Spain's demands that Gibraltar dismantles the artificial reef at the centre of a diplomatic spat with Britain have been dismissed as "misinformed" by the reef's creator after it emerged that there have been no complaints made about it in over 30 years, its construction mostly benefits the Spanish fishing industry and Spain has received millions of euros from the EU to create similar reefs of its own.

Spanish foreign minister José Manuel García-Margallo further fuelled the dispute between the two countries this week by insisting that the 72 hollow concrete blocks that have been recently dropped by a conservation group on the seabed in Gibraltar waters must be removed as a precondition of any settlement between the UK and Spain.

He told the Guardian the creation of the artificial reef "was done to cause us problems" and "only to stop us fishing."

In a column in the Wall Street Journal García-Margallo also wrote: "The dumping of concrete blocks constitutes a violation of the most basic rules of environmental conservation. These waters account for 25% of the activity of local fishermen … it is first necessary for the UK to show that it intends to undo the damage that has already been caused, in particular by removing the concrete blocks."

Satellite map of Gibraltar showing reef location

Local Spanish fishermen have claimed that the reef has removed one of their best fishing grounds but this is dismissed by Eric Shaw, head of the marine section of the Gibraltar ornithological and natural history society who started the reef in 1973 in an attempt to give marine wildlife an environment to breed and colonise.

"There was just sand before and no life. So we tried to provide an oasis by dropping old boats there. It is now a fish nursery. Bream and, in season, tuna spawn there, as well as invertebrates. It's like we have put in a block of flats and [marine life] has moved in. The reef has no intention beyond conservation."

The artificial reef, which has been extended to stretch much of the way around the tiny territory, was the first to be constructed in Europe and is now one of Europe's biggest. It is made of over 30 scuttled vessels and wrecks, including old boats, gravel barges, and floating platforms. It is extended when funds are available or old boats are donated to conservation charity The Helping Hand, which dropped the concrete blocks earlier this year.

"The sandy seabed has been replaced by an oasis of highly diverse marine life. You will find corals, gorgonians, lobsters and crabs. There are sponges, anemones, octopus and eels. There are shoals of fish, small and large, from anchovies and bream, to scorpion fish and bass. Over the years, private vessel owners, companies and officials have donated not only their vessels but also their time, thoughts and efforts in order to improve the marine habitat of Gibraltar," says a spokesman for The Helping Hand.

Shaw dismissed Spanish government complaints that the reef has been built without their consultation or consent as politically motivated. "Since we started building it 30 years ago, no-one has ever complained about it. We have received no letter or complaint in 30 years. All the Spanish authorities have ever asked us is how do we construct it. This is a diversionary tactic by the Spanish politicians."

Gibraltarians said they were confused by the Spanish attack on the reef because it has been a model for many others built along the coasts of Malaga, Granada and Almería. Spain has received millions of euros from the EU to create reefs. Some have become tourist destinations, attracting divers.

This week the row escalated when a formal complaint was lodged in a La Linea court alleging that nine Gibraltar government ministers had committed an environmental crime under Spanish law by ordering the creation of the reef. The case is unlikely to be heard because the reef is entirely in Gibraltarian waters.

Shaw also dismissed claims by the local Spanish fisherman that they have lost earnings of €1.5m since 24 July, when the blocks were put in place. "There is no commercial fishing in Gibraltarian waters and there is only one Spanish fisherman who regularly comes. He is from La Linea and has a very small boat and picks up very little." Larger Spanish trawlers sporadically enter Gibraltarian waters but are thought to catch little.

"There is no commercial fishing in Gibraltar. The reef is good for Spain and its fishermen above all because the fish breed there. They can be caught anywhere," says Shaw.