Gibraltar Border Tax By Spain Would Be Illegal, EU Says

With the rock of Gibraltar in the background, Britain's Royal Navy ship HMS Westminster sails along the Gibraltar stretch near to La Linea de la Concepcion, Spain, Monday, Aug. 19, 2013. (AP)

Recent threats by the Spanish government to impose a border tax in Gibraltar would be illegal, the European Commission warned Monday, adding that Britain and Spain should be able to resolve their dispute by themselves, "in line with their European Union membership."

Gibraltar is a British Overseas Territory located on the southern end of the Iberian Peninsula and has a northern border with the Province of Cádiz in Andalusia, Spain.

European Commission President Jose Manuel Barroso discussed the spat with Spanish Prime Minister Mariano Rajoy by telephone Monday and agreed that a commission fact finding mission should go to the Gibraltar border area as soon as possible and examine the border control, the commission said in a statement.

Last week, Barroso talked with British Prime Minister David Cameron.

The dispute stems from Gibraltar's construction of an artificial reef, which Spain says affects its fishermen. In apparent retaliation, Spanish police enforced border control checks on cars entering Gibraltar, creating massive tailbacks.

The strife has led to a sudden souring in diplomatic relations. Spain says it will take all legal measures to defend its interests, while Britain pledges to stand by Gibraltar.

On Monday, a British Royal Navy warship arrived in Gibraltar for what Britain's government said was a planned naval exercise in the Mediterranean.

Spain ceded sovereignty of Gibraltar to Britain in the Treaty of Utrecht in 1713, but has persistently sought its return.

The fishermen claim the reef of around 70 concrete blocks — some with steel rods protruding — could snare and damage their nets and have stopped fishing there.

Rajoy has defended the border controls, saying they are needed to combat drug and tobacco smuggling, adding that the checks are in line with security policies employed by member countries of the Schengen free travel zone. Britain and Gibraltar are not part of the Schengen agreement.

Besides floating the idea of charging people entering and leaving Gibraltar 50 euros ($66) to provide compensation for the losses that the fishermen face, Margallo has also talked of investigating Gibraltarians living in Spain for possible financial fraud.

Gibraltar's chief minister, Fabian Picardo, said the reef protects fish stocks from being over-exploited. He said Sunday that that "hell will freeze over" before Gibraltar removes the reef, and he has accused Spain of behaving like North Korea.

Gibraltar has accused Rajoy of using the reef dispute to deflect domestic attention away from Spain's severe economic crisis and allegations of corruption involving his ruling Popular Party.

Based on reporting by The Associated Press.