UK rebuffs Spanish challenge to Gibraltar sovereignty

The United Kingdom government has dismissed a request from Spain’s Prime Minister, Mariano Rajoy, for a return to bilateral discussions on matters relating to Gibraltar under an agreement dating back to 1984.

Under the previous administration in Spain, Gibraltar and the UK had made significant progress on contentious issues surrounding Gibraltar’s sovereignty after more than a century of fractious relations. Through the trilateral forum, the three governments engaged on maritime border issues, customs policy and, critically, on tax information exchange. It was hoped that through the signing of a bilateral tax information exchange agreement, Spain would in turn recognize Gibraltar’s status as a transparent, highly-regulated international financial centre, lawfully independent from the United Kingdom.

However, in its election manifesto, the People’s Party, which took office this year, said it would seek to undo the work of the previous government and aim to restore the idea of ‘Two Flags (the United Kingdom and Spain), Three Voices’. This approach would remove Gibraltar’s power of veto over discussions pertinent to the territory and force it to mediate issues with Spain through the United Kingdom, under the terms of the 1984 Brussels Agreement.

Speaking at the General Assembly of the United Nations on September 25, Rajoy called for the United Kingdom to agree to a reset, and the resumption of negotiations under the Brussels process.

In a move welcomed by the Gibraltar government, the UK responded however that it would “not engage in any discussions about Gibraltar that the Gibraltarians don’t want to engage in”.

The Gibraltar government underscored that it had “already made clear that talks under the Brussels process are unacceptable to the government and to the people of Gibraltar”, and expressed hope that with the UK’s backing the matter would be put to rest.

“Gibraltar enjoys a veto on the resumption of bilateral discussions about Gibraltar and that is the end of the matter,” the Gibraltar government stated. “The only dialogue acceptable to the people and government of Gibraltar is a trilateral process, to which Gibraltar and the UK remain strongly committed.”

Article source: Investors Offshore.com

Spain may pay for Euro that serves others

Esteban Gonzalez Pons

Esteban Gonzalez Pons, the deputy general secretary of Spain’s ruling People’s Party, said Spain and Italy may end up paying for the euro while others benefit unless the European Central Bank brings down borrowing costs.

“We need the ECB to act like a central bank for the euro so that the euro doesn’t create a division between its members, with countries benefitting from the single currency and others like us being damaged by it,” Pons said in an interview on Onda Cero radio station today.

Spanish Prime Minister Mariano Rajoy, who returns to work in Madrid today after his vacation, is waiting for the central bank to set out the details of its plan to lower bond yields before deciding whether to request aid. ECB President Mario Draghi said the program would be in conjunction with Europe’s rescue funds and will likely be conditional on further measures to balance the budget.

Rajoy has already introduced more than 100 billion euros ($124 billion) of spending cuts and tax increases since December, driving the Spanish economy into its second recession in three years as unemployment rose to a record 25 percent in the second quarter.

“Part of the crisis is our responsibility but we are also paying for the single currency’s weakness,” Pons said. “Because we are among the strongest remaining European economies, Italy and ourselves are paying for the others.”

The Spanish government is cutting spending on health and education and Italy’s bond yields have surged even as it heads for a balance budget next year. By contrast, German exporters are generating 100 billion euros a year in additional sales as the debt crisis holds down the currency, making foreign sales cheaper, according to Nathan Sheets, chief international economist at Citigroup Inc. in New York.

Article source: Bloomberg.com