Over the last 15-odd years, the Gibraltar government's bet on attracting online gambling companies with low tax rates and other incentives has paid off spectacularly.
This post originally appeared in VICE UK
As one of the 14 remaining British Overseas Territories (nobody bar UKIP talks about "colonies" any more), it would be easy to dismiss Gibraltar as the geopolitical equivalent of that guy still blasting "What Became of the Likely Lads" at 7 AM, long after everyone else has left the party.
But Gibraltar is no longer just a quaint backwater occasionally getting stuck in the middle of Anglo-Spanish territory disputes. Over the last 15-odd years, the government's bet on attracting online gambling companies with low tax rates and other incentives has paid off spectacularly, with the recent boom in online gaming making the territory and many of its residents very rich.
Today, Gibraltar has the fastest growing economy in Europe and an unemployment rate of 6 percent. Peter Howitt of the Gibraltar Betting and Gambling Association told me via email that gambling "is estimated to constitute as much as 25 percent of the GDP of Gibraltar, and it contributes millions in corporation tax, gambling duty [and] PAYE from the thousands of people employed in the industry."
This all sounds like great news. But along with a proliferation of nice cars and shiny things, the windfall has brought tensions along the border with Spain to a 20-year high. Last summer, a dispute over fishing rights nearly turned into an international incident. Gibraltar dumped around 210 tons of concrete into its bay to create an artificial marine reef. Spanish fishermen claimed that this was blocking their access to the waters. To retaliate, the Spanish government stepped up their border checks and brought traffic at the crossover point between Spain and Gibraltar to a complete standstill.
While this was largely painted as just another chapter in a 300-year-old conflict, the staggering economic disparity in the area—wealthy Gibraltar sits directly below Andalucia, a historically poor part of Spain—can't be ruled out as a contributing factor. I recently decided to pay a visit to the area to see how all this lovely money was changing attitudes on both sides of the border.
Towering over the surrounding area, the Rock looks like an iceberg that somehow got lost and ended up in the Med. In fact, the only shadow that looms larger over the area is that of Francisco Franco, the Spanish dictator who—for a small man who's been dead for nearly 40 years—has left quite a legacy.
On a rainy Saturday morning I'm taken for a tour around the centre of La Linea, the town on the Spanish side of the border, by Alvaro, an ex soldier, professional diver and local representative of the Spanish nationalist lobby group Denaes. Looking at the high rise sink estates that he points out as being part of the dictator's legacy, it's admittedly hard to share his sense of pride. But perhaps I'm seeing things out of context. "Franco built all this when he closed the border in the 60s," he tells me. "He wanted people in Gibraltar to look over and see what they were missing."
It goes without saying that, if Franco saw the area today, he'd be pissed. La Linea now has one of the highest unemployment rates in the most deprived province in Spain. One out of every five jobseekers hasn't worked in over three years, and over 50 percent of women are without a job. All of this makes the economic miracle happening some 200 meters away understandably galling for out of work youth, the majority of whom make ends meet by flipping VAT-free cigarettes bought over the border for between €2 to €4 a carton.
Last year, Gibraltar imported 134 million packets of cigarettes, a staggering 115 million of them alleged to have made it over the border illegally. According to a private report by the tobacco consortium KPRG, over half of all illegal tobacco in Spain arrives through Gibraltar, with the same report estimating a cost of €710 billion in lost tax revenue to Spain.
The illicit trade is serious enough to have been flagged this year in a European Commission OLAF (anti-fraud office) report, which called on both governments to pay attention to the problem. In response, Spanish customs limited the amount of cigarettes locally registered residents can bring across to four packs (80 cigarettes) per month. I spoke to Patricia Angullol, the police officer in charge of the border, who told me that while the measures had been a success in terms of seizures, the amount of traffic on the border has remained the same. "We obviously hope that these measures will act as a deterrent, but up until now there's been no real change," she says.
On La Pesquera—the boulevard that leads up to the border—there are few signs that the trade has slowed. From 9 AM to 9 PM, when the tobacconists in Gibraltar close, there's a steady stream of bikes, scooters and people on foot crossing and recrossing, all of them with one eye on the feds.
"You see those guys at the fence," a local dockworker tells me, "they're waiting for the guard to change. As soon as a 'friendly' cop comes on duty they'll call their buddies on the other side and tell them to come over."
People here are really good at waiting. And watching. In one instance, as I walk past a group of women stuffing individual packets down their tights and into their handbags, someone yells: "Reporter!" I turn and get a toothless smile from an old man.
Crouched in the shade of a McDonald's car park, a red-headed man in his thirties avoids eye contact and occasionally spits on the floor, reluctantly telling me about what, for him, is a full time job. "It's not worth it, really," he says. "If they catch you it's a €3,000 fine. But I have two kids—what else am I going to do?" His friends look on, smoking and tutting, obviously not keen to talk.
There are only a couple of things that Spanish nationalists like Alvaro and the Gibraltarian pro-UK activists I spoke to seem to agree on. Curiously, one of these is that the crackdown on tobacco smuggling was largely a smokescreen. "This government isn't going far enough on account of their own economic interests in the area," a spokesperson for Denaes tells me over the phone. "As a result, the police aren't getting the resources they need to accurately fight smuggling."
Kaelan Joyce agrees: "If they really wanted to stop the smuggling they'd stop selling us the fags. It's Spanish companies that sell us the tobacco, as well as the petrol."
Kaelan is a former boxing champ who, thanks to his Twitter account, became the face of last summer's conflict. His tweets are far from subtle when it comes to criticizing what he sees as the Spanish government's deliberate harassment of the Gibraltarian people, and he's no less forthright in person.
"It's clearly ideological," he tells me over a coffee in Gibraltar's Casements Square. "This government, the People's Party, have a problem with Gibraltar."
At times, listening to activists reel off 300 years of perceived affronts and incursions can feel like watching an especially long and boring episode of Neighbors from Hell. But what comes through most in my conversation with Kaelan is a kind of siege mentality; a beleaguered sense of being under attack. Mind you, it's clear that Gibraltarians feel their privileged way of life could end abruptly should this stormy political landscape change in any way.
"People here, especially those in favor of independence, aren't thinking about the bigger picture," says Kaelan, explaining one possible route the situation could take. "I'd love for Gibraltar to be independent, but I just don't trust the Spanish."
It would be unfair to generalize from one person's point of view, but talking to the locals I do sense a tacit Hispanophobia in the area. There's the derogatory nickname for the Spanish—"Sloppies"—and the retired Corporal in the Servicemen's Club who tells me that an "estimated 10,000 Spanish migratory workers" are stealing kids' jobs. Granted, Kaelan's assertion that he once took "two planes to the UK because I didn't want to go through Spain" seems a little over the top. But there has been a significant cultural shift away from Spain in recent years, noticeable in the number of Gibraltarian schoolkids who now refuse to speak Spanish at home.
It's hard to get your head around just how much Britain means to the people of Gibraltar. I always figured the Middle England that people wax nostalgic for was just a construct created by the Daily Mail and promoted by Islamophobic politicians. However, turns out it's actually a pretty accurate description of Gibraltar (Paul Dacre must have a castle here, or something).
Its main street—lined with a mix of high street chains like Next and BHS, and myriad tobacconists and off-licenses—is like Hastings via the duty free section of Gatwick airport. A place where people still have mutton chop sideburns and Snow Patrol's "Run" is fucking everywhere. I was going to compare it to one of those Chinese theme-parks that recreate Tudor England from a pirated DVD of Shakespeare in Love, but rather than ersatz it's hyperreal. The phone boxes are red, but they don't have their panes kicked in.
"In a way, Franco is responsible for why people here feel so British," Kaelan tells me, explaining how the border closure in 1969 led to 20 years of Gibraltar largely relying on imports from the UK to survive. That explains the shops, but what of the rest? Surely a nation can't be defined by the logo on its sandwiches? "Well, no, it is mainly the shops," Kaelan acknowledges. "But it's also our education system. We do the same exams as you. Most people go to uni over there, too. We're British."
Later that evening I'm at Charlie's Tavern, a wood-panelled sporty affair at the far end of the Ocean Village Marina. The terrace by the water is crowded with end-of-week drinkers, and while there's a smattering of local accents—estuary English with an inexplicable Welsh twang—the majority are from the large community of British expats who work on The Rock but live across the border in Spain.
"People do Friday here," says Tom Goodacre, a 24-year-old ex–nightclub promoter from Newcastle, "and Saturday in La Linea."
Tom introduces me to Robert Hanley, who's been in Gibraltar for the last two years and works as an automation expert for a large IT company. "Basically, I find ways to make people redundant," he tells me, before his girlfriend interjects.
"He's working on his own demise," she says.
"Yeah, but hopefully I'll be rich enough by then for it not to matter."
While money is a motivation, Ian Hancox of Recruit Gibraltar—a company that fields job applications on The Rock—denies that it's the prime motivator for people looking to move from the UK. "On average, salaries are 10 to 15 percent less than they would be in London," he tells me.
Nonetheless, interest is high, with Ian's company receiving applications "in the thousands from all over Europe, but with a definite UK skew." IT jobs, like those worked by Robert, are the most lucrative. "Most of the gaming operations are online, so there's always demand for developers and programmers," says Ian.
As the night progresses, beers give way to Jägerbombs and people start talking excitedly about a beach party they're off to later, I realize that, to expats, the lifestyle is at least as important as the money on offer. Tom is effusive about life in Spain, and tells me that moving to Gibraltar was, first and foremost, "a chance to get the fuck out of England."
Looking around at the Union flag on the wall, the Carling and Strongbow on tap and the intent focus on a game of darts at the back of the bar, Tom's statement feels a little ironic, to say the least. But for him, and the rest of the expats I meet, there's a sense that these symbols are just that: symbols.
While Kaelan had told me earlier that, "I do feel proud, walking past Marks and Spencers—it's one of the things that make me feel like I belong to Britain," I get the feeling that, for expats like Tom, Robert and his girlfriend Jess, the attachment isn't nearly as emotional. "We laugh at it, but you have to realize just how serious it is for them," Jess tells me.
At 11PM I'm drunk and staring across the water at what's perhaps the most ostentatious symbol of modern Gibraltar: a 12-storey floating hotel called Aqua. Right next door is The Gibraltar Casino, where—I'm told by a reputable source—workers fritter away a fair percentage of their salaries. A vinyl poster tacked to the window announces it as "The Home of Monkey Bingo." The Bellagio it isn't, but in it's tacky, upfront garishness, something about it feels quintessentially British.
It's an unwritten rule of capitalism that, any time there's gross economic inequality, someone will start shouting about "the trickle down effect." There's no doubt that Spaniards are among Gibraltar's estimated 10,000 foreign workers, but there's an important distinction between lucrative gaming contracts and cleaning and construction work.
The next afternoon, nursing a very English hangover, I head to Los Palomeros, one of the most deprived estates in the region and a place I'd been warned repeatedly not to visit. I initially get a frosty reception, but after buying some beers and single cigarettes from the kiosk (one good thing about La Linea is that literally everybody will give you a light), people are cordial.
I'm introduced to Jesús by one of his friends, who jokes that he's broken the world record for being unemployed. Jesús has fewer words for me than he does job experience, but he's happy for us to take some pictures of his kids, who tear around the rubbish-strewn plaza on a quad bike.
Here, the economy revolves around tobacco, petrol and whatever other contraband finds its way into the area. In the only bar in the area, one guy eyes the cigarette I'm rolling and asks me if I want to add any hash, pulling a hefty brick out of his pocket.
On the edge of the estate, sandwiched between a main road and a scrub of wasteland where kids race 50cc bikes, a card game is in progress.
"Do you want to lose some money?" I'm asked as I walk up to take a photo. In the end I'm happy just to watch. On a notepad, Antonia—the matriarch and the chattiest of the group—jots down the bets and tallies up the scores. The game is a variation of Uno, where a two of a kind burns the pack. It's called "Monkey."
José, one of the players, works at a market two days a week, and tells me that business is worse than ever. "On a good day I might make €25," he says.
Here too are signs that the economic inequality is causing racial tension. "I work six days a week as a cleaner for a disgusting Indian," says Mercedes, Antonia's daughter-in-law. "I want to tell him to shove it, but what choice do I have?"
Later on in the front room of her bungalow, Antonia sits on the battered sofa, a carton of cigarettes on her lap. She tells me that her entire family has always lived in the area, but that things now are as bad as they've ever been.
"When it rains, we're up to our knees in water," she says. "We call the council, and they say we should call an ambulance if it's so bad."
For Antonia and her family, politics take a back seat to survival, but cultural opposition is still hardwired. "It's not on that they search you just because of how you look, or stop you if you have a Spanish flag on your car," she tells me. "I'd like for everyone to treat each other as equals. I'm too old for this now."
Back at the card table, as I take some snaps of the game, she turns to José and laughs. "You can tell he's British," she says. "He took a photo of you and you didn't even notice."
The upcoming reform to the UK Gambling and Gaming Act could spell the end of Gibraltar's economic honeymoon. As of December, 2014, gaming companies will have to pay tax based on where their money is made, rather than where the company is registered. It's a situation that even the chair of the Gambling Association admits could lead to companies leaving for fairer climes and better tax laws.
If Gibraltar's economy contracts, the most vulnerable—Spanish workers in the service sector—will be the hardest hit, bringing even more economic devastation to an area already whipped raw by the financial crisis.
What this will mean for the ethnic and political tensions in the area is still up in the air. Despite the posturing and their baffling (but, I guess, understandable) love of the Queen, the pro-UK activists I meet in Gibraltar are polite, middle class IT geeks, upset and outspoken but hardly about to wage a race war.
As for the Spanish, Alvaro is more resigned than evasive about local support for an anti-Gibraltarian movement. "There are a few young lads who believe in taking action," he tells me. "But they're a minority."
I guess that's the problem with having so many people out of work. As Alvaro puts it: "People over here are more concerned with survival than politics."
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