Gibraltar stubs out smuggling dispute

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The dispute between the Gibraltar government and London over drug smuggling and alleged money laundering from the colony appears to have been resolved. The Foreign Office had held out the threat of direct rule from London if Gibraltar did not "clean up its act". The issue had also damaged relations between Britain and Spain.

Since an effective ultimatum from the then Foreign Secretary, Douglas Hurd, Gibraltar has clamped down on smuggling and is enacting legislation to bring banking standards into line with European law.

"We are pleased with the Gibraltar government action," a Foreign Office spokeswoman said yesterday. "Work is still continuing on legislation to implement outstanding EU directives on some financial and banking issues." But Britain is not satisfied with the Spanish response to the moves, pointing to continued delays at the border which the Foreign Office believes to be unjustified.

Spanish authorities concede that the clampdown on drug and tobacco smuggling via Gibraltar is "very effective" Since Gibraltar introduced anti-trafficking measures just over two months ago "there has been practically no contraband coming to Spain via Gibraltar," said Lieutenant-Colonel Mariano Jorge, head of the Civil Guard in Algeciras, responsible for the coastline adjoining the Rock.

"I did the only fool-proof thing I could do," Joe Bossano, Gibraltar's Chief Minister, said this week. "I reduced supply. If it's not there in the first place, it can't be re-exported."

Mr Bossano imposed restrictions on those allowed to import cartons of American cigarettes and insisted that the tobacco be stored in bonded warehouses and issued to bona fide retailers rather than individuals, and in limited quantities. He also impounded the inflatable boats moored off Gibraltar that were alleged to "do" tobacco and hashish from the Moroccan coast.

The measures came after pressure from London and Madrid; many Gibraltarians also disliked the activities of tobacco smugglers. "There are no possible allegations of the transport of cannabis or tobacco to Spain in boats based in Gibraltar; that route has now closed," said Mr Bossano. "I think we've got it totally under control."

He added that Spanish tobacconists were complaining that the supply of contraband cigarettes sold on street corners had not declined much, suggesting that supplies were obtained from sources other than the Gibraltar route.

"Only 5 to 10 per cent of smuggled tobacco comes through Gibraltar," Mr Bossano said. "Maybe our entire role in this traffic was always exaggerated."

On alleged money laundering activities, Mr Bossano said his government was "beavering away" at transposing a list of 99 EU directives applicable to all EU territories on a range of topics. "We promise to implement all 99 directives before the end of the year, by which time we will be the only place in Europe without a backlog."

The process was complex," he said, "and we have to devote time and money that we don't have."

Spanish official sources said the problem of illicit money in the colony, including the unregulated activity of money changers, was difficult to assess but remained a serious problem. Mr Bossano denies that offshore financial activities serve as a cover for money laundering, saying that Gibraltar is too small for such activities to go undetected.

Spanish authorities report a dramatic increase in the quantities of hashish landing on Spanish shores from Morocco in recent months, but stress this does not come via Gibraltar.