Thursday, July 19, 2012


Leaving the issues of the Treaty of Utrecht and sovereignty aside the most important decision that may have to be faced by Gibraltar in the coming years is will it remain a member of the EU?
Ironically Gibraltar is a member of the EU solely by virtue of the UK’s membership. Gibraltar will cease to be part of the EU if the British Government withdraws. Gibraltarians should have a vote in any UK referendum on the issue but its 20,000 votes are unlikely to swing the decision one way or the other. What is more if Gibraltar votes to stay in and the UK votes for pulling out: the Rock is out.
Britain’s continuing membership is vital for our Financial Centre and the Financial Centre is vital for the future financial stability and independence of Gibraltar. In the Budget debate, Gilbert Licudi, the Financial Services Minister spoke of exploring new emerging markets like Brazil, Russia, India, and China, the so called BRIC countries, which are enjoying massive economic growth. This he pointed out was particularly relevant as Gibraltar can offer them an alternative entry point into the European single market. Or it can if the UK remains in the EU.
So what if Britain withdrew? One of the first persons I asked was Marc X Ellul in his role as chairman of the Association of Trust and Company Managers. His response was short but sweet: “I consider it to be something which will not ever happen.” I mention what he said because in part I agree with his view: however the job of government is about planning not only for what will happen but also for what might not happen.
My personal view is also that withdrawal is unlikely. All recent UK Governments have been pro-Europe even the Conservative euro sceptic ones. Tories might moan about Brussels but when it comes down to it bitching and pulling out are two different things. Britain’s Foreign Secretary William Hague was interviewed by Andrew Marr on the BBC recently just after his boss David Cameron had made his widely reported time for a referendum comments. It was clear Hague believes Britain’s place is firmly within the EU.
The scenario for Britain’s withdrawal comes at the next election. The Conservatives now cut adrift from the Liberals against Labour know that the British public favour a referendum on withdrawal. Hence it makes sense to a euro sceptic party to include in its manifesto a commitment to hold an ‘in or out’ referendum. Cameron will be desperate to carry the euro sceptics with him for they have nowhere else to go except to UKIP which could steal enough votes or seats to usher in a Labour or Labour – Lib Dem coalition. I believe any future Tory - Lib Dem deal is dead in the water.
So Britain could have a Conservative Government (or even a Tory – UKIP coalition) where an “in out” referendum is granted to the clamouring masses. Given that the Murdoch press and other media such as the Express and Mail will campaign for pulling out that is indeed the way things may go.
Britain and Gibraltar pull out: what then for our Financial Centre? My first port of call was the Financial Centre itself who sent me to Stuart Green for comment. He told me: “The finance centre has been built on the basis of access to the EU internal market. The implications of the UK departing from the EU would depend on the arrangements that would then be put in place between the UK and the EU upon the UK’s exit.” Basically Stuart’s comments leave us none the wiser but hint at pending doom if the arrangements are not in our favour.
Next stop was Emma Perez who apart from being CEO of SG Hambros is president of the Gibraltar Banker’s Association. I caught her on the hop but she told me: “The first things that spring to mind however would be the loss of passporting capabilities for Gibraltar Banks into EU and also the implications which could arise vis a vis EU directives which would therefore not be applicable.” This ability to passport into the EU of course is what Minister Licudi is basing his entire BRICS strategy on.
Finally I spoke to James Lasry who is Chairman of Gibraltar Funds and Investments Association. He stated: “Gibraltar is firmly within the EU and its legislative framework and it has positioned itself over the last decades to maximise its position within this context. It would be difficult to conceive of Gibraltar not being within the Union. The funds and investment industries take full advantage of the passporting rights afforded to EU members.”
Yes James, but is there life for the Finance Centre after EU death by withdrawal? His answer is positive. He continued: “Having said this, if Gibraltar were to cease to belong to the Union, its infrastructure and experience could be reapplied to use in non-European contexts such as in the cases of the Channel Islands."
Marc X Ellul believes the UK’s withdrawal from the EU is unlikely, and I agree, but at least we have the reassurance of James Lasry who believes our Financial Centre still has a strong future based on the Channel Islands model. The success of Gibraltar’s financial sector and our very economy will depend our ability to adapt to a sound “in or out” strategy.