When the UK decided to leave the EU in 2016, its opponents predicted all sorts of calamities the country would have to face. One of their valid concerns was the fate of Gibraltar, a self-governed British Overseas Territory that for centuries has guarded the Mediterranean. The combination of strategic importance, flourishing financial markets, and ancient sovereignty claims left it in the middle of a brutal political struggle.

A natural fortress in a perfect location, Gibraltar—or “the Rock”—is a priceless strategic asset. It can, if necessary, exercise control over all vessels passing between the Mediterranean and the Atlantic. It is a convenient deployment spot due to its proximity to other bases. Being a large and busy port, it provides intelligence. The Rock’s height enhances both visibility and audibility, while its stable structure has allowed the British Army to build a network of defensive tunnels large enough for 16,000 people.

The Port of Gibraltar. Image courtesy of ‘Port of Gibraltar,’ licensed under of CCA-SA 4.0 International.

The dispute over Gibraltar is not new. Won from the Moors during the Reconquista, in 1462, and changing hands several times afterwards, it had finally become a part of Spain in 1501. The Rock remained a possession of the Spanish Crown for another two hundred years, until captured by an Anglo-Dutch fleet during the War of the Spanish Succession. The war went well for Britain, establishing its naval and commercial superiority over all rival states, including the Dutch Republic that could no longer compete. To the victor went the prize, and the Treaty of Utrecht, signed in 1713, established the British sovereignty over Gibraltar and Menorca.

Spain, however, refused to give up on its lost territory. During the 18th century, it attempted two sieges, both of which failed, though not before doing significant damage. Britain, meanwhile, turned Gibraltar into a vitally important naval base and invested heavily in its development. In the mid-20th century, Spain made another attempt to reclaim Gibraltar, but this time by democratic means. This dispute resulted in the Gibraltar sovereignty referendum of 1967, with 99.64% of the votes in favour of Britain. Far from pleased, Spain reacted rather vindictively, closing the border for 15 years. Still, it refused to accept defeat and tried to negotiate a shared sovereignty in 2002. This led to the second referendum that showed a similar picture: 98.97% of voters rejected Spain’s proposal, leaving no room for misunderstanding.

The UK, with Gibraltar as a part, joined the EU’s precursor, European Economic Community, in 1973. The border issue was resolved in 1985, and the Rock developed a close connection with its Spanish neighbours, especially with the residents of nearby towns. Thousands crossed the border each day, travelling to work, visiting friends and relatives, or simply enjoying the view. Military spending, tourism, shipping, online gambling, and financial services made Gibraltar one of the world’s most prosperous places. Content with the status quo, its citizens were alarmed when Britain raised the question of leaving the EU.

Dissatisfaction with European governance has long been growing in Britain. Both London and Brussels politicians treated it like a phantom, until it suddenly proved to be quite real. On the June 23, 2016, the British public voted to leave. Gibraltar did not support this decision, mainly out of concern for the free movement and access to the single market. Local authorities even entertained an idea of remaining in the EU, and that was when Spain, not being the one to take ‘no’ for an answer, once again brought up the issue of sovereignty. In June 2016, Jose Manuel Garcia-Margallo, the Foreign Minister of Spain, gave an interview regarding Gibraltar. “I hope the formula of co-sovereignty—to be clear, the Spanish flag on the Rock—is much closer than before,” he said. A few months earlier, he had spoken about Britain leaving the EU, noting that Spanish leaders were going to be “talking about Gibraltar the very next day.”

Yet the Rock stood defiant, as it did for the last three hundred years. Fabian Picardo, the Chief Minister, gave a speech on the Gibraltar National Day, celebrating the referendum of 1967. “If anyone thinks that we are going to sell our homeland for access to Europe, they don’t know the Gibraltarians,” he said. “We have told them that hell will freeze over before Gibraltar becomes Spanish.” Applauded by the crowd in red and white, he went on to say, “If Brexit means Brexit, then British means British. No means no. Never means never. Gibraltar is British forever.”

Boris Johnson, then the UK Foreign Secretary, stated that Britain was prepared to stand up for Gibraltar, and Prime Minister Theresa May refused to negotiate its sovereignty. Rear Admiral Chris Perry said that Britain “could cripple Spain in the medium term.” Meanwhile, the Royal Navy drove a Spanish warship out of Gibraltar waters, mainly to make a point.

Brexit negotiations began. Although Gibraltar’s sovereignty was not explicitly on the table, plenty of other matters remained. The future of Gibraltar’s economy was one of them. Loss of the EU markets could deal a serious blow to its finance industry, but Britain committed to keeping it afloat by providing a broader access to its own markets and services. Still, some fintech companies expected complications and moved their offices to other countries.

Yet the Spanish border was the primary concern. At best, a ‘hard Brexit’ could mean that all who wished to travel to and from the Rock would have to spend hours at checkpoints. At worst, it could mean a closed border. Restricted movement could also impede access to necessary services. Spain vouched not to hold Gibraltar hostage; but the threat was always there.

In October 2018, the Spanish Prime Minister announced that an agreement had been reached between the UK and Spain: Gibraltar was to remain within the EU, and all future disputes over its sovereignty were to be held separately. A month later, he threatened to veto Brexit, “unless it’s absolutely guaranteed that the future relationship of Gibraltar with the EU will require the previous agreement of Spain and the UK, as was agreed at the beginning of the negotiating process.”

On 31st January 2020, Britain left the EU and the Brexit transition period began. It was to end on 31st December 2020, and if no trade deal could be agreed upon by that time, Britain would have to leave without one. Months of negotiations followed. Finally, in December 2020, a trade deal was drafted and signed. There was a drawback though: it did not include Gibraltar. Britain and Spain failed to reach an agreement, and it looked as if the Rock had to prepare for a hard Brexit.

“The days are getting longer but our time is getting shorter,” Fabian Picardo wrote on the 26th of December. Nothing changed the following day, nor on the 30th. However, both teams continued working, and on the 31st of December, hours before the deadline, Britain and Spain came up with a preliminary agreement. Under the last-minute deal, Gibraltar will not be a part of the EU but will join the Schengen Area (with Spain as a guarantor). For the next four years, border security will be ensured by Frontex, the European border agency. The EU, however, retains a significant amount of control over Gibraltar’s immigration, environmental guidelines, personal data, and social security policies.

Spain has never given up on its claims, nor is it going to do so in the foreseeable future. Yet Britain remains steadfast and Gibraltar is as loyal as ever. The deal, whilst far from perfect, at least managed to secure a comfortable life for Gibraltarians. Nevertheless, the new arrangement will bring new challenges—and so the story remains far from over.