Spain threatens to derail the Brexit transition deal over Gibraltar

Thomson Reuters

Union Jack, the Gibraltarian flag and the EU flag are seen flying, at the border of Gibraltar with Spain

• Britain and the EU agreed the terms of a Brexit transition deal on Monday.
• Spain is threatening to block it unless Britain backs down on Gibraltar.
• The Spanish government wants a veto on Gibraltar - a British overseas territory on the southern coast of Spain - staying in the single market and customs union during transition.
• The EU must convince Spain to change its mind by Friday.

LONDON - The Brexit transition deal agreed this week by UK and EU negotiators has been thrown into fresh doubt by the Spanish government's refusal to give its backing over the status of Gibraltar.

The deal - agreed earlier this week by UK Brexit Secretary David Davis and the EU's chief Brexit negotiator Michel Barnier - is supposed to be signed off by the EU27 at a European Council summit in Brussels this week.

However, Spain is reluctant to approve the updated Withdrawal Agreement unless it is given a veto on Gibraltar remaining in the single market and customs union during the 20-month transition, The Guardian reports.

Gibraltar is on the southern coast of Spain with a population of around 30,000. It has been a British territory for over three centuries and voted overwhelmingly to stay in the European Union, with 96% of voters backing Remain.

Towards the end of last year, Brussels said that the Spanish government must agree to Gibraltar being involved in any future trade deal between the UK and EU after Brexit before it can be signed off.

There was concern in Madrid this week after Davis said Gibraltar would automatically be included in the UK-EU transition deal, meaning it would stay in the single market and customs union without Spain's permission.

Asked whether the transition covered Gibraltar, Davis said: "Yes, it does cover Gibraltar. That is our view of it."

EU officials are reportedly confident that Spain can be convinced to support the Withdrawal Agreement in time for the Council summit, which takes place in Brussels tomorrow and Friday.

Any hold-up could push the deal back to summer, leaving British business in a severe state of limbo and UK government with just half a year to negotiate the future relationship before the deal is sent off for parliamentary approval.

Gibraltar's Prime Minister, Fabian Picardo, has previously claimed that a hard Brexit - ie leaving the single market with no transitional apparatus in place - would pose an "existential threat" to the territory because of its economic dependency on Britain's membership of the EU's internal market.

Why is Gibraltar so important?

The overwhelming majority of Gibraltans want to remain part of Britain. Spain is yet to fully abandon its hope of regaining at least some control over the territory which it lost to British-Dutch forces in the early 18th century.

Speaking after the June Brexit vote, Spain's former foreign minister Jose Manuel Garcia-Margallo said he hoped that to seeing the "Spanish flag on the rock [Gilbraltar]" was "much closer" to becoming reality.

Both the British and Gibraltar governments have consistently rejected both the possibility of Gibraltar being shared with or returned to Spain.