Gibraltar is a flashpoint in Spain–UK relations. REUTERS

“There are no exceptions to the principle by which no deal between the EU and the UK may apply to Gibraltar without a previous agreement between the UK and Spain, and this also affects the rights of citizens,” warned Spanish diplomatic sources after details of the British document became known.

The Spanish government had been hoping that the thorny subject of Gibraltar would be left on the back burner until the end of the UK exit negotiations, after the European Council issued guidelines stating that Spain will have veto rights over the application in Gibraltar of any future agreements between the EU and Britain.

I won’t say that it sounded bad, but it could have sounded better Spanish Prime Minister Mariano Rajoy on Brexit paper

Spain, which has more than 100,000 of its nationals living in Britain, was cautious about the British proposal. “I won’t say that it sounded bad to me, but it could have sounded better,” said Spanish Prime Minister Mariano Rajoy in Brussels on Friday.

On Monday of this week, Spain’s foreign minister, Alfonso Dastis, struck a conciliatory tone as he pressed for “a fruitful and beneficial” agreement at a talk organized by Nebrija University and the Harvard Kennedy School.

Dastis admitted that Madrid and London have “a small problem in the south” of the Iberian peninsula, alluding to Gibraltar, which was captured from Spain in 1704 and ceded to Britain under the Treaty of Utrecht in 1713.

Brits to lose voting rights in Spain Theresa May has made it clear that EU citizens living in the UK will lose their political rights. Following the principle of reciprocity, the 300,000 British nationals who are legal residents of Spain will lose the right to vote in local elections. The British community has been among the most politically active foreign groups in Spain. More than 100,000 Brits have signed up to the census of Foreign Residents in Spain (CERE). In some tourist destinations in Alicante and Almería, the councilors and even the mayors are foreign nationals. British office holders will have to step down unless Spain and the UK sign a bilateral agreement recognizing each others’ citizens the right to vote. But this seems like an unlikely option right now.

But the minister said the issue should be addressed “in a dispassionate manner. I don’t want this to become the fundamental issue” in the negotiation.

Yet the 15-page policy paper drafted by the government of Theresa May to establish the future status of EU citizens living in the UK, as well as that of Brits living in the EU, cites the overseas territory twice.

The document states that “the reciprocal agreement on citizens’ rights will apply to the entire United Kingdom, covering Scotland, Wales, Northern Ireland and all parts of England, and Gibraltar. Decisions that are currently made by the devolved administrations and the Government of Gibraltar will continue to be made by them.”

This is not immediately obvious, as Gibraltar does not legally form part of the UK, but is instead an overseas territory whose foreign relations are dependent on London.

The policy paper again mentions the Rock in the glossary of terms, where it says that a UK national is “the term referred to in this document to describe those people who are regarded as UK nationals for EU law purposes.” There is, in fact, no such definition in British legislation, and so the paper cites past statements made by the British government, including one from 1982 saying that UK nationals include “British Dependent Territories citizens who acquire their citizenship from a connection with Gibraltar.”

I don’t want Gibraltar to become the fundamental issue Spanish Foreign Minister Alfonso Dastis

Sources consulted by this newspaper said that residency rights will have little impact on the Rock, as the vast majority of the 7,000 Spaniards who work there live across the border in Spanish territory, while practically all Gibraltarians have their legal residence in the territory, as it is much more advantageous for tax purposes.

Still pending is an agreement over the rights of Spanish workers in Gibraltar to a pension there, or the rights of Gibraltarians to use the Spanish public health system, said sources in Spain