The economics of Gibraltar have little to do with patriotism. Its tax status means the territory has more registered companies than inhabitants. Marriages can be arranged quickly for non-residents – John Lennon married Yoko Ono here and Sean Connery married here twice – and it is a hub of offshore banking and online gambling, but Gibraltar has the air less of a European Las Vegas and more of a Torquay-by-Andalucía. Its efforts to establish itself as a telecommunications base have been hampered by Spain's refusal to recognise its dialling code.
"Gibraltar is a minute speck on the globe," says Freddie Ballester of the territory's Betting and Gaming Association.
"But when it comes to internet gaming it is probably the most important jurisdiction in the world."
Gibraltar argues that its reputation as one of the more reputable and well-regulated zones for the industry has helped attract firms.
But it is no secret that low taxes levied by the Gibraltar government are the biggest incentive.
Located at the very end of the straits that connect the Atlantic to the Mediterranean, the Bay of Gibraltar is Europe's number one oil transfer port. More than 110,000 vessels per year pass through this port, which enjoys a privileged tax regime and does not charge a fuel tax. Ships that come to refuel can also save money on docking fees.
But while shipping companies may see the area as a fiscal paradise, environmental groups say the Bay of Gibraltar is an ecological nightmare — a toxic time bomb that is ready to explode.
In January last year, a new Income Tax Act came into effect in Gibraltar, which Gibraltar says marked the territory’s 14-year transition from "tax haven" to an integrated, mainstream European financial services centre.
A key part of the act reduced company tax from 22 per cent to 10 per cent, making Gibraltar new-business friendly.
Gibraltar's government put its Qualifying Recognised Overseas Pension Scheme (QROPS) industry on hold three years ago when the fact that it taxes its own residents over the age of 60 at zero per cent became an issue of concern for HM Revenue & Customs (HMRC).
Now however, Gibraltar's parliament is close to passing legislation that allows for benefits paid by pension funds transferred to Gibraltar and administered there to be taxed at 2.5 per cent.
Spain, for its part, continues to offer Gibraltarians considerable autonomy if they would agree to become Spanish, while Britain accepts that, under the Treaty of Utrecht, the place would automatically pass to Spain if Britain were to relinquish sovereignty. At the same time, however, Britain is bound, under Gibraltar’s constitution of 1969, to respect the Gibraltarians’ desire to remain British—so long as that lasts: many of them now hanker after outright independence.
In a move to curb growing hostilities, Spain has offered to triple the number of telephone lines in Gibraltar and offer better access to its healthcare system. But Gibraltarians say they will not be bought. In a declaration of unity signed in October by every member of the House of Assembly, they state: "The people of Gibraltar will never compromise or give up our sovereignty, not for good relations with anybody and not for economic benefits either."
On July 21, 2009, Spain's foreign minister made a historic trip to Gibraltar, becoming the first Spanish minister in 300 years to set foot in the disputed British territory. The visit was part of continuing talks among Spain, Britain and Gibraltar.
Most Gibraltarians are bilingual in English and Spanish, and are of mixed Genoese, British, Spanish, Maltese and Portuguese descent. Recent arrivals have included migrant workers from Morocco.
Gibraltarians are British citizens. They elect their own representatives to the territory's House of Assembly; the British monarch appoints a governor.
Like many petty disputes, Gibraltar, with its 30,000 inhabitants and tribe of Barbary apes squeezed under and on to a gigantic limestone rock, has inspired centuries of rancour. Spain ceded Gibraltar to Britain in 1713, and has been trying to get it back ever since. As the two countries are now European and NATO allies, their feud over Gibraltar has become an embarrassing diplomatic inconvenience.