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With Gibraltar, and Spain's Moroccan outposts, domestic politics is everything

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Peter Hain's suggestion that Britain concede some 'joint sovereignty' to Spain is wildly optimistic

Listening to Labour's Peter Hain on Radio 4 this morning cheerfully discussing the possibility that Britain might concede some "joint sovereignty" to Spain in the revived dispute over Gibraltar took me straight back to a turbulent Commons day in December 1980. It was then that Nick Ridley, a Thatcherite junior minister, told MPs about his hopes to resolve a similar dispute with Argentina by conceding sovereignty over the Falkland Islands and leasing them back to be administered by Britain. Arghh! Wouldn't it be more sensible to murmur the single word Ceuta?

Doesn't Hain know what an uproar ensued in 1980 with many Labour MPs as outraged as the Tories? No more was heard of it and the running feud with the military regime in Buenos Aires staggered on towards the 1982 invasion and Britain's improbable reconquest, the event which consolidated the Iron Lady's reputation. It's not going to happen between two states inside the EU in 2013, but the issue is a running sore which none of us should want to inflame.

As is his way, Peter Hain was as optimistic as Ridley. As Jack Straw's Europe minister at the foreign office in 2002, he had been party to negotiations for a joint sovereignty deal with Spain which were close to fruition: better for Gibraltar, better for Spain, open borders, integrated communications and a stronger local economy. The Tories backed it. But, as in Argentina in the 1980s (Britain's too when cornered), domestic politics took over. "Madrid pulled out," said Hain.

That seems to be what's happening again in Spain in 2013. Mariano Rajoy's conservative People's Party government, elected in 2011 after the socialists collapsed in the recession, has taken an aggressive stance on all sorts of policies – including the deficit, social reform and, in recent weeks, the ancient feud with Britain over Gib (which takes its name – Tariq's Mountain – from an 8th century Arab conqueror). There have been sub-plots involving corruption, royal as well as govermental.

In suggesting that Spain might impose new restrictions, including a 50-euro border crossing fee (almost certainly in breach of EU law), the foreign minister, José García-Margallo, goaded Gibraltar's PM, Oxford-educated barrister Fabian Picardo, to liken his sabre-rattling to the worst days of Franco's nationalistic threats – "more like North Korea than an EU partner", he said. The artificial reef which Gibraltar has created to protect its fleet from Spanish over-fishing – Spain claims all the water round Gib – will be removed only "when hell freezes over", Picardo told reporters.

That's naughty, too, and William Hague, Jack Straw's current successor, will probably have asked Mr Picardo to spend a few days on the beach. Ten thousand Spanish workers travel into Gib to work each day and recession-strapped Spain can't afford to jeopardise jobs at present. But the rightwing press in Madrid has been enjoying the story on page one – something the Daily Mail is yet to do, though it is probably stocking ammunition against Rajoy's government just in case.

What should be done ? Not much. The EU has its hands full with the rolling eurozone crisis and much else besides without wasting energy on a 300-year-old sore point. Even in the Mediterranean, whose front door the British Royal Navy was so keen to control in the 18th century, with the Arab Spring, demographic pressures – more people south of the Med now than north of it, a major development – and resurgent Turkey, there is plenty to employ diplomats' time.

Of course Gib is an anomaly. It was ceded in the Treaty of Utrecht (1713), which settled Louis XIV's last war of European expansionism. The strategic importance of Gib – the addition of Malta and Cyprus later consolidated the navy's grip on the Med – represented a crucial stage in Britain's rise to two centuries of global ascendancy.

But there are lots of anomalies which wise people ignore. When King John lost the Angevins Norman inheritance after the Battle of Bouvines (1214), the English crown managed to hang on to the Channel Islands – so close to the French coast but sort-of-British to this day. Expansionary China and its neighbours are currently squaring up to each other over similar island anomalies in the South China Sea. That's much scarier. France retains a couple of islands off the Canadian coast (and bits of the Pacific) but no one seems to mind much.

As for Madrid, surely Whitehall wins the trick whenever it mentions the two disputed enclaves of Ceuta and Mililla, which Spain has retained on the mainland coast of Morocco despite the latter's long battle for independence and continued resentment. They've been Spanish for 500 years and Madrid insists they are an integral part of Spain. Well yes, if you say so.

But that's roughly London's view of Gib, fish and chips, offshore gambling and all. They're British and want to stay British. David Cameron is on the case, but it would be smarter if he and Rajoy stay on holiday until next month when it's not so hot. Reported by guardian.co.uk 29 minutes ago.

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