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Gibraltar controversy mostly consists in Spain and United Kingdom holding opposed views on the issue of the land's sovereignty.
The Rock's both main political parties, the Gibraltar Social-Democrats (GSD) and the Gibraltar Socialist Labour Party (GSLP) are opposed to any transfer of sovereignty to Spain. Spain continues to claim the terrority as rightfully its own and wishes to assume sole sovereignty. The British Government, whilst stating that no change would take place without the consent of the people of Gibraltar, continue to explore the possibility of joint sovereignty between the United Kingdom and Spain.
An Anglo-Dutch force led by Sir George Rooke seized the Rock in 1704. The territory was ceded to Great Britain by Spain in the 1713 Treaty of Utrecht as part of the settlement of the War of the Spanish Succession. In that treaty, Spain ceded Great Britain "the full and entire propriety of the town and castle of Gibraltar, together with the port, fortifications, and forts thereunto belonging … for ever, without any exception or impediment whatsoever."
None the less, the treaty stipulates that no overland trade between Gibraltar and Spain is to take place, except for emergency provisions in the case that Gibraltar is unable to be resupplied by sea. Another condition of the cession is that "no leave shall be given under any pretence whatsoever, either to Jews or Moors, to reside or have their dwellings in the said town of Gibraltar." This restriction was quickly ignored and for many years both Jews and Arabs have lived peacefully in Gibraltar. In a reversion clause, should the British Crown ever wish to relinquish Gibraltar, Spain was promised it will be offered to it first.
The Treaty of Utrecht did not specify territorial waters, as like many things the idea had not been developed at the time. By the first half of the 18th century the concept of the three-mile wide sovereign territorial sea emerged, this was eventually adopted by most countries as the basis of marine jurisdiction, until the UN Convention on the Law of the Sea 1982, which entered into force in 1995, set a new standard of 12 nautical miles. Gibraltar's territorial waters currently extend up to 3 nautical miles, but could be extended if required — the set a standard of the latter distance for all of its signatories. However, the positions of Spain and the UK are opposite on this issue:
"2. In ratifying the Convention, Spain wishes to make it known that this act cannot be construed as recognition of any rights or status regarding the maritime space of Gibraltar that are not included in article 10 of the Treaty of Utrecht of 13 July 1713 concluded between the Crowns of Spain and Great Britain. Furthermore, Spain does not consider that Resolution III of the Third United Nations Conference on the Law of the Sea is applicable to the colony of Gibraltar, which is subject to a process of decolonization in which only relevant resolutions adopted by the United Nations General Assembly are applicable."
"With regard to point 2 of the declaration made upon ratification of the Convention by the Government of Spain, the Government of the United Kingdom has no doubt about the sovereignty of the United Kingdom over Gibraltar, including its territorial waters. The Government of the United Kingdom, as the administering authority of Gibraltar, has extended the United Kingdom's accession to the Convention and ratification of the Agreement to Gibraltar. The Government of the United Kingdom, therefore, rejects as unfounded point 2 of the Spanish declaration."
Repeated stories in the media that Gibraltar banks are used for tax evasion and money laundering have been found baseless by an inquiry by the House of Commons Foreign Affairs Committee, as Gibraltar complies with all international and EU requirements to prevent this happening.
The Spanish Government has also accused Gibraltarian motorboats of helping in tobacco smuggling. However, there is a law against fast launches making illegal own them locally, or even to bring them into Gibraltar waters.
In a 1967 referendum organised by the British government, Gibraltarians ignored Spanish pressure and 99.6% of voters voted to remain a British dependency. More recently, in a second referendum held in November 2002 by the Gibraltar government, 98% of the voters rejected any proposal to share sovereignty between the UK and Spain. However, the Gibraltarians are seeking a more modern status and relationship with the United Kingdom reflecting the present level of self-government. A new constitution has been submitted for approval by Whitehall.
Another issue of contention was the repair of the nuclear submarine, HMS Tireless. Despite many protests, the Gibraltar Government allowed the work to be done after employing its own experts to confirm it was safe. The submarine was in Gibraltar for a year before leaving, during which the repair was successfully completed without incident.
A visit by HRH The Princess Royal in June 2004, the brief return of HMS Tireless in July 2004, together with a visit by Geoff Hoon, the UK Defence Secretary, for the tercentenary celebrations of the cession were subjects of complaint by the Spanish government.