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Margallo’s ‘black hole’ jibe strengthens remain argument - Govt

Gibraltar’s tax regime represents “a black hole” for the European Union, Spain’s acting Foreign Minister José Manuel García-Margallo said yesterday as he warned Spain would “rethink” its relations with the Rock if Britain left the bloc on June 23.

In an interview with El Pais, Sr García-Margallo hit out at Gibraltar’s economic model and said Spain would step up pressure on the Rock in the wake of the Panama Papers revelations.

But the comments, the latest in a strong of statements on Gibraltar and Brexit by the caretaker minister, received an immediate and pointed response from No 6 Convent Place.

“Sr Margallo's statements in his interview in El Pais today make the case for Gibraltar voting to remain in the EU more eloquently and loudly than anybody else can,” a spokesman for the Gibraltar Government told the Chronicle.

In the interview, Sr García-Margallo was asked whether Chief Minister Fabian Picardo had reason to be worried about the impact of a Brexit on Gibraltar.

“Of course he does,” the minister replied.

“Gibraltar is a colony and has access to the EU only in as much as the UK does.”

Asked whether a Brexit would lead to a border closure, Sr García-Margallo replied: “We would have to rethink relations with Gibraltar.”

“Now that there is so much talk about tax havens, Spain has two complaints filed with the [European] Commission.”

“And we are going to send them to other countries so that they too know, when the review the list of tax havens, that Gibraltar is a black hole in European taxation.”

In a wide-ranging interview, Sr García-Margallo said the UK’s referendum on EU membership would be held “at a very delicate time” for the EU.

He said this went beyond Prime Minister David Cameron’s “internal issues” to include factors such as the ongoing economic problems in Greece, the refugee crisis the reluctance of some EU members to share sensitive security information.

“The risk of No [to the EU] winning is very real,” he said. 

“And that is of enormous concern to the Spanish Government. It would be the first country to leave the EU.”

Whether a Brexit would spell the end of the EU project “would depend on how we react,” Sr García-Margallo added.

The minister said that in the event of a UK withdrawal, Euro countries would have to “take a leap forward” to counterbalance Britain’s departure with a closer union that showed the EU was a worthwhile project.

The minister was asked about the Panama Papers and the resignation of Spanish government minister José Manuel Soria over revelations that he had held interests in offshore companies.

Sr García-Margallo said Sr Soria, who was no accused of any wrongdoing, had been to recognise that his position could have damaged the Partido Popular had he continued in post.

He also defended the decision by Spain’s former socialist Prime Minister, Jose Luis Rodriguez Zapatero, to remove Panama from the list of tax havens, thus opening the way for Spanish companies to win the contract to widen the Panama canal.

“There were weighty reasons for doing so,” he said.

“Panamanian legislation established that no company from a country that had Panama on a list of tax havens would be allowed to bid for major public infrastructure, including the widening of the canal.”

Sr García-Margallo also reflected on the political vacuum in Spain following last December’s inconclusive general election, in which no party won sufficient votes to govern alone.

Spain’s political parties have until May 2 to hammer out a coalition agreement but negotiations have proved fraught so far, making the prospect of a June 26 re-run at the polls increasingly likely.

PSOE has rejected the PP’s proposal for a three-way “grand coalition” alongside Ciudadnos, but has so far been unable to reach agreement with Ciudadanos and Podemos.

Sr García-Margallo said political “fragmentation” and coalitions in government were the norm in many European countries.

He said it was thus very difficult to explain to other EU countries why Spanish parties who shared fundamental values in areas such as the economy and security were refusing to form a coalition.

The minister also rejected as “unfair” the suggestion that a coalition might be possible if Spanish Prime Minister Mariano Rajoy resigned, adding that he had steered the Spanish economy back from the brink of “an imminent shipwreck”.

“To open a succession war in the PP would be to risk its stability and that would be bad for the party, but also for Spain,” he said.