is one of our macro-economic infrastructures and delivers hundreds of jobs in the economy and represents a major area of economic growth areas in the years to come. Every year is a record year for bunkering and the number of ships visiting our ports for servicing purposes.

Does the Gibraltar government do anything to specifically target North American tourists?

We do attend the leading global conference on cruise ship tourism which takes place in Miami each year, but we do not do anything in particular to market to or doctor our image as a tourism destination specifically to North Americans. However, I like to think that when Americans do come here from those cruise ships that they feel very much at home, which they appear to do because Gibraltar really is a microcosm of the United States of America.It is a place that over the course of the last three hundred years has become the home and land of people who have come from all over the world which is the American experience.That is both appealing and palpable as you walk the streets here and feel the extraordinary cultural mix of Anglo-Saxon, Latin, Moroccan, Indian and many other peoples.

What negative consequences do you see associated with the growth of the gaming industry in Gibraltar?

The Internet, as an economic trading platform, is going to challenge the established ways of doing things in many, many areas of commercial endeavour, as it has already done in the retail business, the airline reservation business and the holiday booking business. Gaming is no exception, nor is there any particular reason why it should be thought to require an exception to that.What it does raise is the need for regulation.How do you ensure that gaming on the internet is not accessible to people that would not normally be allowed to game in a brick and mortar establishment, i.e. young people, gambling addicts, etc, and how do you ensure such issues as solvency and code of conduct?Those are the real challenges, not whether gambling is right or wrong.With respect to these regulatory issues, Gibraltar plans on being at the global forefront of regulating our gaming industry in order to ensure that the laws of other countries are not breached, along with many other concerns.We believe that if we do those things that the gaming industry is perfectly legitimate and a perfectly viable way to our future economy.

What kind of personal legacy would you like to leave when you eventually leave office?

What I would like to leave as a legacy is a political future in a permanent, political status which can be free and democratically chosen by its people and an economy which will be as prosperous for the next hundred years as it has been for the last thirty years. Gibraltar is a very privileged place in the world to live.It has a very high standard-of-living; it is very safe and also socially and economically prosperous. There is a huge degree of social harmony in the sense that ethnic origin and religious differences are simply regarded as irrelevant. Here in Gibraltar, Jews, Muslims, Hindus and Christians live side by side and people would regard you as very odd if you tried to deal with people based on these differences. The combination of these characteristics makes Gibraltar a very privileged spot on the planet and we would like to keep it that way.

Do you have a final message for our readers?

Gibraltar is a small British population in Europe in the 21st century, representing Europe’s last colony and we deserve to have our right to self determination respected, and thus we look forward to international support with respect to that right.In economic terms, this is an extremely well run community. Every aspect of its economy is based on a bedrock of policy, which has as its first priority the protection of the jurisdiction from “reputational risk” and standards of excellence because as a very small community we have very little else to offer our international clients than the assurance that they are doing business in, and with a jurisdiction, in which their own reputations are not in jeopardy. Whether we talk about the gaming industry, shipping industry or finance industry, that is on the top of all government policy considerations which is the reason all our industries have grown so significantly and why the blue chip companies feel so comfortable doing business here.If the government places so much importance on the “reputational risks” to the jurisdiction, then companies benefit in the fact that their own corporate reputations are similarly protected.