Why has Spain come up with a last-minute objection and what effect could it have ahead of Sunday’s summit, where the EU leaders meet to rubber-stamp the Brexit deal?
The small peninsula, known to its some 30,000 residents as The Rock, is a major point of contention in Anglo-Spanish relations.
Spain has long claimed sovereignty over the territory, which adjoins the Spanish mainland but has been a British territory since 1713.
Gibraltar is due to leave the EU along with the UK at the end of March next year, despite 96 percent of its population voting to remain in the 2016 referendum on leaving the EU.
Earlier this month, Madrid said it was happy with a protocol on the peninsula. However, on Tuesday, it said there was a problem with the main body of the text of the draft Brexit deal.
Spain claims it was not aware of Article 184 until a few days ago. The article relates to negotiations on the future relationship between the EU and Britain. Spain says it is ambiguous on Gibraltar.
Spanish Prime Minister Pedro Sanchez and Foreign Minister Josep Borrell said the withdrawal agreement and a political declaration that goes with it must make clear that negotiations on the future relationship between Britain and the EU do not apply to Gibraltar.
Madrid wants guarantees that it alone can decide on the future of Gibraltar in direct talks with Britain.
However, crafting the tentative Brexit deal has taken a year and a half of difficult talks. EU states are determined not to set a precedent for Britain or other states making more requests to modify the text.
British Prime Minister Theresa May told parliament that the UK would not agree to exclude Gibraltar from negotiations on the future relationship with the EU. “We want a deal that works for the whole UK family, and that includes Gibraltar,” she said.
According to Reuters, diplomats in Brussels are also presenting a united front, saying they thought Sanchez was trying to score points with voters before a high-stakes regional election in Andalusia, which borders Gibraltar, on December 2.
The diplomats said the issue could be solved by Sanchez and May and urged Madrid not to put the whole Brexit deal at risk.
According to EU rules, the withdrawal treaty is adopted by a qualified majority and not unanimity, so a single state cannot block it. The leaders of the 28 member states, minus Britain, would, however, seek unity on this most politically sensitive matter.
Any solution could refer to the fact that in April 2017, the EU 27 gave the European Commission guidelines for Brexit talks that said no deal between Britain and the EU on their post-Brexit relationship may apply to Gibraltar without a specific agreement between Madrid and London.