Madam Chairman, Minister, distinguished delegates, mine is the task of giving you the view from a territory about what makes a modern partnership between the UK and an Overseas Territory.

The British Government`s White Paper on the Overseas Territories – entitled "Partnership for Progress and Prosperity" rightly recognises that each Overseas Territory is unique and needs a constitutional framework to suit its own circumstances. This acknowledges the fact that each of the Territories is at a different stage of political, social, economic and cultural development. There cannot therefore be a standard vanilla constitutional model – nor a standard model of partnership with the UK.

I would like to start by giving you a snapshot of Gibraltar. We are located at the southern tip of the Iberian Peninsula, at the mouth of the Mediterranean. Our territory comprises just under six sq kms, which is home to a population of just over 28,000 people. Our Constitution was given to us by the British Government in 1969. It establishes a Parliament, in which we pass all our own laws. It also establishes a ministerial system of Government. We are part of the EU by virtue of the UK`s membership. Under its Article 299(4) the EC Treaty applies to European territories for whose external affairs a Member State is responsible. Our Parliament therefore has to transpose into our laws, and our Government has to implement and comply with, EU Directives and Regulations. This is a heavy burden for a small country. Our political system, like the UK`s is adversarial and party based. Our Constitution gives us a very large measure of self-government. The Gibraltar Government exercises responsibility in all areas of government, except defence, external affairs and internal security, which remain the UK`s responsibility. Our Constitution establishes a separate judiciary, police force and public service, so that, like other Overseas Territories, Gibraltar is a separate legal, political, administrative and judicial jurisdiction from the UK. We are entirely self- sufficient financially. Our economy is principally based on financial services, tourism and port activities. We operate a successful and growing financial services sector to the highest standards, which HMG agrees matches the UK`s own standards of regulation; we receive over five million tourists (mostly day visitors) a year and Gibraltar is one of the fastest growing cruise ports of call in the Mediterranean. Our port is the Mediterranean`s largest ship bunkering port, and, additionally, Cammell Laird of the UK, operates a successful and strategically located ship repair and conversion yard. Gibraltar is therefore a highly developed, European, politically advanced society, and this is naturally matched by the aspirations of its people for political evolution and maximum democratic self-government.

We therefore welcome the language in the White Paper that speaks of forward looking Partnership; of modernisation of the constitutional relationship with the UK; of the commitment to self determination and of the exercise of the greatest possible measure of self Government by the people of the territories. We greatly appreciate the statement that the Overseas Territories.

are a valued part of Britain`s identity and that a bond exists which Britain values highly. Speaking for Gibraltar, I can say that those sentiments are warmly reciprocated. For us self-determination or decolonisation is not about breaking our links with Britain.

But the question "what makes a modern partnership" begs, as does the White Paper itself, another vital question: What is meant by "partnership"? What does HMG mean by "a modern, forward looking partnership", and how does that definition measure against our notion of partnership and the self- government aspirations of the Overseas Territories?

According to the White Paper this "partnership" imposes "obligations and responsibilities" on both sides. "The territories should administer themselves in accordance with their constitutions and in full respect for those of the UK international obligations relevant to them. Within that framework the UK should uphold the right of the individual territories to determine their own future, to enjoy a high degree of autonomy and to exercise the greatest possible control over their own lives". The White Paper also says that "the partnership will be based on consultation and mutual understanding". The UK expects high standards of probity and governance and to minimise the extent to which the UK is exposed to contingent financial liabilities. In return Britain pledges to defend the Overseas Territories, to encourage their sustainable development and to look after their international interests.

Clearly it is right and fair that in a real partnership there should be mutual obligations and responsibilities. I readily, and easily, recognise that enjoying British sovereignty and a constitutional relationship with the UK has a price tag – it is not unconditional. It cannot mean effective independence in all but name. The UK obviously has legitimate interests in the conduct of the affairs of Overseas Territories and it must have the means and mechanisms for protecting those interests. But in a truly modern, forward looking partnership those means and mechanisms should not be "day to day" in nature. They should be useable in the event of genuine need, but residual in nature. This raises two obvious questions – what are the UK`s legitimate interests in the conduct of an Overseas Territory`s domestic affairs, and what mechanisms should the UK have to uphold those interests?

The right of the UK to demand and insist on "good Government" is clear. The UK is obviously entitled not to be exposed to international embarrassment by the conduct of an Overseas Territory`s affairs by its Government. I can readily accept the criteria for this mentioned in one part of the White Paper, namely, that "those territories which choose to remain British should abide by the same basic standards of human rights, openness and good government that British people expect of their Government". In other words, good Government in the qualitative sense. Good government meaning reputable, honest, open, transparent government and behaviour. But "quality" of Government is very different to ideological or policy preferences and priorities.

It would not be acceptable that the phrase "good government" should become a "catch all" concept by which HMG should seek to impose its own policies, views and cultural and ideological values on OT Governments. This would negate real democracy (since Overseas Territory citizens do not vote for the election of UK Governments and are unrepresented in the UK Parliament) and would seriously erode our self-government in practice. Democratically elected Governments in the Overseas Territories are elected to implement and account to their electorate for their own policies, for the economic and social advancement of their country and not the policies of HMG in the UK, which are invariably and understandably designed and intended to promote the interests of the UK, which may be and indeed often are different.

Self-government is not self-government if it is subject to the views and approval of HMG.

Similarly, it is readily accepted that the UK is entitled to insist on Overseas Territories complying with international legally binding obligations contracted by HMG on our behalf. It would be intolerable for the UK to be internationally accountable for non-compliance without the where with all to ensure compliance. But this begs another question. In a modern partnership said to be based on consultation and mutual understanding, should the UK enter into international commitments and obligations which bind the Overseas Territories without the express consent of the Government of the territories? I believe that it should not! Often those international commitments impose a heavy financial or social burden on the territory. Indeed, often they undermine our economies. Contracting them on our behalf, and without our consent, in areas that are domestic in nature, is not consistent with self-government. If HMG is capable of converting domestic, internal affairs (which are the responsibility of OvereasTerritory`s Governments) into external affairs simply by making them the subject of an international treaty obligation, that too is inconsistent with self-government.

Does the UK possess its powers in relation to the affairs of Overseas Territories to impose its own policies and wishes on them or to promote the territories` interests in discharge of her responsibility for them under international law? When they conflict, which should prevail? And in a democracy who decides what is in the best interests of an Overseas Territory – its own elected Government or HMG in the UK?.

And I strongly believe that HMG should certainly not seek to impose on Overseas Territories mere political agreements that have no legally binding status, that it may choose to enter with other countries without the consent of Overseas Territory`s Governments – especially not when those agreements respond to the UK`s own interests in matters where the Overseas Territory have obviously different interests.

Take for example, the international financial services sector – which is crucial to the economies of several of the UK Overseas Territories, including Gibraltar.

We applaud the UK`s encouragement to the Overseas Territories and the Crown Dependencies to tighten up on regulatory standards and anti-money laundering measures. We in Gibraltar have found that that step, which we have completed to UK standards several years ago, has actually been very positive to business development.

But the UK is now, with a handful of other countries, leading the way internationally, through purely political agreements (with no legal standing) in such organisations as the OECD, FATF, G7 and the EU, to extend international action to what is called "action to deal with harmful tax competition issues" ie the tax regimes upon which international finance centres are based.

There had been no consultation and still less mutual understanding between the UK and the Overseas Territories prior to the UK entering into these commitments which purport to bind the Overseas Territories. On the other hand – the UK has "mutual" responsibilities towards its Overseas Territories, many of which rely on financial services and whose economies are threatened by these international initiatives against so-called "harmful tax measures". Of course, the question that this phrase immediately brings to mind – "harmful" to who? The answer is harmful to the leading industrial countries, such as the UK. "Tax competition" is certainly not harmful to the Overseas Territory`s finance centre and their economies. So this leads to the main question: in this modern, forward looking partnership, is the UK entitled to use her "powers", over the Overseas Territories, not just to ensure good government or human rights, but also to promote and impose her national policy whatever the adverse consequences to the Territories? I think not. Overseas Territories are fiscally sovereign. Our constitutions were not intended to, and in fact do not, give HMG the power to interfere in our fiscal affairs. This cannot, and should not be overriden, by policy consideration of the UK Governments nor by political agreements or legal commitments entered into internationally by the UK above the heads of Overseas Territory`s Governments. Those of you that are familiar with the White Paper will appreciate that parts of that paper are not compatible with these views.

Therefore, the idea of a partnership is a good one, provided that it is a real partnership, and not a pretext for unjustified UK interference in our internal self-government whereby HMG seeks to impose its views, policies and agendas on Overseas Territories in issues that, by any objective criteria, do not raise questions of internationally recognised human rights or probity or objective quality of governance. Nor is taxation the only area of internal domestic policy where the White Paper seeks to give the UK a role – there is also the issue of borrowing practices and criteria, as well as the environment.

Therefore, although the White Paper identifies and describes many of the ingredients that Overseas Territories would wish to see in a Modern Partnership with the UK, it also uses language, which appears to be contradictory. On the one hand, it speaks of the Partnership being based on mutual understanding and co-operation, on the other hand, it appears to simply purport to lay down the law unilaterally and subjectively on a number of domestic issues, while at the same time advocating in favour of maximum self- government.

It is therefore important that in a modern partnership the respective roles, competences and obligations of each partner be clearly defined and that both partners discharge their obligations and responsibilities to the full. Where the UK has a legitimate interest the agendas should be discussed and worked out together. Those areas, that are the responsibility of the elected Government of the territories should be left to that Government, subject to genuine good government issues and compliance with international obligations contracted with the Territory`s consent. For its part the UK should fully discharge its responsibility to uphold, promote and defend the rights and interests of each territory on the international stage in accordance with the legitimate and reasonable interests of that territory. The White Paper refers to this as "looking after" the Overseas Territories interests internationally.

In this last mentioned respect I would like to give you some Gibraltar specific examples. As you all know Spain claims the sovereignty of Gibraltar, which she lost 296 years ago in 1704. In furtherance of that claim she places a series of restrictions on Gibraltar and takes measures of harassment. These include, amongst many others, the imposition of long and artificially created delays in crossing the border, the refusal to allow maritime and air links between Gibraltar and Spain; the non recognition of our 350 international regional direct dialling code; the non recognition of our constitution, our Government, our judiciary, police and other institutions; the systematic undermining of our EU rights and status. And all this despite the fact that we are part of the EU. These circumstances have persisted for years with serious negative impact on our economic, social and political development and on the enjoyment of our EU rights – despite being required to comply with our obligations.

Now in our "partnership" HMG is responsible for our external affairs. If the victim of these actions were Dover at the hands of France, instead of Gibraltar at the hands of Spain, would UK have tolerated it for so long without taking effective action? I think not. This is what the Foreign Affairs Committee of the

House of Commons concluded in their June 1999 report on Gibraltar (at paragraph 125):

"We conclude that there have been occasions in the past when the British defence of Gibraltarian interests has not been as robust as it should have been. Of all our overseas territories, Gibraltar is in the

unique position of having to conform to almost all EU regulations and directives. This means that the British Government has a special duty of care towards Gibraltar in the European Union, and places extra responsibilities upon United Kingdom Ministers to uphold the interests of Gibraltar. We urge Her Majesty`s Government both to recognise and to act in full accordance with these responsibilities".

Now we understand that the UK has other national interests and that it places these in the balance together with its obligations to the Overseas Territories. But if the UK, when deciding whether, how or to what extent to discharge its obligations to an Overseas Territory balances those obligations with the UK`s own other national interests, does that mean that in this "partnership" the UK`s obligations are conditional upon the balance of UK interests? Clearly in practice they are. If so, should not the Overseas Territory`s obligations to the UK similarly be conditional upon the balance of the Overseas Territory`s interests – especially in policy areas that affect the economic and social prosperity of the territory?

For example, as you all know Chancellor Brown has vetoed the imposition of withholding tax on bond interest, despite the fact that it is an EU measure "designed to take action against harmful tax competition" because he rightly judged that it operated against the UK`s vital commercial interests. I applaud him for that decision. But is an Overseas Territory not similarly entitled to resist other measures designed "to take action against harmful tax competition" if they damage the Overseas Territory`s vital commercial interests?

The concept of "modern partnership" between the UK and its Overseas Territories also raises questions of the international status of the Territories. Despite the change in nomenclature from colony to Dependent Territory and recently to Overseas Territory, there has been no change in our international legal status. As most of you will be aware, the remaining UK Overseas Territories are all listed at the UN as colonies – or Non Self Governing Territories as colonies are known in UN jargon.

In this day and age Overseas Territories cannot be considered "possessions" of the UK, under its control, nor treated as such. We are small non-independent countries for which the UK has responsibility under and in the terms of the UN Charter, Covenants and Resolutions.

In the White Paper, HMG rightly acknowledges and recognises the right to self-determination of the territories, and says that HMG would not obstruct independence in the case of those territories for which it is an option.

The phrase "for which it is an option" is intended to exclude Gibraltar from the option of independence – and perhaps also the Falkland Islands. These are the two territories which are the subject of a territorial sovereignty claim by a third country.

In the case of Gibraltar the UK now asserts the view (I say now asserts because it asserted the very opposite view until the early 1970s) that because of a clause in the Treaty of Utrecht of 1713, Gibraltar cannot opt for independence. We roundly reject that view – but, in a sense the point is academic in practice because Gibraltar does not seek independence from the UK. We value our British sovereignty and our constitutional links with the UK and wish to keep them.

But what modern status options are available to Gibraltar if we cannot opt for independence? We cannot remain a colony forever. Constitutions must evolve or they stagnate. Apart from independence, the UN recognises 3 other legitimate means of decolonisation – these are integration, free association and any other status that suits the circumstances of a territory and is freely accepted by the people of that territory in an act of self-determination – namely a referendum.

Sadly the UK will not countenance integration for its Overseas Territories – and denies (to Gibraltar at least) the opportunity to freely associate itself with the UK.

Yet the people of Gibraltar wish to be decolonised. We want a modern international status, a modern relationship with Britain. We want to be removed from the UN`s list of colonies and remain in a modern, non-colonial, constitutional relationship with the UK. It cannot be the case that the people of Gibraltar must remain a colony forever, unless they agree to become part of Spain.

Accordingly, and pursuant to the UN`s fourth option for decolonisation we seek to decolonise, through a process of constitutional modernisation that will leave us in a non-colonial, modern, constitutional relationship with the UK, the terms of which will maximise our self-government while leaving HMG with modern, but effective mechanism to uphold her legitimate and defined interests, should the need arise. To this end a Select Committee of our Parliament is currently considering constitutional reform proposals to put to HMG.