Mr Matutes made the offer to his British counterpart, Malcolm Rifkind, last week in Madrid, sources at the Spanish foreign ministry said yesterday. The proposal, dismissed by the British government, envisages a transition period of 50 or 70 years.
The idea of a transition phase marks a development in Spain's thinking and an attempt tobreak the stalemate over sovereignty. Spain constantly asserts its right to the Rock under the terms of the Treaty of Utrecht of 1713, while Britain refuses even to discuss it in the regular talks on the colony.
The vast majority of Gibraltarians consider themselves to be British. Peter Caruana, Gibraltar's conservative Chief Minister, has dismissed the Spanish proposals as "absurd".
During the proposed transition period, responsibility would be shared for "governing, budget and everything", Spanishsources said yesterday. They said the British had informed the ministry late on Tuesday night that the offer was unacceptable, because it did not take into account the wishes of the Gibraltarians.
The proposal would not meet with universal approval in Spain, but a sizeable proportion of the population would probably go along with it. Some in the ministry are miffed that the proposal, leaked to Spain's ABC newspaper yesterday, had become public. "I think it appeared too soon. It would have been better to wait, to talk to Mr Rifkind again, perhaps over a coffee, to talk to Tony Blair, and let the idea take its course. But now it's out I'm not crying," a source said.