Gibraltar is a small peninsula located on the southern coast of Spain. It covers a total area of 6.5sq km and its coastline stretches for 12km only; there is a 1.2 km borderline with Spain. The Strait of Gibraltar links the Mediterranean Sea and the North Atlantic Ocean. Gibraltar enjoys a mild Mediterranean climate. Its highest point is the rock of Gibraltar which reaches 426m and is surrounded by narrow coastal lowland. The supply of fresh water is limited and there is no agriculture.

n July, 2008, the population was estimated at around 28,000. The official language is English although Spanish, Italian, Portuguese and Russian are also spoken. The ethnic groups settled in Gibraltar include Italian, English, Maltese, Portuguese and Spanish.

The history of the Rock of Gibraltar is rich and varied due to its strategic location. Once dominated by Rome, the cape fell to the Goths who ruled for a further 3 centuries. The Berber Tarik-ibn-Zeyad took Gibraltar in 711, giving the Rock its name (a corruption of Jebel Tarik, Tarik's Rock). Gibraltar remained under moorish occupation for six centuries. Spain finally reclaimed Gibraltar in the late 15th century, and kept it until the War of the Spanish Succession (1702-1713), when the Treaty of Utrecht ceded the Rock to Great Britain "for ever." Spain's last attempt to take it back by force was in 1779.

During the nineteenth century, Gibraltar developed into an impregnable fortress and a prosperous society developed within its walls. It remained a key British military and naval outpost until very recently and British culture has heavily influenced most aspects of Gibraltarian life. In modern times Spain has pursued its claim to Gibraltar in every possible way short of force of arms; but the population will have none of it, and no resolution of the problem is in sight.

Gibraltar is predominantly Roman Catholic (74%) with Protestant, Muslim and Jewish minorities.

In 1830 Gibraltar became the Crown Colony of Gibraltar with legislative powers vested in a Governor; a Charter of Justice created an independent Judiciary. Gibraltar is now a dependent territory of the UK with internal self-government based on a Constitution of 1969. The UK remains responsible for defence, foreign affairs and internal security.

Gibraltar has its own House of Assembly, comprising fifteen elected members and two nominated members; the last elections were in 2007. The two main parties are the Gibraltar Socialist Labour Party (led by Joe Bossano) and the Gibraltar Social Democrats (led by Peter Caruana). The latter is currently in power.

The Chief Minister who is appointed by the Governor heads the Council of Ministers who are responsible for matters such as trade, economic development, education, public services, and housing. There is an advisory Gibraltar Council.

Gibraltar is politically stable and as a British colony since 1704 its legal systems are based on English models, although of course EU law applies in most areas. There are three levels of court, and a Court of Appeal.

In December 2006, Gibraltarians accepted a new constitution for the jurisdiction, which aimed to give it more autonomy from the United Kingdom over its own internal affairs. In a referendum, 60.24% of those who turned out voted 'yes' to the new constitution, while 37.75% voted to reject it. 60.4% of Gibraltar's 20,061 registered voters turned out to vote.

The constitution, agreed in April of that year by then UK Foreign Secretary Jack Straw and Peter Caruana, and between Gibraltar's two main political parties later in the year, saw the UK retaining international responsibility for Gibraltar. However, the new constitution ceded certain powers previously in the possession of the British government to Gibraltar, and allowed the jurisdiction to have its own independent judiciary.

Spain and the UK have disputed the status of Gibraltar for nearly 300 years but in April, 2000, both Governments agreed to put the issue of sovereignty to one side and work co-operatively on administrative tasks. In effect Spain agreed to accept Gibraltar's status within the EU - an issue on which Spain had contended for many years.

It was also agreed that communications between Spain and Gibraltar would be handled by a 'postbox' mechanism whereby a unit of the FCO in London relayed messages in both directions. Despite that agreement, however, the Spanish Foreign Ministry subsequently called for joint sovereignty of Gibraltar with a view to the Rock coming under full Spanish sovereignty after a period of time.

The Gibraltar Government was - not unexpectedly - unhappy about the situation; it would have liked to see the Spanish Government ease restrictions in three main areas: frontier queues - the Spanish border controls can cause delays; European Parliament voting rights; and the provision of more telephone numbers.

During 2001, tension between Gibraltar, the UK and Spain increased as talks restarted under the Brussels process set up in 1984. At a meeting in Barclelona in November boycotted by Gibraltar, British and Spanish Foreign Ministers agreed on a fast timetable for developing new sovereignty proposals. But by mid-2002 the UK and Spanish authorities were battling to save the talks from collapse.

In a referendum held by the Gibraltar government in November, 2002, nearly 99% of votes were cast against the joint sovereignty proposals. In January, 2003, Spanish Foreign Minister Ana Palacio suggested that Spain's attacks on Gibraltar through the European Union were an attempt to protect EU member states from the threat posed by the Rock. Addressing issues which included shipping and Gibraltar's financial services and taxation regime, Ms Palacio urged the Union to harden its stance against Gibraltar, suggesting that EU directives and laws were being flouted by the jurisdiction in a number of areas.

By mid-2003 it was clear that the age-old stalemate between Britain and Spain had been re-established, and British Foreign Office minister at the time, Denis MacShane suggested that there was unlikely to be a resolution to the Gibraltar question for at least thirty years. "I don't think the people of Gibraltar will approve any steps on sovereignty until there has been a long period of calm and good relations with Spain," said Mr McShane. "I have respect for the Spanish position, but quite simply, I do not see any positive outcome on the issue for some time."

In September, then UK Foreign Secretary Jack Straw made a supportive statement in the UK Parliament, assuring the government of Gibraltar that he was willing to discuss the jurisdiction's long-term interest in EU integration, though stating that he would not pressurise the territory into changing its status in the EU.

In 2004, after fierce resistance from Spain, Gibraltar was incorporated into a UK European parliamentary constituency, and its citizens voted accordingly in the 2004 MEP elections. The Spanish government persisted, however, and in July, 2005, a hearing began began in the European Court of Justice. The Spanish argued that the British legislation broke the founding treaty of the then European Community because it allowed non-European commonwealth citizens to vote in EU elections. Spain also believed that the United Kingdom acted illegally by incorporating Gibraltar into the south western UK electoral constituency for the purposes of European elections.

Neil Parish, a Conservative MEP representing the South West and Gibraltar constituency in the European Parliament, believed that Spain's motivations in the case had more to do with the tensions over Gibraltar's sovereignty rather than with upholding the democratic laws of the European Union.

"This is all very sad. Spain is determined to make life difficult over Gibraltar because the Spanish Government knows there is absolutely no chance of making progress on the sovereignty issue," stated Mr Parish.

Jack Straw and his Spanish counterpart at the time, Miguel Angel Moratinos made another attempt to resolve the sovereignty issue in November, 2004, when they met in Madrid, where it was agreed that progress should be made towards giving Gibraltar an independent voice in future sovereignty negotiations. As a result of the discussion, Straw and Moratinos agreed to discuss the setting up of a new forum for dialogue which will have an open agenda and within which Gibraltar could have its voice heard under a "two countries, three voices," format.

In September 2006, agreement over a number of outstanding issues relating to Gibraltar was reached between the UK's Minister for Europe, Geoff Hoon, Spanish Foreign Minister Migel Angel Moratinos and Gibraltar's Chief Minister, Peter Caruana. Areas covered by the agreements included the expanded use of Gibraltar Airport, the full inclusion of Gibraltar in EU air liberalisation measures, recognition by Spain of Gibraltar's '350' international dialling code and unblocking by Spain of Gibraltar mobile telephone roaming in Spain.

However, relations appeared to be deteriorating again in March 2008, when a report published in the Spanish media suggested that the Spanish government was considering asking the Organisation of Economic Cooperation and Development (OECD) to place Gibraltar on its 'blacklist' of uncooperative tax havens.

In a two-page article published by the Spanish El Pais newspaper, the Spanish government effectively accused Gibraltar of helping to facilitate money laundering and tax evasion through its apparent reticence when dealing with Spanish requests for assistance in fraud and fiscal investigations.

According to the report, the Spanish government found the Gibraltar police force generally cooperative in criminal investigations, if in an "underhand" sort of way. However, it added that this cooperation tended to dry up when Spanish authorities request information about Gibraltar-based companies, banks and insurers.

The report claimed that there were 28,000 companies, 28 legal firms and 115 lawyers registered in Gibraltar, but argued that most of these were operating outside the control of the financial authorities. It also suggested that Gibraltar's popularity as a domicile for global e-gaming firms "worries the experts in the fight against the laundering of dirty money".

Gibraltar's Chief Minister, Peter Caruana dismissed the Spanish allegations, telling the UK's Daily Telegraph newspaper that: "If the Spanish government is saying that the Gibraltarian authorities are not cooperating with Spain in the way we cooperate with other countries, then that is simply untrue."