Spain Graft Scandal Spills Over Borders in Gibraltar Spat

Photographer: Oli Scarff/Getty Images

Passengers board a flight at Gibraltar International Airport on August 8, 2013 in Gibraltar. Close

Passengers board a flight at Gibraltar International Airport on August 8, 2013 in Gibraltar.

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Photographer: Oli Scarff/Getty Images

Passengers board a flight at Gibraltar International Airport on August 8, 2013 in Gibraltar.

The corruption scandal roiling the Spanish government is spilling over the borders after Prime Minister Mariano Rajoy confronted the U.K over the disputed territory of Gibraltar on Spain’s southern coast.

Rajoy told U.K. Prime Minister David Cameron in a phone call yesterday that action by Gibraltar to block access to fishing grounds for Spanish boats was unacceptable. The U.K., which says it’s concerned about the retaliatory increase in border controls delaying travelers at the frontier, announced today that a warship would visit the territory later this month on a routine exercise.

The spat blew up days after Rajoy told the Spanish parliament he made a mistake in supporting his People’s Party’s former treasurer, Luis Barcenas, who has admitted to running a secret slush fund for senior party officials. Barcenas’s allegation that Rajoy accepted illegal cash payments before taking office has created a firestorm in Spain, helping wipe out most of the PP’s opinion-poll lead over its Socialist rival.

“It’s all about timing,” Alejandro Quiroga, a lecturer in Spanish history at Newcastle University in northeast England, said in a telephone interview. “It’s kind of suspicious.”

Naval Frigate

The U.K. Ministry of Defence said HMS Westminster, a frigate, will pay a routine visit to Gibraltar on its way to exercises later this month. Similar visits have taken place for the past three years. The ship, which has a crew of 187 and carries missiles and a helicopter, will stay there for three days, a spokesman said, speaking on condition of anonymity in line with U.K. government rules.

Photographer: Angel Navarrete/Bloomberg

Prime Minister Mariano Rajoy told U.K. Prime Minister David Cameron in a phone call yesterday that action by Gibraltar to block access to fishing grounds for Spanish boats was unacceptable. Close

Prime Minister Mariano Rajoy told U.K. Prime Minister David Cameron in a phone call... Read More

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Photographer: Angel Navarrete/Bloomberg

Prime Minister Mariano Rajoy told U.K. Prime Minister David Cameron in a phone call yesterday that action by Gibraltar to block access to fishing grounds for Spanish boats was unacceptable.

“Gibraltar is a strategic base for U.K. defense and as such Royal Navy ships visit its waters throughout the year as part of a range of regular and routine deployments,” the ministry said in an e-mailed statement. “At the same time, other elements of the task force will be visiting Spanish ports as part of the exercises.”

The dispute stems from Gibraltar’s installation in July of an artificial reef -- comprising 70 blocks of concrete -- in disputed waters near its airport. That blocked fishermen from reaching a shellfishing area.

Spanish Foreign Minister Jose Manuel Garcia-Margallo then said in an Aug. 5 interview with ABC newspaper that Spain may impose a levy on travelers entering the British territory.

Delayed Reaction

Quiroga said Garcia-Margallo’s protest was likely driven by Rajoy’s political problems. The reef was installed more than a week before the minister reacted.

The confrontation has helped push the Barcenas story down the agenda, even as Spaniards took to social media to denounce that they called a government attempt to steer news coverage away from its internal problems.

“Margallo and the right-wing media in punch-up over Gibraltar,” Enric Hernandez, editor of El Periodico de Catalunya, a Barcelona-based newspaper, posted on his Twitter feed. “Excessive nationalism or a smokescreen (Barcenas case)?”

Garcia-Margallo, who sat one seat away from the prime minister during the Aug. 1 debate in parliament, has supported Rajoy by picking fights in the past.

In October, as Catalan nationalists in Barcelona riled Rajoy’s base by pushing for independence from Spain, Garcia-Margallo told Scottish nationalists, pushing a similar cause, they’d have to “get in line” to rejoin the European Union if they opted to leave the U.K. in a referendum scheduled for 2014.

Euro Crisis

The foreign minister also told Germans they’ve benefited from the financial crisis due to a lower exchange rate and cheaper borrowing costs as the Spanish government was resisting pressure to request a sovereign bailout in September.

The minister compared European monetary union to the Titanic, the ocean liner that sank after hitting an iceberg in 1912, saying it would take down “first-class passengers” like Germany as well if it foundered.

Garcia-Margallo told his British counterpart, William Hague, in a phone call yesterday that Gibraltar’s actions over the fishing grounds were unacceptable, his ministry said in a statement. The countries agreed to form a working group to resolve the issue.

Cameron told Gibraltar’s Chief Minister Fabian Picardo in a July 22 letter published on the Gibraltar government’s website the U.K. won’t compromise on its defense of its sovereignty over the enclave and acknowledged that incursions onto the territory had “increased substantially” since Spain’s economic problems began to escalate in March last year.

Treaty of Utrecht

Gibraltar, commanding a strait at the narrowest crossing between Europe and Africa, has been under British control since it was captured by an Anglo-Dutch force in 1704 during the War of the Spanish Succession. Spain ceded the territory to Britain under the Treaty of Utrecht in 1713. Gibraltarians voted almost unanimously in referendums in 1967 and 2002 to retain their association with the U.K.

In another story to push Barcenas off the front pages this week, Angel Carromero, an official from the PP’s youth wing, accused the Cuban government in an Aug. 5 interview with El Mundo newspaper of assassinating a political dissident. Carromero was jailed in Cuba for his part in the car accident which led to the death last year of the dissident, Oswaldo Paya. He was later returned to Spain to complete his sentence.

In his testimony to parliament, Rajoy denied any wrongdoing, saying that while he did receive extra payments in his position as party leader, he always declared those sums to the tax authorities.

That has failed to convince most Spaniards, according to an Aug. 1-2 poll published by El Mundo. The survey by sigma Dos showed 72 percent of its 1,000 respondents said the premier was lying and 60 percent said he should resign.

Support for Rajoy’s PP fell to 32.5 percent in July, according to a survey by the state polling agency. He won the November 2011 election with 44.6 percent of the vote.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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