23 October 2016
As its economy is based predominantly on financial services and trade, Gibraltar relies heavily on free access to the European market. Photo: Internet
As its economy is based predominantly on financial services and trade, Gibraltar relies heavily on free access to the European market. Photo: Internet

Gibraltar at a crossroads after Brexit

Apart from Scotland, Wales, Northern Ireland and the Channel Islands, also bearing the impact of the United Kingdom’s decision to leave the European Union is the tiny British overseas territory of Gibraltar.

Lying on the southern tip of the Iberian Peninsula, Gibraltar has a very high strategic value as it overlooks the entrance and exit to the Mediterranean Sea.

In 1704 Spain was besieged by the coalition forces of Britain, the Netherlands and the Holy Roman Empire during the War of the Spanish Succession.

After the war, Gibraltar was ceded to Britain for good in 1713 under the Treaty of Utrecht.

Deeply humiliated by the loss of its territory, Spain tried to take back Gibraltar by force in 1727 and 1779 but failed.

Since then the sovereignty of Gibraltar has remained a major point of contention between London and Madrid.

And reclaiming Gibraltar has always remained high on Spain’s diplomatic agenda no matter whether the country was under the military dictatorship of General Francisco Franco in the post-war years or under a democratic government since the late 1970s.

In fact, for most of the time since Gibraltar was ceded to Britain, Spain had been imposing a land blockade on the city.

It wasn’t until both Britain and Spain had become members of the European Common Market that the blockade was finally lifted.

Under the political framework of the Common Market and the subsequent European Union, both London and Madrid agreed to put aside the issue of Gibraltar’s sovereignty.

However, Brexit has somewhat put an end to that status quo. Even before the referendum, Madrid had already warned that it would raise the issue of retrieving Gibraltar with London again once Britain voted to leave the EU.

Following the referendum, the foreign minister of Spain expressed in public that “Britain’s exit from the EU undoubtedly presents an once-in-a-lifetime opportunity for Spain to take back Gibraltar”.

As the economy of Gibraltar is based predominantly on financial services and trade, it relies heavily on free access to the European market.

Once Britain leaves the EU, Gibraltar may also lose its EU membership.

Madrid thus believes there is a huge economic incentive for Gibraltar to reunite with its “motherland” in order to keep its EU membership.

However, it appears the Gibraltarians don’t see it that way, and are still eager to keep their British identity even if the country is going to leave the EU.

Although the majority of Gibraltarians are of Spanish descent, they are happy to remain British citizens, and most of them simply resist the idea of reuniting with Spain.

Gibraltar held two referendums in 1967 and 2006 over whether to reunite with Spain, and in both Gibraltarians overwhelmingly voted in favor of staying British.

It’s not that difficult to understand why. Apart from the three-century-long sense of belonging to Britain, under the existing Gibraltar Constitution, Gibraltarians are given a very high degree of autonomy.

Besides, unlike the Basic Law which only promises 50 years of autonomy and prosperity, the Gibraltar Constitution doesn’t have an expiry date, which means the Gibraltarians can stick to their real autonomy, common law system, independent public finance and British citizenship for as long as they want.

Many Gibraltarians are worried that they could be worse off both politically and economically if they were returned to Spain, as their city might lose its high degree of autonomy and degrade into just another local region of Spain, not to mention that Madrid might see them as a cash cow and milk them for tax.

It is generally believed that Gibraltar can find its way through the post-Brexit era. Like the Channel Islands, it can persuade Brussels to let it keep its EU membership by concluding a separate bilateral treaty.

This article appeared in the Hong Kong Economic Journal on July 13.

Translation by Alan Lee

[Chinese version 中文版]

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Associate professor and director of Global Studies Programme, Faculty of Social Science, at the Chinese University of Hong Kong; Lead Writer (Global) at the Hong Kong Economic Journal

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