Will Gibraltar be Brexit’s fall guy?

The Rock – a limestone thumb barely twice the size of the City of London – has been the subject of a 300-year custody battle between London and Madrid, but Gibraltarians voted almost unanimously to stay under United Kingdom control in 1967 and 2002. They voted by a similar margin for Britain to stay in the European Union in the Brexit referendum. The overall result of that vote, though, has thrown their political and economic future, and way of life as Mediterranean British citizens, into doubt.

Brian Reyes, editor of the Gibraltar Chronicle, says Gibraltarians have a ‘British nationality, but with a Mediterranean dimension … uniquely rooted in this Rock.’ While the Union Jack can be seen all over Gibraltar, gift shops are also full of soft-toy Barbary monkeys – more on them later – sporting EU flags.

With its blink-and-you-miss-it border with Spain and the neighbouring town of La Linea de Concepcion, Gibraltar is a part of the UK that will be greatly affected by its departure from the EU. Much of the Brexit focus thus far has been on the Irish border, but issues here, on the shores of the Med, are every bit as contentious. Fish and chip shops, red telephone boxes, and pointy police hats made their way to Gibraltar with the British. Now that way of life, where pies and paella coexist and many Gibraltarians speak in a stream of Andalusian-accented Spanish and English, is challenged by Brexit.

Just how problematic the vote would prove for Gibraltar was evident within hours of the results coming in on June 24, 2016, when former Spanish Foreign Affairs Minister, Jose Manuel Garcia-Margallo, called for shared British-Spanish sovereignty of Gibraltar. Although the issue has not been as high profile as some others in the Brexit negotiations, when it has come up, it is quite clear how high the stakes are, with former Tory leader Michael Howard even raising the prospect of Britain going to war with Spain over the territory.

While such sabre-rattling seems, mercifully, to have quietened down, the possible ramifications for daily life in Gibraltar are real, huge and immediate, with issues over immigration, borders, trade and sovereignty – all critical questions on the Rock – still to be decided.

Most obviously, there is that border, across which Gibraltarians (and Spaniards) are able to cross in relative ease each day to work, shop, live, eat, and love. Virtually all Gibraltar’s food comes across it, while all its waste travels in the opposite direction. But there are many other uncertainties too. Gibraltar’s low 10% corporate tax rate – less than half the prevailing rate across the border in Spain or back in the UK – could leave it vulnerable to EU economic sanctions against undue tax competition. And if the UK doesn’t negotiate access to Spanish healthcare for Gibraltar’s citizens – which they get on a reciprocal basis now – they may have to return to the UK for state-funded specialist medical treatment.

All of these basic questions of life are unresolved and pose the biggest challenges to life on the Rock since its civilians were evacuated during the Second World War and a 16-year closure of the border between 1969 and 1985. Reyes from the Gibraltar Chronicle said while there’s uncertainty in Gibraltar ‘this is a pretty resilient community. I mean, we’ve seen challenge in the past… we’re optimists.’

They might need to be. The biggest challenge for Gibraltar could be any new rules on the movement of workers. The 2.6-square-mile territory has boomed in the last 30 years thanks to a low corporation tax – combined with British law – attracting global financial, gambling, and gaming companies. These are staffed by Gibraltarians but also thousands of Spanish, and EU workers who commute across the Spanish border daily with barely a wave of their passports or identity cards. Up to 40% of Gibraltar’s workforce commute to more than 10,000 jobs on the Rock each day and most of Gibraltar’s tourists arrive from Spain. The arrangements have also been beneficial to the surrounding Spanish region of Andalusia and the next-door town, La Linea, which has one of the highest unemployment rates in Europe at around 35%.

Brexit threatens the current state of affairs, though, with its challenge to the key EU pillar of the free movement of people between member states. However, it would be misleading to claim that the current border arrangements are always ‘frictionless’, as the current in vogue word has it. Occasional rows between Madrid and London can seriously gum up the crossing. As Reyes explained: ‘The border has in the past been used almost as a political pressure point. So it’s like a tap. Turn it on, turn it off.’

A dispute over Gibraltar creating a concrete scuba diving attraction allegedly on La Linea fishermen’s favourite spot triggered enormous delays in the mid-2000s. Delays have also been provoked by Royal visits and Gibraltar’s acceptance into UEFA football competitions. Matters tend to be worse when the right-wing Spanish PP (People’s Party) is in power, when officials cite concerns over drugs, arms, and money-smuggling to justify more intensive border searches. Gibraltarian Stephanie Martinez said she had experienced ‘three-hour walking queues and 12-hour car queues’ when things were really bad ‘political-wise’.

However, even those delays are an improvement on the situation before Spain joined the EU. In 1969, Franco closed the border altogether. It was not fully reopened until 1985, after the UK threatened Madrid that unless it did so London would veto Spain’s entry to the EU in 1986.

It is hard to see how things are going to get any better when, once again, only one side of the border is a EU member. Indeed, Spain are acutely aware just how the tables have turned since the mid-1980s.

In its 2017 draft Brexit guidelines, the European Commission gave Spain an effective veto over Gibraltar by stating that no deal on the Union’s future relationship with the UK would apply to the territory without Spain’s agreement. That has not gone down well, among the europhiles in the territory. Gibraltar’s deputy chief minister Joseph Garcia told me: ‘People felt that it was an unnecessary slap in the face to people who had voted 96% to remain in the EU.’

Garcia said that Gibraltar’s government’s view is that Spain’s veto is illegal and Gibraltar will challenge it in court if Madrid invokes it. However, if Spain did veto any deal and Gibraltar’s challenge failed, would London reject a deal which didn’t include Gibraltar? It seems unlikely that the UK would put Gibraltar’s 30,000 population ahead of 65 million people on the mainland, even if Garcia says David Davis has assured him that ‘they would not do the deal without Gibraltar’.

As Jon Henley, the Guardian’s European affairs correspondent, said: ‘That’s the $64,000 question. It’s pretty hard to see that the rights of the small rock off the southern tip of Spain are going to be privileged over a vital sector of the UK economy.’

Fredrick Martin, a senior trade union official for Unite’s Gibraltar branch, expresses more optimism. ‘I don’t think [the UK will] actually believe that it’s good and proper to throw [Gibraltar] underneath the bus… for the purpose of getting a better deal… Fingers crossed.’

At Gibraltar’s Admiral Casino on a recent Sunday night locals were playing bingo. One British woman, who had recently moved to the Rock said she would leave if the flag came down: ‘They [the Spanish] don’t really want Gibraltar, they want to bring Gibraltar down, for nothing.’

Gibraltar’s minister for financial services and gaming, Albert Isola, said that after the referendum it felt like a ‘morgue’, but that it might not be as bad as it seemed at first. Isola said the Gibraltar government’s sectoral analysis on Brexit found that roughly 90% of its financial services sector is accessing the UK market and just 10% the EU.

But Peter Howitt, founder of Ramparts law firm, which is based in Gibraltar and the UK and serves financial and tech companies, is less upbeat. Companies in Gibraltar depend on access to the EU’s single market and ‘they would definitely need to have a new company that is authorised within the EEA [European Economic Area – the EU, Iceland, Liechtenstein, and Norway].’

He added: ‘I can’t think of… anyone, who’s said that they’ve watched this unfold with confidence. Most people consider this to be a kind of train wreck, in slow motion, watching the establishment in the UK tear itself apart to some extent.’

If a special Brexit deal continued the current arrangements many potential challenges for Gibraltar could be avoided. In November 2016, the Chief Minister of Gibraltar, Fabian Picardo, said he wanted a ‘bespoke’ deal for Gibraltar, including keeping freedom of movement and access to the EU single market, even if the UK doesn’t get these. It’s not clear whether Gibraltar’s government is still pursuing this. When I asked whether Gibraltar is pushing for a special deal, financial services minister Isola said: ‘I don’t believe we are.’

Deputy chief minister Garcia said Gibraltar is looking to maintain the status quo during a Brexit transition period and will then look ‘to negotiating a new relationship with the EU once we’re out’.

It seems that Gibraltar – and its Mediterranean-but-British people – will have the same deal as the United Kingdom on day one of post-Brexit life in March 2019. Peter Hewitt says the choice is ultimately the same: ‘A decision needs to be made about whether the UK or the Conservative Party is going to pursue a ‘little England’, splendid isolationist policy, which is a risk, I think. Or whether it’s going to actually look at what the UK’s position should be in the modern world.’

Harry Ridgewell works for WikiTRIBUNE, a not-for-profit news website where professional and citizen journalists work side-by-side