Spain retreats from island after losing war of diplomacy

Spain's embarrassing clash with Morocco over a tiny, barren island claimed by both nations has ended with the night-time withdrawal of Spanish troops under a deal brokered by the US.

The operation, which took just 90 minutes, seems to have averted a more serious clash between the two sides, which are at loggerheads over a series of issues, and a public row among EU allies.

The 75 occupying Spanish soldiers left by helicopter on Saturday night, abandoning the disputed islet of Perejil – called Leila by Morocco – to its permanent population of goats.

Spain's Foreign minister, Ana Palacio, is expected to approve a diplomatic accord to draw a line under the dispute during a symbolic meeting with her Moroccan counterpart in Rabat today. The whole, farcical episode has proved an embarrassment for Madrid and for the EU, which had to rely on the US Secretary of State, Colin Powell, to resolve the diplomatic mess.

Under the US-brokered deal, Perejil – some 200 metres off Morocco's coast – would return to the situation which prevailed before 11 July, with neither Spain nor Morocco occupying the territory or raising its flag.

The weekend resolution of the crisis comes as a relief to EU foreign ministers who meet in Brussels today, not least because it had threatened to overshadow their gathering. The Moroccan Foreign minister, Mohammed Benaissa, had been expected to press his case in Brussels today, an appearance that would only have exacerbated the diplomatic tensions. Instead, attention will be on Mr Benaissa's meeting with Ms Palacio in Rabat.

A week ago the 15 EU member states expressed solidarity with Spain after the Moroccans sent a small force on to the island. But when Madrid responded with a much larger military operation to take Perejil, France blocked a statement endorsing the Spanish action. Paris, the former colonial power in Morocco, still enjoys close diplomatic and economic ties.

The European Commission added to the embarrassment by offering mediation, only to backtrack in the face of fury from Spain, which expected more wholehearted backing from Brussels.

Eventually, Mr Powell stepped in, pushing for a swift end to the row and striking a deal through intensive telephone negotiations. The US has close political ties with both countries and, with its war on terrorism to prosecute, has been anxious to avoid a needless row between the West and Morocco, a key ally in the Arab world. Mr Powell said the resolution of the crisis could be the starting point for better relations between the Mediterranean neighbours.

Although their proximity and trade links mean they are key partners, the Perejil dispute is the latest in a long series of rifts between Spain and Morocco, who have squabbled over immigration, fishing rights, oil exploration and the future of the disputed Western Sahara.

Morocco also has designs on Spain's North African enclaves of Ceuta and Melilla, which the Spanish insist are not up for negotiation. Morocco feels that its international position has been strengthened by Madrid's demands for sovereignty over the British territory of Gibraltar, and has been stepping up the diplomatic pressure.

The parallel with Gibraltar has not impressed the Spanish government, however. Last week, Ms Palacio said the two cities were as Spanish as "Seville or Cadiz".