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Spain hopeful of closing Gibraltar Brexit deal with UK by October

Spanish Prime Minister Pedro Sánchez will leave aside the thorny issue of the British Overseas Territory’s airport in order to facilitate ongoing bilateral talks

Spanish Prime Minister Pedro Sánchez in Salzburg this week.
Spanish Prime Minister Pedro Sánchez in Salzburg this week. EFE

The Spanish government is trusting that the negotiations it is engaged in with the United Kingdom on the issue of Gibraltar will bear fruit very soon. Prime Minister Pedro Sánchez is hopeful of reaching a deal on the British overseas territory, which is located in the south of Spain, in the month of October, before the UK concludes a deal with the European Union on “Brexit” – the process by which the country will exit the 28-country bloc.

Spain wants the deal on Brexit to include a specific protocol on Gibraltar, and to facilitate this, Sánchez has excluded from the negotiations the controversial aspiration of Spain to have joint use of the airport in the territory.

There is determination on the part of the British and Spanish governments to reach a deal in October

Spanish PM Pedro Sánchez

“We hope to be able to reach a deal with the United Kingdom in October,” Sánchez said at a press conference after the summit of heads of state and government that took place this week in Salzburg. The PM explained to his EU partners – the leaders of the other 26 member states that, along with Spain, will remain after Brexit – the scope of the discussions with London over Gibraltar. “I have found the support of my partners over this,” he said. “We need a deal on Gibraltar in October.”

In Sánchez’s opinion, the pending issues are “loose ends” that can be resolved between now and then. The Spanish government wants those agreements, which will reduce the imbalances between Gibraltar and its surroundings, crystalized in a European protocol, annexed to the Brexit deal, as EL PAÍS reported on Monday.

Asked by a British journalist about the viability of that strategy, Sánchez said he was optimistic. “There are still some complications, but there is determination on the part of the British and Spanish governments to reach a deal in October,” he said. The complications lie in all the areas to be dealt with at the bilateral talks between Madrid and London: environment, tax and tobacco-smuggling (see box below).

Despite these stumbling blocks, Sánchez was keen to highlight the “constructive focus” of the British government, which is showing its commitment to close down a deal soon, despite not yet having made any formal guarantees.

The current agreement that the countries are trying to reach will have a very short shelf life

Sánchez avoided mentioning the airport – which was built by the UK on land that Spain does not consider to be part of the British Overseas Territory – as up for discussion. The failure to reach a deal on that point in the past suggest it is an issue best left for the future. The current agreement that the countries are trying to reach will have a very short shelf life: the 21 months that, presumably, will pass between the UK leaving the EU (on March 30, 2019), and the coming into force of the future framework for the relationship between the country and the bloc (in theory, in January 2021).

After Sánchez made his statements, a spokesperson from the British government told EL PAÍS: “We are continuing to have constructive discussions with the government about Gibraltar and with our European partners, including Spain, to tackle the practical implications that have arisen from the exit of the United Kingdom from the EU.”

But despite all of this, the objective of October is a massive challenge – both for the bilateral agreement on Gibraltar, and the actual Brexit deal itself.

English version by Simon Hunter.

Madrid’s key demands

Smuggling. Gibraltar is the biggest entry point for illegal tobacco products into Spain. Last year authorities seized more than 600,000 packs of cigarettes, a 158% rise from 2016, according to official data. Madrid wants the price of tobacco, which is much lower in Gibraltar, to be raised in order to make illegal trafficking less attractive.

Taxes. There are 55,000 registered businesses in a territory of just over 30,000 residents. Madrid wants stricter tax residence criteria to prevent businesses that operate in Spain from registering in Gibraltar for tax-avoidance purposes.

Workers. The Spanish executive wants more stable conditions for the 10,000 to 12,000 workers who cross from Campo de Gibraltar into the overseas territory each day.

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