MOD Presence, Transferred MOD Properties and Tendering

Undoubtedly one factor that the CM considers important, following the recently announced MOD Lands Deal, is the continued MOD presence In Gibraltar. It was vocalised by him in terms of both political and economic importance. There is no doubting that the presence of the MOD in Gibraltar is generally warmly welcomed. It will continue so to be. The repetition by the Defence Secretary of Gibraltar's continued strategic importance is also reassuring. It is this that requires our attention. The allusion to the tightness of money in the UK as well as the need for the UK to obtain value for money is less reassuring albeit understandable. In this context the emphasis on the political and economic importance of the MOD has other connotations, which require careful consideration to avoid unwanted repercussions.

Statements about the political importance of the MOD presence in Gibraltar should be measured and tempered. Gibraltar's continued British sovereignty should not be or be seen to be inextricably tied to that physical presence in Gibraltar. The British sovereignty of Gibraltar needs to be seen as separate and distinct from military requirements. The march of recent history has indicated one relentless destination. The MOD presence in Gibraltar, for a variety of reasons, has been reducing substantially. One day, for whatever reason, the presence will be negligible. What will remain always, however, is Gibraltar's strategic location. It is this advantage, together with the evolution and development of a social and political civil society, that is the negotiating strength of Gibraltar.  It is not a count of the number of MOD personnel physically located in Gibraltar that is any basis to interpret Gibraltar's international status.

The political argument ties in closely with the economic argument. Gibraltar is now (subject to prudent public expenditure and debt management) self-sufficient economically. We have economic self-sufficiency even  without MOD expenditure. This is not to say that MOD expenditure is not welcome. The ability of Gibraltar to remain British for so long as the people so wish, for it to remain a separate political unit and make progress toward self-determination, however, should not be intertwined with an MOD presence.

The ability to continue remaining a cohesive and separate political entity cannot be viewed as dependent at all on MOD use of Gibraltar. It is more directly related to Gibraltar's ability to retain a sustainable economy based on irreproachable business practices; practices that are acceptable and meet international and generally accepted standards and are not parasitical. It is of concern that, however much the boast of Gibraltar's good reputation is trumpeted by our politicians internationally, some such business practices do not meet these standards. Any shortcoming in standards makes our economy more susceptible. 

Public expenditure must be tempered by longer-term aspirations and needs. There is presently a tendency to be profligate with public moneys in the belief, hope and expectation that the economy will continue to perform as in the recent past. Expenditure is being incurred on luxuries at the expense of essentials. Gibraltar is not immune from the international financial and economic downturn. Accordingly, prioritising essentials is more and more necessary, precisely whilst the economy is performing well,. The urgency will increase if the economy is affected by the downturn in the world's economy and/or any attack on Gibraltar's core economic pillars, for example, presently, the potential for increased regulation of gambling in Europe, closely followed by taxation at the point of consumption, is of concern. 

One immediate economic impact is that the transfer of MOD lands carries a direct and indirect cost. The direct cost is that the Government is obliged to construct 90 houses for the MOD. The indirect cost is that accepting built and properties without buildings on them mean that there will be additional costs of security and maintenance. The Government have already announced that homes that are to be transferred will either be sold by tender or under the "right to buy" scheme, in order to raise money to meet the direct and indirect cost,in order to raise money to meet the direct and indirect cost. 

The question is, will sale of properties by tender provide the Government with the best return? It would be right to argue that in certain defined circumstances there are social as well as economic considerations that a government must have when disposing of housing. The issue does not relate to those houses where social considerations are more important than economic considerations. However, economic considerations have a major bearing when there is a direct cost to the Government, in the form of the construction, for the MOD, of 90 houses.

I am not convinced that selling houses by tender actually results in either the best price being obtained, or the process being entirely open and transparent. It is certainly the method that governments have for decades used to sell real estate in Gibraltar. That does not make it the right method. Perhaps, an open auction would deliver to the Government a better return. It may also prove to be a fairer and more open and transparent manner in which to sell houses. The Government would need to set a reserve price and then each person would bid openly for the house of his choice. The revenue to Government may increase substantially if sale of housing were to be done by auction.

Aside from housing, real estate of other description has been released to the Government by the MOD. Gibraltar's real estate assets, unless or until there is more reclamation, are limited and will be so even with reclamation. It is of the important that such land as is available and is suitable for economic activity should be utilised to its best potential. In this manner it will stimulate economic activity, increase employment opportunities and grow our GDP. I have no magic formula but I would urge that careful thought and planning go into what use each piece of real estate is put to and how it is sold. There is a need to make sure that it is all used to its best advantage and for the best economic benefit to Gibraltar. 

One huge asset that Gibraltar has is day tourism, via cruises and the frontier. It may be economically beneficial to consider using some of these newly transferred real estate assets to provide Gibraltar and them with additional attractions. This will entice these tourists to leave that extra bit of money in Gibraltar. US tourist destinations seem to be very good at achieving the expenditure by tourists of little tranches of money that fund employment and economic activity. It may be possible to learn from their experience and ability to enhance the tourist product.

So all in all the MOD Land Deal is good news. Now it is up to those who govern us to use the released properties to Gibraltar's best economic advantage. Frequently short-term answers or solutions are not the best way forward. Unfortunately electoral expediency and opportunism frequently deliver short-term answers and solutions with adverse longer-term repercussions. It is best for Gibraltar that acting in this short-term manner should be avoided.