Spain has made clear that it will not back an EU-UK deal, unless London commits to bilateral negotiations for the future of Gibraltar, Spanish Foreign Minister Josep Borrell told Reuters on Monday.

Bilateral framework

“… The negotiations on the future of Gibraltar are separate discussions,” Borrell said, making clear that the future relationship between the EU and the UK was a separate matter from the relationship between Gibraltar and Spain.

Gibraltar is a small peninsula off the coast of Spain that was captured by the British in 1713. Spain has claimed sovereignty over the territory for decades. 96% of Gibraltar residents voted to Remain in the EU during the 2016 referendum.

The EU-UK draft agreement contains a separate protocol on Gibraltar.

The protocol creates three Spanish-British committees focusing on the rights of the approximately 10,000 Spanish cross-border workers, the fight against smuggling, environmental protection, and cooperation on law enforcement and border control.

Each of these areas of cooperation will also be covered by four separate Memorandums of Understanding (MoUs), detailing expectation of cooperation between tax, border control, and law enforcement authorities, El Pais reports.

Tax Transparency

Finally, Spain will demand transparency on tax matters, to avoid fraud, smuggling, and money laundering. Madrid is demanding alignment with OECD and G-20 transparency standards, El Pais reports. Gibraltar will also be required to introduces taxes on alcohol and petroleum, as well as a special traceability program for cigarettes.

Chief Minister Fabian Picardo insists that Gibraltar is “ready for any eventuality,” telling Gibraltar Chronicle that the Protocol was better than a “no deal” for both the UK and Gibraltar.

In Spain, the Partido Popular hit out at the Socialist Government of Pedro Sánchez, accusing him of missing an opportunity to press for sovereignty. Spain is not renouncing its claim to sovereignty, according to the Spanish Government’s state secretary for Europe Marco Aguiriano.

Madrid traditionally aspires to “joint sovereignty” over Gibraltar.