All that remains sound between Spain and the UK

All that remains sound between Spain and the UK

Theme[1]: The relations between the UK and Spain are extremely close-knit and should not be allowed to be jeopardised by the Gibraltarian government’s recent actions.

Summary: The sinking of concrete blocks in the sea by the Gibraltarian authorities, making it impossible to fish in waters whose jurisdiction is claimed by Spain, is an objectively serious event due to its unilateral and irreversible nature. But the way in which Madrid and London are approaching this umpteenth crisis leaves one with the unpleasant feeling that the strategic importance of the links between the UK and Spain –which are extraordinarily close-knit and should be considered a key asset to both parties in the economic, social and even political arenas– are not being sufficiently valued.

There may not be another case in the world of two countries that, without being neighbours or sharing a common language, have a greater interpersonal, business and even cultural interaction. Nevertheless, the disputes about the Rock of Gibraltar (both on sovereignty and on the way of tackling the questionable legality of many activities that are based there) condition and weigh down a relationship with enormous potential for both the UK and Spain in the bilateral or multilateral areas of security, internal markets and, in brief, other spheres where they can cooperate politically, working closely as important European partners.

Analysis: During the August holidays there was a very high statistical probability of Spanish and British holidaymakers coexisting peacefully in close proximity on the same beach, reading in their respective newspapers about the latest escalation of tension concerning Gibraltar. The former will see that their media are devoting even their front pages to the subject and that, unavoidably, along with the full-length articles and dispassionate analyses, recourse is made to the patriotic clichés that have been ingrained over the years and that automatically consider Spain to be right in its claims over Gibraltar; the latter, on the other hand, are likely to read about the issue in less prominent places and will not be offered as much information, although that relative lack of interest is unlikely –especially in the case of the tabloids and perhaps the Telegraph– to avoid chauvinistic stereotypes seeping out or editorial comments resorting to the well-worn metaphor of the Rock and the Gibraltarians’ resistance being the incarnation of solidity itself.

The solidity of the reasons defended by two of the most advanced European democracies in a diplomatic conflict as complex and as long-standing as this are extremely difficult to gauge with any degree of certainty. Nevertheless, it is possible to be more objective when it comes to measuring how sound the relations are between the two countries that are now engaged in the umpteenth episode of a dispute which this time has spiralled into a more bombastic mode than usual. This is also a good way of looking at things with the necessary perspective to avoid rushing through such a potential minefield, especially when the results are so spectacularly positive that it is not easy to explain how the situation has become so heated. It is almost certain that there is no other case in the world of two States that –without being neighbours or sharing a common language– have bonds so close knit as those that unite Spain and the UK. Their interdependence has not ceased growing over the past few years and, contrary to common opinion, it is not based on the relatively superficial reason of being a holiday destination or a retirement home for one side, or of being somewhere to study English or to have a brief work experience for the other. To the contrary, the bond is very tight and affects all aspects –social, economic and also, although somewhat less, political– that are important when it comes to examining foreign bilateral relations.

Given the impressive nature of the data, it seems inevitable to start this examination with the interpersonal dimension, not only because it is probably impossible to find a single English family without some summer experience in Spain, but also because of the even more important and remarkable fact that the number of full or part-time British residents in Spain numbers one million according to the think-tank IPPR’s estimates. Of these, only 20% are aged over 65, which means that currently several hundred thousand Britons are brought up, study, work, set up companies or marry and have children in Spain. Spain’s capacity to be a permanent and lasting attraction to the citizens of the UK is comparable only to Australia’s –although in the latter case there is a long history of migration and dual citizenship which distorts the results– and greatly exceeds that of the US, Canada and Ireland, is four times greater than France’s and far higher than Italy’s, the previously preferred Southern European destination for those who wished to travel or settle far from the British Isles.

It is true that this intense human flow is not fully reciprocated because Spaniards are more reluctant to abandon their country. Even so, the UK is the preferred tourist destination after Spain’s neighbours, easily accessible by road. It is also one of the favourite destinations for the rising wave of emigration, attracting many young professionals and unemployed in Spain who, unlike the masses who moved to Europe in the 60s, today know how to speak English (according to the INE –the National Statistical Institute–, the UK is the European country in which the number of Spanish residents has increased the most: by 23% between 2010 and 2013, versus the 10% increase in Germany).

This uninterrupted and increasing mutual popularity, whether it involves just tourism or getting ahead in life, covers a vast swathe of the economy. First, the constant movement of people generates more daily air traffic than anywhere else in the world (an extraordinary figure that exceeds 30 million passengers a year, ahead of the 25 million moving between the US and Canada). This is also reflected in the business alliances between airlines –that culminated not long ago in a rather turbulent merger between two major flag carriers– and in the management of Heathrow airport and other terminals by the Spanish company Ferrovial.

But the penetration of Spanish multinationals goes far beyond that and has in the past decade achieved a significant presence in other sectors in which the British economy is, furthermore, particularly competitive. Thus, Banco Santander has become the UK’s third-largest financial organisation following the acquisition of Abbey National in 2004 and of another two banks in the midst of the financial crisis, while Iberdrola is a leading energy supplier after the purchase of Scottish Power and Telefonica is the second-largest mobile phone operator. And there are many more cases: Inditex undoubtedly, but also Mango and the construction companies FCC and ACS, the wind-power company Gamesa, Abengoa, Fagor, aluminium-manufacturer Acerinox, franchiser Abertis, oil-company Repsol, the Mapfre insurance company and the hotel group Sol Meliá, among others.

But, of course, investments in the opposite direction are even larger, with Spain recovering and attracting even more British acquisitions. Iberia, recently integrated with British Airways in the IAG group, is an example, but Imperial Tobacco’s acquisition of Altadis is also worth mentioning. Other companies taking up positions or expanding significantly over more than a decade, taking advantage of the market’s liberalisation and the beginning of a booming economy, are now surviving the crisis (Vodafone in the telecoms market, BP and Shell in the oil sector, Barclays and RBS in finance and Aviva in insurance). Furthermore, other companies with a long-standing tradition also remain in existence, including drinks manufacturers, pharmaceuticals, chemical companies, car rental and real estate consultancies, with some, such as the mining industry, going back a century. According to data from ICEX (the Spanish Foreign Trade Institute) there are more than 300 companies in the UK with Spanish capital, while there are almost 700 British businesses in Spain. Even considering the habitual fluctuations in capital flows, over the past decade it has not been unusual for the two countries to head their respective indexes of overseas investments. This constant activity of companies of one country in the other –supported by their respective historical chambers of commerce– has encouraged mixed-capital businesses to become involved in other markets, as with BP and Repsol in the Caribbean and IAG in the air travel sector.

Looking at total trade flows, the data are perhaps less spectacular but also very significant. Both countries tend to fluctuate between the fifth and tenth positions in the import/export indexes of their respective trade balances, with a surplus now favourable to Spain. In any case, it is highly revealing that –with the natural exception of fruit and vegetables, where the balance clearly favours Spain– the mutual flow has a very similar make up, which shows that there are no asymmetrical sectoral dependencies but that there is, on the other hand, an interdependence between similar markets. The products flowing in both directions include those with a strong design, innovation or luxury component (including vehicles, industrial technology, clothes, ceramics, wine, gins and whiskies) and advanced services (finance, transport, communications, construction, consultancy, culture and leisure). It is therefore not only a very significant commercial relationship, but also a very balanced one, a contributory factor being the similar size of the two economies. A century ago Spain’s per capita income was only 45% of the UK’s, with a population barely half that of the British Isles, while today Spain’s wealth is at 90% of the UK’s and its population is around 75% of the UK’s.

But, however significant all this may be, the relationship goes beyond the shared interests related to demographical size or the business opportunities and it also benefits from sharing common values and exchanging ideas and customs. It is true that because of the difference in language and the fact that such large numbers of people are involved, coexistence between British and Spanish in the same place does not imply a very deep integration of either habits or ways of thinking. However, it is hard to find another example of communities that, from such different origins, have managed to build such close and relatively symmetrical cultural and intellectual relations. The British are the main customers of the multitude of Spanish language dotted along the Mediterranean coast and Spanish will soon become the language they are most likely to study at home, whether at the Instituto Cervantes in London, Leeds or Manchester or as part of their educational system. Furthermore, an appreciation for the daily life they enjoy so much when they are guests in Spain is being increasingly transferred to the UK, where Spanish culture is flourishing in interests such as food, fashion, art, football and literature. In the other direction, penetration is even greater, with an efficiency only comparable to the cultural projection of the US –which, in practice, feeds back into it–. Since early childhood, all Spanish schoolchildren learn English from books that identify the language with the UK’s lifestyle and landscape. Appreciation for British culture may not be entirely conscious, but Spain’s consumption of British films, music, theatre, news, education and sports is extraordinary. After years of mutual visits, studying each other, living together and forming mixed families, both countries have learnt from one another and have converged not only in their GDPs but also in spirit.

In the field of politics, relations are as not as closely-knit, although since Spain’s consolidation as a democracy and its entry into Euro-Atlantic organisations, both countries share the same western principles and status as medium-large powers within the EU (being the third and fifth largest member States by population) and NATO. It is clear that the UK’s diplomatic and, especially, military power are far greater than Spain’s and that London and Madrid have different ideas about the future of European integration. Nevertheless, the scope for synergies between equals far outweighs the differences. It is sufficient to highlight three potential areas in which potential harmony can be achieved in either bilateral or multilateral relations: in security, for instance, cooperation is increasing and the British and Spanish armed forces know each other well and are complementary in different scenarios, particularly as regards maritime safety. Secondly –and justifying that it is in Spain’s interest to help prevent the UK from exiting the EU–, they share production models to a far greater extent than is often thought, based on strong internal demand and the significant weight of the services sector. This affinity has already become evident, in recent economic policy, in their similar way of understanding the dismantling of monopolies, the promotion of free competition and the deregulation of markets in general, although it could now become more concertedly deliberate in moulding certain aspects of the internal market at a time when it might be reasonable –without Spain having to break its essential commitment to the Eurozone– to find the means to counterbalance Germany’s ordoliberalism. Thirdly, both States –although currently subject to strong centrifugal tension– are still among the best examples across Europe of democracies capable of accommodating their diverse nations (in other cases, trying to accommodate territorial diversity failed, either through separation or assimilation).

Between the end of the 90s and 2010 the good relationship established between José María Aznar and Tony Blair –and maintained, with a lower profile, by José Luis Rodríguez Zapatero and Gordon Brown– allowed many of the factors examined in this article to bear fruit in the greater political sphere, despite circumstances not always being favourable, such as the controversy over intervention in Iraq, the internal deterioration of each successive government and the subsequent economic crisis. The good climate even led in 2002 to considering a solution for the dispute over the Rock, under an imaginative formula of co-sovereignty, which was on the verge of being accepted by Spain but was in any case rejected by Gibraltar, which held a pre-emptive referendum that resulted in an overwhelming refusal to accept this possible solution.

It is interesting to read about the course of these negotiations in Outside In, the memoirs of the then Secretary of State for Europe, Peter Hain. In them, it can be seen how British politicians, or at least some of them, have also been able to approach the dispute without preconceptions and with an honest attitude towards Spain. While being aware that any agreement could be highly controversial among Gibraltarians and the more conservative British public, there was at one point enough courage to admit that the strategic relationship with a major European partners deserved to be free from a situation that Hain considered anachronistic (‘it was ridiculous in the modern age for Britain to have a colony on the tip of Spain nearly 2,000 miles away’) and unsustainable (‘concerned about money laundering, tax evasion, drug trafficking and crime’).

That opportunity is gone and at this point the conditions are not in place for anything similar in the short or medium term. Nevertheless, while the tangible ties between the two countries continue to strengthen, it is impossible for London to not honestly reconsider the need to resolve the conflict. A seemingly permanent obstacle to reaching a solution is the fact that, by law, Gibraltarians have the last word on the dispute. However, such a narrow idea of democracy, by which one of the parties has the exclusive right to decide on complex matters that have vital consequences in a more general environment –and which is unfortunately popular today in Europe, either to preserve the euro ignoring the external impact of national decisions on other countries that share the currency or in the rhetoric of certain peripheral nationalisms–, can and must be refuted. It is reasonable for the clearly-expressed desires of the Rock’s inhabitants to be fundamentally taken into account in order to determine their personal status, but in such an interdependent context it should be possible to develop sophisticated formulas to resolve conflicts and, at the same time, not violate democratic principles. After all, establishing what community should ultimately decide is not all that obvious if considered from the wider perspective of the general interest of the Campo de Gibraltar area as a whole and, above all, from the perspective of Spanish-British relations. If the choice of most Gibraltarians is to maintain their current identity that should be respected, but another scenario could be a hypothetical majority in London that –as occurred in similar cases– reconsiders the situation and decides on a solution that is more respectful of all the principles and legitimate interests involved, including UN recommendations on decolonisation and the British desire to place a strategic relationship with a key partner on a firm footing. Peter Hain’s book and many an article published in the non nationalistic press these past days show that, contrary to what is usually believed in Spain, the UK’s sympathy for the Gibraltarian authorities or its willingness to maintain a tax-free imperial relic is not necessarily that great. Loyalty is pledged to the Crown, but obligations to the Exchequer are ignored.

Spaniards, on the other hand, should follow suit and –while they calmly await the unfolding of a process that may never reach maturity– admit to themselves that the general bilateral ties are much more important than this specific conflict. Spain, essentially knows that it is impossible to dissociate such a geographical anomaly from the Spanish North-African enclaves of Ceuta and Melilla and is of course capable of living with this British appendage in its territory, in the same way that the French have always done with the Channel Islands, for instance. Naturally, maintaining a low-profile but imaginative territorial reclamation does not rule out adopting a proportional and consistent attitude of cooperation with the daily lives of all those who live in the area or keeping up the struggle against corporate privileges, tax evasion, money laundering and other criminal offences that might originate in Gibraltar. It is in this respect that it will never be incoherent or excessive to demand the UK’s loyal cooperation or help from the EU. Indeed, European institutions can do much to help –beyond the cases brought, and yet to be brought, before the Court of Justice in Luxembourg– and this is an area that remains unexplored so far.

In any case, the most intelligent position for Spain will always be to calmly and predictably face any provocations or unilateral action by the Gibraltarian authorities, such as the sinking of 70 concrete blocks into disputed territorial waters to stop Andalusian trawlers from ever fishing there again. Nevertheless, this time, and regardless of the journalistic escalation, neither Spain’s reaction has been completely within the limits of good judgement and an adequate perspective nor has the UK’s attitude shown the sensitivity, or even appreciation, owed to a European partner or to such an important strategic alliance. The erratic application of a law that is –in theory– permanently in force, the announcement of measures that fail to respect the free movement of people and calls for acting in unison with Argentina only lead to bewilderment. The same occurs when the UK (to say nothing of Gibraltar) engages in rhetoric that disrespectful, when naval exercises are equivocally exploited and, especially, when such a lack of understanding is shown towards a country that is objectively the victim of the tax haven and legal paradise it has the other side of the frontier.

Conclusions: Half way between the summer doldrums and a serious diplomatic dispute, the crisis that broke out at the end of July 2013 seems to have set back, by several steps, the fostering of stronger political ties between Spain and the UK, appropriate to countries whose bonds are already so close in the social, economic and cultural areas. It is up to Spanish analysts to recommend the government in Madrid to take into account a much wider and important reality and to act with particular moderation when it comes to Gibraltar. However, such a complex dispute cannot depend solely and indefinitely on the self-restraint of one of the parties. In the same way that –in his latest and successful essay– the brilliant Antonio Muñoz Molina is mistaken when he exaggeratedly lays at the door of Spain’s supposedly weak democracy the sole responsibility for the economic crisis –ignoring any international and European factors that also contributed to it–, in the dispute over Gibraltar it should be understood that Spain has its share of responsibility to settle it in the best way possible, although obviously not all of it. In any case, if it is a case of talking about what is or was solid –much like the Rock of Gibraltar itself–, it will always be better for everyone to focus on the most important issue that remains sound, and that is the bond between two European partners.

Ignacio Molina
Senior Analyst for Europe at the Elcano Royal Institute

[1] The author wishes to express his gratitude to William Chislett, Carmen González Enríquez and Federico Steinberg for their comments, which have undoubtedly enhanced this paper’s value. The author remains solely responsible for any possible errors or shortcomings.