WITH its branches of British high street retailers such as Marks and Spencer or BHS, and a large Morrisons supermarket, Gibraltar can seem the most English of places. Add in seagulls, tepid beer and red telephone boxes and the picture of a genteel British seaside town might be complete. But Gibraltar lies 1,800km (1,100 miles) from mainland Britain. The only land this rocky outcrop is attached to is the Iberian peninsula, from which it juts south towards Africa and into the Strait of Gibraltar. And although it is a British Overseas Territory governed by an elected body that styles itself “Her Majesty’s Government”, many of its 30,000 residents speak Spanish as naturally as they do English, often with a lisping Andalusian accent.

In many ways the symbiosis works like a charm. Spaniards from one of the country’s poorest, most unemployment-hit regions, the Campo de Gibraltar, cross the border daily to work in this low-tax paradise with a tiger-like economy that grew 30% over four years from 2008. For them it is a refuge from double-dip recession and 40% local unemployment. And Gibraltarians have all the benefits of modern Spain at their doorstep, from good food and pleasant beaches to fancy motorways. A large number own second homes in Spain, which explains why the Rock, as it is known, feels dead at weekends

Yet getting out of Gibraltar has just got harder. In a return to practices that Gibraltarians had hoped were a thing of the past, Spanish border guards are deliberately slowing frontier traffic. It can now take an hour to get across; recently traffic was snarled up for seven hours on Winston Churchill Avenue. It could soon get worse. The Spanish foreign minister, José Manuel García-Margallo, is threatening to levy a €50 ($67) charge for each crossing. The latest source of friction is an artificial underwater reef, made of concrete blocks with metal spikes, which the Gibraltarian government is building to stop overfishing by local Spaniards in what it sees as its waters.

Spain claims those waters (much as it claims sovereignty over Gibraltar itself) and says the local government is acting illegally. The arguments follow six years of entente and three-way dialogue. But Mr García-Margallo returned to the sabre-rattling that has marred relations for three centuries saying that Spain will never sit down and talk to both Britain and Gibraltar at the same table while the Gibraltarian chief minister, Fabian Picardo, is in power. Mr García-Margallo is behaving like a North Korean, retorted Mr Picardo, who accuses him of using Gibraltar to distract from government corruption scandals.

Britain once considered Gibraltar a strategic asset. It controls entry to the Mediterranean and used to house a Royal Navy base that underpinned the local economy. But that is no longer so. The navy has mostly gone and Gibraltar has grown strongly on the back of, among other things, tourism, internet gambling and offshore finance. Britain and Spain are now firm NATO allies. So why not hand it over?

In a move that reflected the cultural reality of an identity drawn from both Britain and Iberia, attempts were made by a British government a decade ago to broker a joint-sovereignty deal. But Gibraltarians were outraged, and Spain was interested in the plan only as a step towards recovering the full sovereignty which was ceded in the Treaty of Utretcht in 1713. In a referendum in 2002, 98% of Gibraltarians rejected the idea.

This is a dispute with no end in sight. Having tried compromise, Britain refuses to contemplate any deal that is not approved by the people of the Rock. That is what makes Mr García-Margallo’s tactics self-defeating. The latest confrontation will prevent a settlement for yet another generation.