SAND
FALKLAND ISLANDS AND DEPENDENCIES
GIBRALTAR
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Fresent Constitution and Prospects for Independence
The Governor is advised by an Executive Council and there is a Legislative Council which, incester with constitutional changes likely to be APITOVLÊ, will in future have an elected unofficial majority.' The Governor can act contrary to the advice of his Executive Courcil and he has the right to legislate by declaration, but either course could provoke a constitutional crisis. There is no demand for independence. There are no political parties and
· all classes are united by a desire to remain British. But HMG's long term interest lies in a settlement of the sovereignty dispute with "Argentina.
No change has been made in the Ministerial form of Government introduced in 1969 in the context of the Spanish claim to sovereignty. External affairs, Defence and Internal Security ap reserved to the Governor together with the right to intervene in financial, economic and other matters. In practice
he has consulted Ministers on most issues. Independence is not an option since, under the Creaty of Utrecht, Skin must be given first refusal if britain Should give up sovereignty. The Spanish border remains closed but Spanish leadershir are coming to appreciate the necessity, if any sort settlement is ultimately to be reached, for the removal of restrictions, and winning the confidence of the Gibraltarian people in respect of whom G is pledged not to agree to any transfer of sovereignty contrary to their free expressed viches. Irogress is likely to be slow owing to the constraints of the internal political situations in Spain and Gibraltar.
CONFIDENTIAL
Considerations affecti A1
Folicy
The Islands are not grant-sided. At present they are economically viable but are vunerable to world price movements in wool - their only product.
MG remains committed to support and sustain Gibraltar Economic activity is heavily dependent on UK inputs, particularly MOD. The Aid Program agreed in 1974 is behind schedule, being handicapped by inefficient labour, shortage of materis and citing difficulties. Additional aid (including possibly budgetery aid) may become necessar
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