When the PSOE politician Gemma Araujo took office as the mayor of La Linea last July 11, one of the first things she did was order a physical gesture aimed at repairing the damage caused to cross-border relations by her Popular Party predecessor, Alejandro Sánchez. Early one weekday morning, she watched as municipal workmen demolished the infrastructure put in place by the former PP mayor as part of his failed plan to impose a charge on vehicles leaving Gibraltar. It was a token that was well received on the Rock, where people had breathed a collective sigh of relief at the departure of Mr Sánchez and his team.
Now, in a wide-ranging interview with B2B, Mrs Araujo leaves no doubt that La Linea´s town council sees Gibraltar not as a threat, but as an ally. La Linea, she concedes, is verging on bankruptcy. Gibraltar, she quickly adds, will play a significant role in its economic recovery.
“I believe Gibraltar´s role is crucial,” she says. “It was important to make a gesture and show Gibraltar that we were different, that our intentions were not the same as the PP’s.”
“All the municipalities have been hit by the crisis and unemployment, but La Linea has always had the salvation that you can go and work in Gibraltar.”
“In that respect, we also have to be self-critical as an administration. People go to work in Gibraltar because we have not been able to generate employment here, or in the surrounding areas.”
“Gibraltar has been the cushion that has softened the blow of the economic crisis in La Linea, even though the impact has nonetheless been significant.”
Mrs Araujo, 32, illustrates that economic contribution by reflecting on the damage caused by Mr Sánchez´s tough position on the Rock. Mr Sánchez had rarely recognised that Gibraltar was a source of direct and indirect revenue for La Linea and the surrounding Campo de Gibraltar. He had opted instead for a negative analysis, arguing that La Linea was vital to the Rock ´s success but that the town did not benefit from it. That entrenched position – and most of all, the hare-brained toll idea -led to many Gibraltarians avoiding the Spanish border town in protest. For the new PSOE mayor, the PP had followed a flawed strategy that backfired and impacted negatively on La Linea.
“For us, Gibraltar is an opportunity,” Mrs Araujo says. “Not only because there are Spanish people working there, but because of the opportunities for Gibraltarian interests to set up here and, above all, because of the revenue created by Gibraltarians who come across the border to shop here.”
“There is no doubt that those revenues dropped during that time and I regret the silence that there was on this issue, which was directly impacting on the economy of our municipality. During this period of direct confrontation under Alejandro Sánchez – and I personalise it in him because time has shown that it was his policy, not that of the wider municipality – there was a significant drop in that source of revenue, and we and our businessmen noticed that.”
“We realised the significant income that Gibraltar generated for our community.”
“I think we need to forget this period.”
Difficult Times
Mrs Araujo took office at a time when La Linea was reeling economically. The city has nearly 10,000 people registered as unemployed. Its town council owes tens of millions of Euros and cannot even afford to pay its 850-strong workforce. Every day outside her office, union activists and municipal workers protest loudly over unpaid wages. It has been this way for over a year and the protests have, on occasion, led to severe disruption to frontier traffic. When she became mayor, the workers were owed over €5m in unpaid salaries. Although some of that has now been paid off, the bill continues to rise. La Linea, its new mayor admits, requires some strong medicine.
To explore how Gibraltar might play a role in La Linea´s economic recovery, it is first necessary to understand the depth of the problems its town council faces. The monthly bill for municipal salaries is currently €1.4m, without including social security payments. La Linea receives €15m from the state every year but those payments are currently frozen because the council has a debt for social security and tax running to nearly €40m. From the Junta de Andalucia it receives €2.8m, while its taxes are collected on its behalf by the Diputación de Cádiz and amount to some €18m.
“With that income, a normal town council would have enough if the bill for salaries was lower,” Mrs Araujo says. “That is our objective, reducing the salary bill.”
“When all the income that a town council receives is earmarked to pay salaries, then other services suffer and that is the situation we are currently living.”
In practice, the size of the municipal salary bill means that La Linea struggles to find the cash to pay for routine work ranging from painting street markings and replacing street lights to fixing pot holes in the road. Public services and infrastructure deteriorate and this impacts not only on the people who live there, some of whom are Gibraltarians, but also on the people who move through the city, including people who live on the Rock.
“We find it hard to pay for the basic, essential things, and this has a direct repercussion on La Linea´s citizens who are now paying for the wasteful policies of the past,” she says.
“For many years, La Linea has lived beyond its means. Now we´re dragging a deficit and an accumulated debt as a result, and the current situation is serious.”
To tackle the municipal salary bill, La Linea´s town council is working to meet current payments while whittling away the debt as and when it is possible. In parallel, it is also working to reduce costs by removing benefits such as bonuses, expenses and the like. It has also moved to close down municipal companies that do not provide essential services or value for money. The list includes the municipal TV station, which was closed in August with the loss of 22 jobs. Ultimately, it will also mean redundancies to scale back the size of the municipal workforce.
“I know that these are difficult, unpopular measures, but I have accepted that this is a role I have to play,” Mrs Araujo says. “Until those measures are taken, this town council will not be able to recover and move ahead.”
Mrs Araujo uses her own salary to illustrate the cuts that she feels are necessary. Some of the council workers are paid very large salaries, much higher than what Mrs Araujo herself gets paid. The mayor receives an annual gross salary of €53,000, while some civil servants in La Linea are paid close to €100,000 a year.
“If everyone makes a sacrifice that reflects the current circumstances, then maybe we won´t have to lose that many people,” she says. “Salaries that are too high will have to come down, that´s the way it is.”
All of this might seem like a recipe for labour strife but Mrs Araujo has so far largely avoided the conflicts that were bread and butter during the days of Alejandro Sánchez. She has worked to recover dialogue with the unions and to some extent has been successful.
Although the unions protest daily outside her office, the turnout at these demonstrations is low and most workers appear to be biding their time in the hope that she will find a way through the financial tangle. With cutbacks on the horizon, they are also wary of raising their heads too far above the parapet. As such, the protests have become largely symbolic.
“Of course the unions are going to bang the drum if I don´t pay,” she says. “But they are also going to bang the drum if there are cutbacks in the workforce. I´d rather they banged the drum because of the cutbacks, but be able to pay the salaries of the workers every month.”
She does not hesitate to acknowledge that life for many municipal workers has become very hard. Most are surviving on handouts and credit, but many have run out of room to manoeuvre. In extreme cases the town council has had to step in to ensure families have access to essential services including water and electricity.
In that sense, Mrs Araujo says the workers must be praised for hanging in there.
“They have continued to work with absolute professionalism even though they knew that they might not get paid their full salaries at the end of the month,” she says.
Changing Things
In finding new sources of revenue for her city, Mrs Araujo highlighted the need to ensure that there was sufficient land to accommodate any company that wished to set up in La Linea. One of the key aims of a forthcoming review of La Linea´s urban development plan will be to earmark sites for commercial and industrial use.
“That will be one of the priorities,” she said. “We´re not talking of large businesses of the sort that set up in the major sites in Los Barrios or Algeciras, but rather very specific types of business.”
At present, though, this is a hope for the future. She concedes that the plan is not a response to interest from companies.
“We want to do it the other way round,” she said. “Have the land available first, then find the customers.”
Asked why a business would site itself in La Linea, she spoke of the city´s strategically-advantageous geographic location, with easy access to the A7 to Málaga, Gibraltar and to Algeciras.
“I think La Linea is naturally geared to the services industry and I believe that this is where we will find the interest.”
She also highlighted the new marina facilities and planned commercial developments in that area.
“We need to develop and promote those and create the confidence needed for companies to come and set up here,” she says.
Tourism is another area that Mrs Araujo and her team are keen to develop. She wants visitors to stay in the town and not just see it as a place to drive through en route to somewhere else.
“We have a privileged location, with North Africa just 30 minutes away, with Gibraltar a step away, and at the gateway to both the Mediterranean and the Atlantic,” she says.
“And then there is the potential offered by the joint use of the airport.”
Mrs Araujo met with state airport officials last July, shortly after becoming mayor, to unblock the sale of land on which Spain will build its access to Gibraltar’s new air terminal.
The sale of the plot of municipal land had been stalled for nearly three years by the PP Mr Sánchez.
The PP mayor said he was simply trying to get the best price for La Linea’s cash-strapped council, but others accused him of hampering the cross-border project for political ends.
Now, Mrs Araujo is leading the council initiative to untangle that impasse and renew discussions with Aena, the state airport authority that will oversee the project.
“We are concerned that the terminal in Gibraltar is almost complete and ready to be inaugurated in the coming months and we have yet to reach an agreement to release the land that AENA needs,” she says. “We’ve already had a first meeting to see how we could unblock this issue [and] we hope to renew the negotiations with AENA after the summer.”
“We’re going to sit down and try and close an agreement that will guarantee that the plot of land is available.
Gibraltar Cooperation
In all of these projects, Mrs Araujo sees the potential for Gibraltar companies to get involved. In the coming months, she hopes to strengthen her contacts with the Gibraltar Government and with the local business community to explore possible opportunities.
“Any initiative that aims to encourage mutual cooperation between the neighbouring communities is good,” she says.
“If on top of that we can generate employment or offer Gibraltar businesses assistance to set up here, or offer help finding employees, then that is always going to be positive.”
Mrs Araujo believes that many youngsters in La Linea are already well educated and trained but often struggle find jobs in their area of expertise and, as a result, have to settle for something else or move away.
“But I also recognise that many of them have yet to get up to a good standard of English,” she adds.
“One of initiatives will be to help these youngsters to perfect their English to help them find work in Gibraltar and remove that language handicap that can limit their employment opportunities.” She says the town council would look to see whether Gibraltar could play a role in this educational initiative.
She says that dialogue with Gibraltar had flourished under the PSOE government and the tripartite forum, whereas the PP has always opted for a “false patriotism” in order to hamper that cooperation. But she will not be drawn to reflect on the current political climate and the fact that the tripartite talks had all but collapsed as a result of the row over territorial waters.
“My job as mayor is to encourage goodwill and good relations between both communities,” she told B2B.
“Our common history requires this.” “But that does not mean that the Foreign Affairs Ministry in Madrid cannot have a determined position on Gibraltar in matters that are not within my remit.”
Despite her good intentions, Mrs Araujo concedes that there is potential for storm clouds on the horizon. Spain will hold its next general election on November 20
and the polls show that there is strong likelihood of the PP taking over in Madrid. National elections will be followed by regional ones in Andalucia – as this edition went to press, a date had yet to be fixed – and there are signs that the PSOE may for the first time lose its hold on the regional government too.
The PP has already promised a tougher line on Gibraltar if it wins in November. While it insists it is committed to local cooperation with Gibraltar, it prefers a “two flags, three voices” formula that recognises Britain as the sole interlocutor on Gibraltar issues.
“If that situation arises, then it is going to require even more effort from us,” she says. “Our competencies are local and we are going to continue working in that sense whoever is in government.”
She adds that should the PP win the national elections and harden Spain´s position in respect of Gibraltar, then the Gibraltar Government will have to play a critical role to differentiate between national policies imposed by Madrid and local initiatives led by a PSOE town council in La Linea. “It´s going to require a greater effort,” she says.

New entrants to the Civil Service will no longer retire on final salary pensions under new arrangements introduced by the Gibraltar Government at the last budget. The measures, which begin next year, are aimed at tackling a rising pensions bill that represented a significant burden on the public purse.
The Civil Service final salary pension scheme is entirely unfunded and is paid out of the Government’s annual expenditure budget.
As salaries increased over the years, so did the cost of meeting those payments.
In 1983, the cost of meeting the pension payments of retired civil servants was £3.8m. By 2011, that had risen to £26.6m.
Under the present system, Gibraltar employs civil servants, pays their wages and enjoys the services they provide, but it is future generations who must pay the pension of those civil servants.
“Because it is unfunded, what it basically means is that we are leaving the pensions liability for current civil servants to our children and grandchildren, who will be the taxpayers in 33 years time when a civil servant recruited today retires,” said Chief Minister Peter Caruana during his last budget address just before the summer break.
“Just as we, today’s taxpayers are now paying the pensions of past civil servants who have retired and will pay the pensions of current civil servants when they retire.”
In times of economic prosperity, such an arrangement works well and payments are met. But the risk is that a downturn in the local economy could saddle future generations with an unsustainable burden.
It is that risk that the Government sought to address by putting Civil Service pensions on a contributory footing.
“If at some future time the economy were to do less well, this could become unaffordable and thus a serious problem for our children and grandchildren and for future generations in Gibraltar,” Mr Caruana said.
“We should eliminate that risk to them as soon as possible. This can be done by establishing a new occupational pension system for future civil servants in which the Government and the employee both put aside each year a proportion of each employee’s salary into a pension fund for that employee.”
When that employee retires, the accumulated content – annual contributions plus investment income over the whole career – of that employee’s pension fund will pay for his her occupational pension, which will thus no longer be linked to final salary and will not be a financial burden on taxpayers at the time that he/she retires.”
Under the Defined Contribution Provident Scheme, the cost of public sector pensions will be spread over 33 years of a civil servants working life and paid annually by the taxpayers who employed and obtained the benefit of that civil servant.
Unlike in the UK, this change in the civil service occupational pension system will not affect existing employees, who will continue to enjoy their present pension arrangements.
In effect, it means the change will increase existing costs for the Government, which will have to meet current final salary pension payments while funding annual contributions for those in the new scheme.
“So this is not about saving money now,” Mr Caruana said. “It costs more money now.There is nothing in this for the Government today except extra cost.”
“This is about taking seriously our responsibility to our children and grandchildren and to future generations
by relieving them of need to pay later for the cost of things that we do, enjoy and decide today.”
Over 1017 public sector workers – around 25% of the public sector workforce – are already employed on the basis of this new pension scheme, most of them in statutory agencies outside the main Civil Service structure.
It already applies to new entrants in public authorities and agencies and, as from January 1, 2012, will apply to all new entrants in the Civil Service.
The Government is currently preparing the legislative changes needed to put the new scheme into place.
It also envisages improving the terms of the Provident No.2 Pension Scheme by increasing employer contributions from their current 10%.

Weekday mornings this winter in both arrivals and departures in Gibraltar airport’s new terminal look set to be what could be diplomatically described as ‘challenging’.
The quirks of slot allocation to the airlines mean that three flights are scheduled to arrive within five minutes of each other on Monday, Wednesday and Friday. This frenzy of activity will be but a blip as the ramps look set to remain empty for much of the remainder of the day during the year’s quiet season. The winter schedule comes into force on Sunday 30 October with the airport’s three established carriers continuing to provide service to various UK destinations.
Although British Airways (BA) has shifted its flights to Málaga to operate from London Gatwick, its daily service to Gibraltar continues to operate from London Heathrow’s Terminal Three. This winter however the airline has rescheduled the flight to operate later in the day and to offer better connections to passengers arriving from long haul services into London. The single daily flight will leave Heathrow at 10.05am with arrival into Gibraltar at 1.55pm. Departure will be one hour later with arrival back in London at 4.55pm. Additionally, the airline will continue to operate larger 156 seat Airbus A320 aircraft on the route.
easyJet (EZY) launched three weekly flights to Liverpool at the end of March this year. The airline will continue the service at the same frequency this winter.
The only change to the operation is that the Saturday flight moves to a morning operation from The Rock. Inherited with its purchase of GB Airways, the low cost airline’s daily flight to London Gatwick will continue but the schedule has changed to an early morning departure from London. Six days a week the flight is due to land in Gibraltar at 11.05am and after the airline’s customary rapid turn round it leaves for London just 35 minutes later. Saturday flights arrive just under two hours later.
Earlier this year Monarch (ZB) announced a big increase in flights to Spain and Gibraltar citing increased demand as tourists shifted away from North Africa. This winter the airline will be reducing this extra capacity back during the off season. From a peak of 11 weekly flights to London Luton in July and August, the airline will cut this to just four with effect from 07 November 2011.
Although this will be increased to five in the run up to Christmas and New Year, only three weekly flights will operate with effect from 09 January 2012. The airline’s route to Manchester, which saw four weekly flights this summer, will be reduced to three weekly services with the start of the winter timetable.
Looking forward to the summer season, Monarch will offer a substantial increase in flights to both London Luton and Manchester.
The big news however sees the launch on 31 March of bmibaby’s (WW) three weekly flights to Nottingham East Midlands airport – a route set to open Gibraltar and the western Costa Del Sol to the English Midlands.

The transfer of the Gibraltar Yacht Registry from Companies House to the Gibraltar Maritime Adminstration has paved the way for the Rock to pitch for lucrative business from wealthy owners of luxury megayachts.
Joe Holliday, the Minister for Enterprise, Development, Technology and Transport, described the move as “an important milestone” for Gibraltar’s maritime sector.
Gibraltar’s Ship Registry has gone from strength to strength over recent years, consolidating it’s position as a quality flag that attracts owners of merchant ships from around the globe.
The Registry’s commercial fleet continued to grow in 2010, with a 4% increase in ship numbers. In 2010, there were 49 new registrations, bringing the total number of vessels on the Gibraltar Register to 320 ships totalling nearly 2.2 million gross tons.
But the Yacht Register has remained largely static in the same period. That now seems set to change.
A key element of the transfer is a legislative change that now will allow for yachts over 24 metres in length that comply with the internationally recognised Large Yacht Code to be registered in Gibraltar.
“This will open a new and exciting market for Gibraltar’s maritime services and to this end, a surveyor has been recruited to carry out the surveys and inspection on these vessels,” Mr Holliday said.
“A promotional campaign is being worked on to attract these discerning owners to register their yachts in Gibraltar. This is an important sector with immense potential for the future.”
As at March 31, 2010, there were 736 yachts registered in Gibraltar.
Gibraltar, at the western gateway to the Mediterranean, has long been a favoured staging port for yachts moving between the Mediterranean and the Caribbean.
New maina projects built in recent years have included sizeable berths to accommodate large megayachts.

While a walk down Main Street remains the medium of choice for exchanging ideas in Gibraltar, a report published earlier this year laid bare the extent to which social media has taken root in this community and helped foster a parallel, online debate.
Nearly two thirds of the population of Gibraltar is registered on Facebook and a growing number of people are dabbling in Twitter and other platforms.
The figures released by the tracking website Socialbakers suggested some 17,540 people in Gibraltar hold a Facebook account. That amounted to nearly 61% of the community, the third-highest per capita concentration of Facebook users in Europe, according to Socialbakers.
Users in Gibraltar are spread across all age groups, with nearly half of them in their late teens to mid 30s, the data showed.
And when it comes to social media, there is no discrimination. In terms of gender, the spread is roughly even. Both men and women enjoy Facebook.
For many, Facebook is a means of staying in touch with family and friends who are not in Gibraltar.
But the popularity of discussion groups such as Gibraltar Politics and Speak Freely! demonstrates that social media also has a vibrant local dimension too.
Increasingly, mainstream media outlets such as The Chronicle, GBC and Panorama are also turning to Facebook and Twitter, both as a means of breaking news and as a source of information.
But is there a down side to all this? Perhaps.
Another recentsurvey, this time by Internet security company Webroot, found that 56% of the 4,000 people it questioned confessed to being addicted to social media.
According to Webroot, 46% of respondents visit their favorite social network several times a day or constantly, while 18% visited at least once a day.
The survey found that new technologies lay at the root of this phenomena, with 42% of those who visited their social sites several times a day or constantly accessing them from mobile devices.
The level of usage prompted questions about security issues and the protection of personal information, and one important piece of advice: Do not do or say anything online that you would not do or say in the real world.