Straw warns of Gibraltar deal

Jack Straw today delivered a stiff warning to the people of Gibraltar that a deal with Spain is the only way to give the Rock a secure future.

The message, as the Foreign Secretary entered talks in Barcelona with his Spanish counterpart, strengthened the conviction that Tony Blair is determined to reach a settlement of the centuries-old dispute over the status of the British colony.

Mr Straw reaffirmed that there would be no transfer of rule away from the United Kingdom without a referendum of the people of Gibraltar. But he conspicuously refused to rule out the possibility of a Spanish presence which could, in time, amount to joint sovereignty.

Asked on Radio 4's Today programme about suggestions that Britain would be ready to consider giving Spain an office in the territory and the right to fly its flag, the Foreign Secretary said that he did not want to pre-empt the result of the negotiations. He pointed to the decades of difficulty and harassment Gibraltarians had suffered at the border with Spain and over limitson telephone lines and other issues, and added: "The only way to resolve these difficulties and provide a safe, prosperous and stable future for the people of Gibraltar is by a process of negotiation."

The willingness to make progress has already been settled at the top, in talks between Mr Blair and Spain's Prime Minister, Jose Maria Aznar, who have established a close and strong working relationship. Both sides have agreed that a settlement over the status of the Rock, ceded to Britain by Treaty of Utrecht in 1713, should be reached by the end of next year.

London and Madrid also accept that the row is an obstacle to what could be a strong alliance within the EU, and share concerns that Gibraltar has been accused of becoming a haven for tax fiddles and money laundering.

Downing Street said today that any formal joint sovereignty arrangement would require a referendum. However, suspicions that, in the words of Tory shadow foreign secretary Michael Ancram, a "stitch-up" was under way were heightened when Mr Straw and Spain's foreign minister, Josep Pique, had dinner together last night ahead of the talks.

Mr Pique said afterwards that the relationship between the two governments was now excellent, adding: "We think we will have a lot of possibilities to achieve real advances."

Gibraltar's chief minister, Peter Caruana, has boycotted the talks on the grounds that he was denied equal and separate status alongside the two foreign ministers.

He dismissed as "offensive" a suggestion that a deal with Spain would bring the 30,000 Gibraltarians free treatment in Spanish hospitals and an extra 100,000 telephone lines.

"We have a very good health service of our own, thank you very much," Mr Caruana said. "Any suggestion that 30,000 British subjects should have to barter their sovereignty just to let them have enough telephone lines is really beyond the pale."