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Gibraltar land grab stirs age-old dispute with Spain

July 18, 2026
in Finance
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Gibraltar land grab stirs age-old dispute with Spain
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The fall of “continental Europe’s last wall” sparked bonhomie this week as Spain and Gibraltar dismantled a physical border that had separated them for 300 years. But the harmony on display papered over a sovereignty dispute that is as intractable as ever — and one Gibraltar is intensifying with dredging vessels and heaps of sand.

The British overseas territory is one of Europe’s most cramped living spaces, not least because of the limestone promontory that gives the Rock its nickname. “We’re two and a half miles by one mile but most of the two and a half square miles is a rock that you can’t build on,” said Fabian Picardo, Gibraltar’s chief minister.

To surmount those physical limits, Gibraltar has spent decades building artificial land into the Mediterranean Sea. This has sparked fury in Madrid: it has long claimed sovereignty over Gibraltar, which it describes as “Europe’s last colony”, and the expansion of its surface area is an added insult.

As recently as last month, Diego Martínez Belío, Spain’s secretary of state for global affairs, railed against the creation of artificial land as “a violation of Spain’s sovereignty and territorial integrity”.

But Gibraltar, a maritime gateway shaped by historic battles and sieges, is determined to accelerate its building plans, despite the chumminess over a post-Brexit UK-EU treaty, whose signing erased its physical border with Spain.

“The latest census tells us that the population has gone from 32,000 to 40,000,” Picardo told the FT. “This is a process of ensuring that we can house people in Gibraltar.”

He estimates that Gibraltar has increased its liveable land mass by nearly 50 per cent in the past 40 years. Work is under way on a contentious project, known as Eastside, where rubble from a landfill site is creating the base for 1,300 housing units — mostly in low-rise tower blocks — plus a “top-notch” hotel and superyacht marina.

As long as Gibraltar complies with international environmental law, which Picardo says it is “very careful” about, it is “free to be able to continue to reclaim land”.

Spain disagrees. It has formally protested to the UK about the 10-hectare Eastside project multiple times and challenges the UK’s claim to sovereignty over waters extending 3 miles to Gibraltar’s east and 1.5 miles to its west.

But Picardo says Spain’s complaints have “no legal force. It’s only political.” He is pursuing a new 5-hectare reclamation project in the Inner Harbour on Gibraltar’s west flank.

Under the 1713 Treaty of Utrecht, the enfeebled Spanish crown handed Gibraltar to the British. But Spain has never given up trying to get it back and ignores polls that show an overwhelming majority of Gibraltarians want to remain British.

The territory’s old city walls, which in part date back to centuries of Muslim rule in the Iberian peninsula, contain Gibraltar’s heart and its Main Street, which today boasts a Marks and Spencer, Union Jacks and abundant fish and chips.

But reclaimed land houses the offices of insurers and online gambling groups such as Lottoland, which are engines of the low-tax economy, as well as the breezy waterside restaurants of Queensway Quay.

Spain argues that it never ceded the waters where they were built. Especially upsetting to Madrid is Gibraltar’s military-cum-civilian airport — its umbilical link to the UK — which is built on an isthmus linking Gibraltar to Spain that was not ceded either.

Spain claims Britain seized the isthmus illegally in the early 19th century, when the land was “neutral ground” and Madrid had allowed the British to set up a quarantine encampment for yellow fever patients.

In the mid-20th century, Gibraltar extended the airport’s runway into the sea using stone blasted from the Rock itself.

Klaus Dodds, professor of geopolitics at Middlesex University London, said that land reclamation “showcases the agency of the UK and government of Gibraltar. And anything and everything that gives the appearance of Gibraltar being ‘successful’ inevitably means that a change in sovereignty is less likely.”

This week, with both sides wanting a show of harmony, Picardo and Spain’s leftwing Prime Minister Pedro Sánchez watched the removal of gates and passport control points that had long divided Gibraltar from Spain.

The new frictionless land frontier, which means free movement for 15,000 workers who cross from Spain into Gibraltar every day, is the result of the hard-fought new UK-EU treaty. It was necessitated by Brexit and in effect brings Gibraltar into the EU’s Schengen travel zone. The trade-off is that Spanish police will now carry out passport checks at Gibraltar airport.

Sánchez, who called the land border Europe’s last wall, recalled how the dictator Francisco Franco slammed it shut in 1969 to isolate Gibraltarians. It was not fully reopened until 1985, years after Franco’s death. “Today we are opening . . . a period of peaceful coexistence,” Sánchez said.

But the new treaty states that it does not alter the dispute over Gibraltar’s status. “Spain is not changing even a comma in its sovereignty claim,” said José Manuel Albares, foreign minister.

Spain has fought unsuccessfully to stop Gibraltar’s land reclamation by arguing it is a breach of environmental law that harms marine habitats and disrupts tidal dynamics.

The new treaty requires Gibraltar to meet EU-equivalent environmental standards, but Antonio Muñoz of Verdemar Ecologists in Action, a green group, complained that it contained no mechanism to hold Gibraltar to account.

“If what they are doing happened in Spain or any EU member state, it would be an environmental crime and everyone involved would be arrested,” he said.

José Manuel García-Margallo, a hardline conservative former foreign minister, said that as Brexit had left Gibraltar in a precarious position, Spain had missed a chance to shift the status quo on sovereignty. “We should have fought harder,” he said. “A historic opportunity has been squandered.”

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