A shock Spanish election result means Gibraltar faces a reckoning over long-stalled negotiations on a “Gibexit” border deal that would guarantee free access for online gambling and other employees at its border with Spain.
Gibraltar officials are hoping for the best, but preparing for the worst, as the British Overseas Territory that voted 96 percent against Brexit yearns for a deal that will ensure free movement over its border with Spain.
Gambling companies such as Betfred, Lottoland, 888, Entain and others are either based in Gibraltar or have major operations there.
About 2,000 of the 15,000 workers that cross the border daily into the 2.6-square-mile jurisdiction go to gambling-related jobs.
Gibraltar faces two big hurdles: the border uncertainty; and its position on the Financial Action Task Force greylist, a status which means increased costs and compliance checks for financial and gambling companies, along with reputational damage.
The border issue erupted this week, with The Times quoting Gibraltar governor David Steel as saying: “The Spanish have asked for a regulatory framework over the management of the airport which implies Spanish jurisdiction, which is not something that Gibraltar can tolerate.”
The Financial Times put it this way: “Gibraltar does not want to be the last victim of Brexit — but it is getting ready just in case.”
A spokesman for Prime Minister Rishi Sunak expressed general support for Gibraltar.
“We remain a steadfast supporter of Gibraltar and we are not going to do anything to compromise sovereignty,” the spokesman said.
In Gibraltar, workers face the prospect of lengthy queues and red tape at the border if negotiations fail or Spain forces an unfavourable outcome.
Polls project the right-leaning People’s Party as winner of the July 23 election, which was called after the party of socialist Prime Minister Pedro Sanchez was pummelled in May local elections.
The prospect of a hard-right government being elected in Spain raises issues of not just border friction, but sovereignty.
The nightmare for Gibraltar would be a conservative government propped up by the far-right Vox party, which has called for closing the land border with Spain to “suffocate” Gibraltar and regain control over it.
Gibraltar’s border has been the subject of 13 negotiating sessions over 2.5 years under three British prime ministers since an interim arrangement was agreed in January 2021, a year after the UK left the EU.
Until now, negotiations had been bogged down over whether the Gibraltar airport entries would be overseen by the EU’s Frontex or by Spanish officials, with Gibraltar favouring the EU border officials.
Gibraltar wants “certainty”, but it can deal with any result, said Albert Isola, minister for digital and financial services, speaking before the recent KPMG Gibraltar eSummit.
“We’ll adjust, absolutely,” he said.
Adjustments could include more staff working from home and more electronic gates to speed passport checks, said Peter Montegriffo of Hassans law firm, who was Gibraltar’s minister for trade and industry from 1996 to 2000.
Gambling commissioner Andrew Lyman said work shifts could be staggered to reduce wait times at the border.
Companies have also been hiring Irish nationals, who do not face the same border snags as the British, he said.
“The border won’t close even if no treaty is signed,” Lyman said. No deal “won’t be desirable, but it won’t be an end”.
A new Spanish government will also probably be focused on its term as presidency of the council of the European Union, he said.
That term runs through to the end of the year, which means interim arrangements could continue for some time, Lyman said.
“It won’t be a desirable outcome, but I don’t believe it will be a catastrophe,” he said.
“Gibexit”, or the replacement of interim arrangements with permanent ones, is a key issue for gambling companies, said Nicholas Macias, who was recently named secretary general of the Gibraltar Betting and Gaming Association.
“I can’t see any panic in the industry, just wariness,” he said.
In January 2021, Gibraltar got an interim deal that allowed passport-free travel between Gibraltar and Spain, a deal which dangled the possibility of free movement through the Schengen zone, or 23 of 27 EU countries, for citizens of Gibraltar and those from the UK with residency.
But the Spanish election shock may have ended that prospect.