The Chief Minister of Gibraltar is urging Canadian companies to invest in the British territory despite rising tensions with its next-door neighbour, Spain.
“Gibraltar is open for businesses from the United States and Canada that may want to use Gibraltar as a stepping stone into the European Union,” Chief Minister Fabian Picardo said in an interview from Washington, where he is lobbying for investment and political support. “Gibraltar has huge advantages.”
Among the advantages, he added, are a 10-per-cent tax rate, no value-added tax and a strong local economy. There are drawbacks, notably tense relations with Spain that have hit the lowest point in 40 years and caused havoc at the territory’s only border crossing.
Gibraltar has always been a sore point in Spanish-British relations. Spain ceded the seven-square-kilometre peninsula on its southern coast to Britain in 1713 under the terms of the Treaty of Utrecht. In recent years, Spain has argued the territory is a colonial relic and it should be returned. However, the people of Gibraltar have consistently said they want to remain part of Britain.
Last summer, relations between Gibraltar and Spain worsened after Gibraltar began building a reef off its coast by dumping 70 concrete blocks into the sea. It said the reef was to replenish fish stocks, but Spain argued it hampered fishing in the area where fishing rights are already under dispute. In response, Spain tightened border controls, resulting in delays of up to eight hours for cars to cross, and threatened further action such as closing air space to flights to Gibraltar and conducting tax probes into Gibraltarians who have property in Spain.
Mr. Picardo, whose position is akin to a premier, said the border restrictions have eased somewhat lately, but he criticized Spain for behaving like a “bully boy.”
“Spain continues to try to bully Gibraltar into accepting Spanish sovereignty against our consent,” he said.
Despite the ongoing disputes, Mr. Picardo talked up Gibraltar as a sound place to invest. Gibraltar runs its own affairs and is a member of the European Union, although it uses the British pound as its currency. The territory has a reputation as a tax haven, but Mr. Picardo said it is compliant with international rules governing tax transparency.
Gibraltar has transformed itself into a world centre for gambling companies, which use the territory as a base for Internet gaming. Roughly 60 per cent of all online gambling worldwide is run though Gibraltar and the industry now accounts for nearly 20 per cent of Gibraltar’s $1.4-billion economy. It also employs about 2,500 people, or about 10 per cent of the workforce. Gaming companies have been lured to the peninsula by low taxes, knowledgeable workers and good infrastructure.
A recent crackdown on Internet gambling by the United States hurt many offshore operators, but Mr. Picardo said Gibraltar moved quickly to ensure its operators complied with U.S. rules. Now that some U.S. states are opening up their markets to online gambling in the wake of a court decision that lifted some of the restrictions, Mr. Picardo said Gibraltar is perfectly placed to take advantage.
He also said the ongoing dispute with Spain and the border problems should not dissuade potential investors. Crossing the border is not difficult for locals who know when to avoid the long lineups, he added.
Mr. Picardo had high praise for the Canadian government, which he said has backed Gibraltar in its dispute with Spain. Canada “supports the right of people to determine their own future in an exercise of self-determination in all colonial situations,” he said.
The same cannot be said for the U.S., which has yet to support Gibraltar, something Mr. Picardo hopes to change. The U.S. “is seen as a guarantor of democracy and freedom around the world,” he said. “So I think the United States has a duty to be as clear as categorical as other governments in the world are.”