EU uncertainty tempers overseas economic successes
2014 proved to be a significant year for expansion of Gibraltar’s overseas representation politically and for business development, but this year is likely to play an even more critical role
James Lasry, Chairman of the year-old AMCHAM (American Chamber of Commerce) Gibraltar group told Gibraltar International in April that following a US trade mission by ten firms in November, “we have a couple of big deals that are still cooking – deals in the areas of energy and renewable energy that will really impact on Gibraltar in a big way”.
“They are subject to a tender process that began last May; if successful, they will mean millions of pounds of inward investment”, promised the Hassans lawyer.
AMCHAM Gibraltar – now with 27 member firms – was promoted by Chief Minister, Fabian Picardo, to give impetus to his push for inward investment from beyond traditional (principally, UK) markets.
Picardo said in the Gibraltar International interview nearly 18 months ago: “I think you can expect to see great interest from US commercial entities seeing what they can do in Gibraltar with access to the EU and also to North Africa, which is becoming increasingly important to the US.”
Since establishing representation in Washington in 2012, several high profile visits by the Chief Minister and his deputy, Dr Joseph Garcia, has given Gibraltar greater prominence.
The pair have met with the Council on Environmental Quality in the White House and outlined Gibraltar’s aim for carbon neutrality, including changing power generation fuel from diesel to gas to reduce emissions and introduction of alternative energy sources.
Gibraltarian and long-time US resident, Joe Carseni, a member of the Gibraltar-American Council, was appointed The Rock’s American representative to garner political support, but he also promotes “the attraction of business opportunities and commercial investment in Gibraltar”. Holland & Knight, a law and lobbying specialist agency, was appointed in May to raise Gibraltar’s profile before the Executive and Legislative branches of the Government in Washington.
A mix of politics and business generation is on the agenda too for significantly expanded EU representation. Last October former South West & Gibraltar MEP, Sir Graham Watson, was appointed to lead and direct lobbying from new, larger Brussels premises, as well as “facilitating the promotion of business in Gibraltar”. Sir Graham’s emphasis is on relations with the European Parliament and MEPs elected last year, and with the new European Commission, enhancing communication with the UK’s Permanent Representation to the EU (UKREP).
The Rock’s business interests with particular EU significance include eGaming, taxation, aviation, environmental and maritime matters. Sir Graham – an MEP for ten years – arranged meetings with the Parliament and Commission in April for Garcia’s second Brussels visit this year, to include the latest developments relating to Gibraltar’s position in the EU.
It was timely: Picardo had controversially just called for each part of the UK to have an individual say in negotiations if there is to be a vote on Britain’s possible EU exit – something that will become clearer after the UK General Election on 07 May. “The only existential threat to our economy is one where we are pulled out of the European Union against our will and denied access to the single market,” he told the Financial Times in an interview.
The push for greater EU recognition began under the previous administration. However, “it is true to say that the Brussels office had been downgraded in the past and that this Government has chosen to upgrade it once again”, Dr Garcia told Gibraltar International.
“There are a whole host of issues that affect Gibraltar’s position in the European Union and we must be there to meet those challenges”, he explained, pointing to Spain’s decision to abandon a 2006 Cordoba agreement with Gibraltar that has seen efforts to exclude Gibraltar Airport from EU civil aviation legislation, which he told MEPs would be “illegal and contrary to the [EU] Treaties”. Spain was also hindering the free movement of people at the La Linea border.
Two Gibraltar exhibitions – accompanied by numerous meetings with EU politicians and officials and media – have been held at the Brussels Parliament. The first – in June 2013 – marked the 300th anniversary of the signing of the Treaty of Utrecht, which gave Gibraltar its British credentials, as well as the 40th anniversary of Gibraltar’s entry into the European Economic Community (as then) as a European Territory for whose external affairs a Member State [the UK] was responsible.
Gibraltar engages with the EU directly, because it otherwise relies on the UK to represent its interests. As part of mainland Europe, Gibraltar is able to passport financial services such as funds and insurance throughout the 27 EU countries: “Gibraltar may have more appetite for more Europe than the UK in the coming years”, Picardo has emphasised.
Dr Garcia admits the Brussels office focus will be mainly political, but said: “There is scope for commercial and economic activity as well and many of the issues that the office will touch upon, like aviation, the frontier and tax, will have a clear economic impact as well”.
EU representation is being modelled on the success of Gibraltar House in London’s Strand: it has been “essential to maintain the position there and to lobby for Gibraltar on the different political issues that arise”, Dr Garcia opined.
But it wasn’t always so. As London office director, Albert Poggio, recounts: “Initially, when I began in 1988 we had opposition from the Foreign Office, which didn’t want us working in London and didn’t recognise us. In those days, when the Chief Minister came to London we were lucky to get five MPs to meet him; now the Gibraltar Group is the second largest lobby group in Parliament with 120 MPs”.
After May’s UK general election however, “we will need to build up again the support for Gibraltar”, Poggio noted, adding: “But at least the Foreign Office is now on-side.”
Gibraltar Finance (GF) no longer has its own full-time representative at the London office following Victor Galliano’s decision to return to the City. The London role, for which members of the Gibraltar Finance Centre Council long campaigned, was described as “a strategic presence in the heart of Europe’s largest financial centre and one of the most important globally”.
Galliano assisted three Gibraltar-based colleagues – in insurance, funds and private clients – with London contacts and sought opportunities for business development. Jimmy Tipping, GF director, says there are no plans at present for a replacement – that aspect has been “paused”.
Having grown from three Gibraltar House staff to ten, Poggio in 2008 persuaded the then government to buy the present £6m+ four-storey premises that has since quadrupled in value. Poggio now plans retirement next year, but aims to continue as a part time consultant.
His nominated successor is Jason Cruz, the 41 years old representative of Gibraltar in Hong Kong (HK), where opening of the Asian office a year ago was a surprise; no reference had previously been made to the former British colony being a target for trade development.
But Cruz, in the course of work for major Asian firms in financial services, banking and property investment, had introduced over previous years several local business partners and investors to “a dialogue with Gibraltar”.
Candidly, Picardo recently admitted it was a move that “should have happened a long time ago. It is an area that has unfortunately been neglected.
“We have therefore seen the growth of the Chinese economy to a great extent pass us by and we’re arriving late to the party, but it’s a party we cannot afford to miss, even if we are arriving late to it.”
Cruz, with an assistant, has organised six ministerial visits to Hong Kong covering education, the financial sector, tourism and maritime services, which he believes have resulted in “some business”. Another visit is imminent – this time led by the private sector and includes representatives of the new Gibraltar Stock Exchange on their fourth trip.
But Cruz, in the course of work for major Asian firms in financial services, banking and property investment, previously had introduced several local business partners and investors to “a dialogue with Gibraltar”.
The new office will encourage Chinese investors to use Gibraltar for both direct investment on the Rock and crucially as an entry-point into the European market, something that Financial Services Minister Albert Isola emphasised to HK funds sector firms last September.