Gibraltar and Brexit: what are the main issues?

The Rock faces a number of hurdles once the UK leaves the EU

Gibraltar is at the centre of a long-running dispute between the UK and Spain

Theresa May’s efforts to pass a Brexit deal have suffered a further setback after Spain threatened to veto her draft divorce agreement over the handling of Gibraltar.

Speaking ahead of a crunch meeting of EU leaders on Sunday, Spanish Prime Minister Pedro Sanchez said he will reject the withdrawal agreement without clarification of the text on future talks about the status of the British overseas territory.

What does Spain want?

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“Spain maintains a claim to the peninsula, ceded to the British crown under the 1713 Treaty of Utrecht,” says the BBC. “It wants to ensure that future EU talks with the UK do not cover Gibraltar.”

Spain and Britain have been running parallel negotiations over the future of Gibraltar, alongside the main EU-UK Brexit negotiations, and Sanchez wants assurance that Madrid will not be shut out of future decisions.

He believes Article 184 of the Brexit deal, which states that the EU and the UK will seek to “negotiate rapidly the agreements governing their future relationship”, is ambiguous and wants to ensure that this does not apply to Gibraltar.

Spain “insists on its future right to discuss the status of the peninsula bilaterally with the UK, and is seeking clarity that this draft deal will allow it to do so”, says the BBC.

What do the people of Gibraltar want?

The tiny region of Gibraltar is not officially part of the UK, but it is a British overseas territory, and as such will leave the EU by default when the UK does in March 2019. The territory was the first to declare its result in the Brexit referendum, voting 96% in favour of remaining in the EU.

The European Council sparked anger in March by offering Spain an effective veto over the territory’s fate after Brexit, the Daily Mail reports. “Gibraltar fears Spain could use this veto to force talks about the Rock's constitutional future. At the very least, it fears there could be talks about closer cooperation with Spain,” said the BBC at the time.

Gibraltar’s Chief Minister Fabian Picardo has said that as far as the territory’s population was concerned, the question of sovereignty was irrevocably “settled”.

He said: “We are very linked to the UK, we see the world through British eyes and we don't want to change that.”

While much of the UK’s diplomatic focus over the past year has centred on its problematic border with the Republic of Ireland, The Independent describes the issue with Gibraltar an “even bigger problem”.

What other issues are there?

The situation has been further complicated by the European Commission’s decision to adopt a mandate in December making it clear that a bilateral agreement between London and Madrid on Gibraltar is essential if the overseas territory is to be covered by transition arrangements.

Talks between the UK and Spain have led to a “protocol” being agreed and three Spanish-British committees being set up to tackle tobacco smuggling, oversee cross-border worker rights, and co-operate on environmental protection and border control.

The Spanish government may also use the negotiations to attack the tax-haven status that has made Gibraltar a centre for banking, insurance, gambling and online gaming, says The Guardian. Madrid has called this arrangement an “unjustified privilege” in the past, and claimed that it contravenes EU law on taxation.

Other matters to be addressed in the talks include practical issues of border arrangements, with thousands of people crossing from Spain into Gibraltar every day to work.

“The fear is that, if Brexit turns nasty, Spain might decide to shut the border,” The Guardian says. “Not all locals love the EU, but it has been a buffer against headstrong politics.”

Picardo said last year that it was “only in the negotiations for the Spanish to access the then-European Economic Community that Spain finally opened the frontier”, and that Gibraltar “sees the EU as a guarantor of the freedom of movement of people”.

The key issue prior to the Brexit referendum was that of the territory’s disputed status, with Spain claiming - and pushing for - sovereignty over the Rock. But recently Spain has eased off on the issue, insisting it will not “endanger” the UK’s Brexit deal by forcing a change of Gibraltar’s status.

Questions remain over the status of Gibraltar International Airport, however. London has long maintained that the airport is a British asset on British land, The Times reports. The local Gibraltar government has pointed to the 2006 Cordoba Agreement between the UK, Spain and Gibraltar, which allows unimpeded Spanish businesses access to the airport.

“However, after Spain’s conservative government came to power in 2011, Madrid refused to acknowledge the terms of the treaty and insists it can only deal with Britain, not the Gibraltar government,” the newspaper says.

The conservative Popular Party, which was ousted from power earlier this year, has seized on the issue to attack the socialist-led government, describing the withdrawal agreement as “shameful” and an “absolute failure” when it comes to Gibraltar, and co-sovereignty of the airport in particular.

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