Why the tiny territory of Gibraltar could be a major Brexit headache for Theresa May
- Gibraltar poses a headache for Brexit negotiators.
- Its service-based economy relies heavily on the free flow of workers across the border from Spain, a process which Brexit is likely to disrupt severely.
- Because Spain's relationship with Gibraltar is so politically sensitive, Brexit negotiation guidelines dictate that Spain has to sign off the UK's proposals before the EU does.
- That makes it especially tricky for British negotiators.
- "I worry that issues around Gibraltar haven't been given enough consideration in London; that [a solution] will come in at the very end of negotiations and perhaps not be the best solution, because it's been cobbled together at the last minute," said Julie Girling, MEP for South West England including Gibraltar.
LONDON - The tiny territory of Gibraltar poses an outsized problem for Brexit negotiators. The rocky outpost on the southern tip of Spain has been a British territory for three centuries, and its service-based economy relies heavily on the free flow of workers across the border from Spain, which account for around half its workforce.
While it may not be discussed as much as the Irish border, it still poses a serious problem which needs addressing before the EU signs off on a Brexit deal with the UK. And the European Commission is clearly worried too, highlighting last week that the Gibraltar issue is a "serious" one which "remains pending."
Brexit: An existential threat
Gibraltar is a self-governing territory with 34,000 residents, most of whom are British citizens and 97% of whom voted to remain in the European Union in 2016. Equally, Gibraltar is physically connected to Spain and mainland Europe, and has close links with Spain, which frequently challenges the UK's legal claim to the territory.
When the UK leaves the EU in March next year, Gibraltar's border with Spain will become a divide between EU and non-EU territories. Without a solution, Brexit is likely to severely disrupt the free passage of goods and people across the border - something currently facilitated by membership of the European single market.
Gibraltar isn't part of the EU customs union, so tariffs already exist on the flow of goods at its border with Spain, but the real issue is the flow of people for a heavily services-based economy, which includes banking, insurance, and other financial services.
More than half of Gibraltar's 27,000 jobs are currently staffed by those crossing the border from Spain every day. Currently, they face very few passport checks. Any significant change to that would likely cause severe economic disruption on both sides of the border.
The Spanish veto
Currently, few workable solutions are on the table from the UK government, mired as it is in Cabinet infighting and stagnant progress on even bigger issues.
"I worry that issues around Gibraltar haven't been given enough consideration in London; that [a solution] will come in at the very end of negotiations and perhaps not be the best solution, because it's been cobbled together at the last minute," said Julie Girling, MEP for South West England and Gibraltar.
Here's the most significant part: Because Spain's relationship with Gibraltar is so politically sensitive, Brexit negotiation guidelines dictate that "no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom."
That means any agreement or proposal the UK comes up for Gibraltar with has to have the full approval of the Spanish government. That effectively hands Spain a veto over Britain's exit deal with the EU.
As it stands, both the UK and Spain are striking an optimistic tone about the prospects of finding a workable solution, though its shape remains unclear.
And although Spain does not look likely to try and delay wider negotiations, it could hand Theresa May another significant headache before October, when both sides intend to sign off the final Brexit deal.
The EU's mantra bears repeating: "Nothing is agreed until everything is agreed."