Gibraltar remains the thorn in Spain's side

AS TONY BLAIR entertains Spanish Prime Minister Jose Maria Aznar this weekend for a family get-together at Chequers, both men must wonder if their personal rapport can dispel the bile spilling around Gibraltar, writes Elizabeth Nash.

The last time they met, near Bonn in February, Mr Aznar handed Mr Blair a report that described the British colony as a "veritable infrastructure for drug running and money laundering". The Rock could be "an operations base for kidnapping and assassinations", it said, alluding darkly to "shady financial dealings" and "links with organised crime".

Gibraltar's Chief Minister, Peter Caruana, denounced the allegations as "calumnies" that provoked "hatred against Spain". Tension flared in February to its fiercest level for years in a dispute about Spanish fishermen who plied the waters off the Rock. That row was solved largely by Mr Caruana's high-risk stratagem of inviting the fishermen to his office for a chat.

Spain's Foreign Minister, Abel Matutes, was outraged at being sidelined. He thought Britain had wriggled out of a gentleman's agreement regulating fishing rights around Gibraltar, and that it was no business of "local authorities" on the Rock to make deals with Spaniards.

Mr Matutes turned away motorists with Gibraltar licence plates and threatened further curbs on use of airspace. Faced with the tightest border controls for years, motorists queued for hours and Gibraltarians complained about their little territory feeling besieged.

Business flagged at Andrew Hoare's sports shop in Main Street. "We went through all this under Franco. It's just another siege," he said. "My grandfather survived the war. My father survived the closure of the frontier, and now I'm going through it all again."

It seemed so promising a year ago when Mr Matutes offered Mr Blair's new government a sweetly-presented joint-sovereignty proposal. "Spain is ready to maintain and protect the rights of Gibraltarians and to talk about a statute of autonomy," Mr Matutes said. "Our idea is that during a long period of co-sovereignty, Gibraltarians would make new gains and keep the advantages they have. We respect Britain's sovereignty over the Rock, although we hope to recover it eventually."

That remains essentially Madrid's position, but its presentation has become steelier in recent months. Why has the line hardened? "We were given to understand that it would help us if we offered Britain a more conciliatory approach," an official Spanish source said. "But after the fishing dispute we felt Britain was not carrying out its side of the bargain and had let us down."

The only redeeming feature of the stand-off, from Madrid's point of view, is the perception that Britain is finally treating Spain seriously at the highest level. That is their reading of Mr Aznar's country weekend.

"At last Britain is ready to talk to us on the basis of equality, after centuries of patronising and spitting on us," the source said. "We have conveyed to Britain that this problem cannot persist for ever. It's time something was done. Controls will stay until Britain stops illicit trafficking, and makes Gibraltar's banking system less opaque."

Britain says it will not respond to threats. "Spain must realise that pressure on the border or elsewhere is intolerable and entirely counter- productive," said a British source. As Peter Caruana puts it: "Gibraltarians will eat bread and water before surrendering to economic pressure from Spain."

Much of the information in Spain's report handed to Mr Blair was jointly provided through collaboration between British and Spanish security forces, Britain says, and many allegations of drug running relate to vessels that have nothing to do with Gibraltar, except that they are registered or chartered there.

Gibraltar is the only stumbling block in a harmonious friendship. There would seem every prospect of a deal being struck - except that the Gibraltarians cling "with teeth and fingernails" as they put it, to British sovereignty, and to Britain's promise to respect their wishes.

Madrid cannot see the point of that. "We're not going to cut them into little pieces, treat them like Kosovars. They'd be much better off," said the Spanish source. But Britain insists: "The commitment to sovereignty is there: no British government is going to back down on it."