The EU on Wednesday announced that it had come to an agreement with the UK, Spain and Gibraltar, tying up the last loose end of the Brexit process some five years after the UK formally left the block and almost a decade after the referendum vote.

This follows years of negotiations to settle Gibraltar’s post-Brexit status, a tiny British overseas territory that has a land border with Spain and, by extension, the EU.

Negotiations stuttered at various junctures, especially under the previous Conservative government in London. The arrival of a new Labour government last summer, however, is widely viewed to have kick-started talks and formed part of a wider reset of relations with Europe.

Spain’s premier Pedro Sánchez spoke to his British counterpart Keir Starmer by phone on Wednesday. “Prime Minister Sánchez congratulated the Prime Minister on his leadership,” Downing Street said in a statement.

“Both leaders also agreed that this development unlocks huge opportunity to advance the bilateral relationship between the UK and Spain, on behalf of the British and Spanish people.”

Gibraltar’s Chief Minister Fabian Picardo said in a statement that he was “delighted” to finalise an agreement, adding that it will give “legal certainty to the people of Gibraltar, its businesses and to those across the region who rely on stability at the frontier.”

The deal, he said, “will protect future generations of British Gibraltarians and does not in any way affect our British sovereignty.”

British Foreign Minister David Lammy said in a statement: “Alongside the government of Gibraltar, we have reached an agreement which protects British sovereignty, supports Gibraltar’s economy and allows businesses to plan for the long-term once again.”

Spain’s Foreign Minister José Manuel Albares said that “With this agreement, the barrier will disappear. That’s the last wall on continental Europe, and we will guarantee free movement of persons and goods. Gibraltar will be linked to the Schengen area, and Spain will control entry and exit.”

What’s been agreed?

We don’t know exactly yet. Until the specifics of the text are published and ratified, it’s difficult to know for sure.

However, though the text of the deal is as of yet unpublished, reports suggest the deal ensures a fluid border for both people and goods over La Línea, the land border, and will allow for Spanish police officers to do passport checks in Gibraltar’s airport to maintain the integrity of the Schengen area.

What happens now?

The deal must now be ratified via the “internal procedures” in each country, something that is far from a certainty, especially in Spain.  With governments described as centre-left in both London and Madrid, the deal will also be heavily scrutinised by the right-wing in Britain and Spain. 

This will be especially true among pro-Brexit Conservative and Reform MPs, but also on the Spanish right, for whom ‘The Rock’ is something of a blood and soil nationalist issue.

According to the joint-statement: “The way is now clear for negotiating teams swiftly to finalise the full legal text and proceed with the respective internal procedures leading to the signature and ratification of the future Agreement.”

Key points of the Gibraltar deal:-

What about the border?

The deal aims to maintain a ‘fluid’ border between Gibraltar and Spain. One of the main points of the agreement is the removal of the physical border separating Spain from Gibraltar, with the aim of facilitating the movement of the 15,000 people who travel daily between the two territories. Many Andalusians living in the area travel to Gibraltar and Gibraltarians often have business and family ties to the area across the border in Cádiz province.

The agreement also creates ‘dual’ EuroStar-style border controls carried out by both Gibraltarian and Spanish officers at the port and airport, while most controls at the border crossing between Gibraltar and La Línea will be removed. It’s notable that Spanish police will do passport checks in Gibraltar airport, rather than Frontex officers, the EU’s border agency, as was expected.

Spanish daily El País reports that the British Government believes border checks “will be implemented in a similar way to the one already in place with the French police operating at St Pancras train station in London.”

“Spain will be responsible for ‘carrying out full Schengen checks’,” it adds.

What abouts goods controls?

Similarly, the agreement also seeks to eliminate goods controls between Gibraltar and the EU via Spain. “In the area of goods, the Parties agreed on the principles underpinning the future customs union between the EU and Gibraltar, providing for strong cooperation between the respective customs authorities and removing checks on goods,” according to the joint statement. 

Like with cross-border workers, thousands of businesses in Gibraltar and the Campo de Gibraltar area of Càdiz across the border depend on fluid crossings with minimal goods controls.

How does this impact British military bases?

The joint statement does not refer specifically to the issue of military bases, but London has emphasised that the agreement guarantees the “full operational autonomy” of British military facilities in Gibraltar. 

The recent strategic defence review presented by the Starmer government emphasised “the importance of maintaining a British military presence’ on the Rock, particularly protecting “British territorial waters around Gibraltar” and providing a launching pad for British military operations.

Concessions on military bases would’ve likely been a step too far for London and interpreted as a ‘Brexit-betrayal” by the British right.

What about the 90/180 day rule?

Again, the exact details are unknown but reports suggest that, due to the new dual EuroStar-style passport checks, the deal will establish Schengen rules to non-resident Britons arriving in Gibraltar.

The Guardian notes that “This means they could be turned away at the border if they have already spent 90 days in the Schengen zone over a 180-day period.”

What about sovereignty?

In theory, the agreement has no direct impact on sovereignty. However, the issue of Spanish police on British territory — border guards in the airport, in this case — was long a sticking point during negotiations and has for decades been a point of contention among Gibraltarians who remember the tough years when dictator Francisco Franco closed the border for thirteen between 1969 and 1982.

British and Gibraltarian sources have been keen to downplay sovereignty losses. However, Eurosceptic voices in the UK will likely view the passport checks as a concession to the Spanish.

Some in Madrid may view this as a victory, and reports suggest that the fluid land border was made conditional on ‘Spanish boots on British territory’ at the airport.

What about tax?

The Times reports that as part of the deal Gibraltar will end its VAT-free regime so a new import duty or “transaction tax” will be introduced. Spanish authorities have long called for tax reform on the Rock, arguing the lack of sales tax encourages smuggling of contraband goods into Spain.

This is particularly true on tobacco and alcohol sales. Albares announced that the deal will include a “fiscal convergence process” because the Rock “is joining the customs union.” The aim is to prevent indirect taxes applied in Gibraltar, such as on tobacco, from distorting competition in the Campo de Gibraltar area.

The deal also pledges to fight money laundering, another historical complaint of Madrid.