Yesterday, Britain and Gibraltar defied Spanish protests and celebrated the 300th of the crown colony. Political Editor Graham Dines traces the history of the dispute between the UK and Spain over the anomaly of the Rock.

Yesterday, Britain and Gibraltar defied Spanish protests and celebrated the 300th of the crown colony. Political Editor Graham Dines traces the history of the dispute between the UK and Spain over the anomaly of the Rock.

IPSWICH's adopted warship HMS Grafton sailed into Gibraltar harbour with all guns blazing to mark the 300th anniversary of the annexation of the Rock as a crown colony and key military base.

The Spanish government was not amused.

The tiny Mediterranean outcrop on the tip of Spain - it's just 2.25 square miles - has been a running sore in relations between London and Madrid since the end of World War II.

Fascist dictator General Franco tried to isolate the colony, cutting off direct road links between Spain and Gibraltar and regular wrecking the telephone system.

Harold Wilson's Labour government in the 1960s organised a United Nations referendum to find out the views of Gibraltarians - did they want to remain British or join Spain? The verdict was a near unanimous rejection of the overtures from Madrid and Labour committed itself to defending British sovereignty.

Not so the Conservatives, who under Ted Heath were hell bent on European integration, taking Britain into the Common Market - later the EEC - and eagerly anticipating the establishment of a European politician and defence union during the following 10 years.

In anticipation of the end of all sovereignty throughout EEC, Heath wanted to hand over Gibraltar to Spain, ending end the tensions between the two countries.

The UK ambassador to Spain Sir John Russell cabled London: "We cannot go on defending this historical and geographical anomaly."

To the Foreign Office, the solution was obvious. Alan Goodison, head of the FO's southern European department, advised the Heath government. "We hope that within 10 years, the European Community will become a political and defence union. When that time comes, Gibraltar will be neither British nor Spanish. It will be European."

But the dream of Heath's Tories never materialised. And Spain has continued to fret and fume over Gibraltar ever since, although Tony Blair tried to prove his good European credentials two years ago by dreaming up a joint sovereignty solution.

But the deal collapsed following an unofficial referendum showing 99% of Gibraltarians were opposed to the change.

The advent of the socialist government of Jose Luis Rodriguez Zapatero in March has soured relations between Spain and the UK. It wants Gibraltar back.

But in an act of defiance, the Royal Navy was yesterday granted the Freedom of the City of Gibraltar to mark the tercentenary of the capture of Gibraltar by an Anglo-Dutch fleet on August 4, 1704.

It was an occasion marked enthusiastically by the 30,000 inhabitants of the colony and guests of honour included the British Defence Secretary Geoff Hoon and the First Sea Lord Sir Alan West.

Spanish foreign minister Miguel Angel Moratinos last week summoned British ambassador Stephen Wright to tell him of Madrid's "profound disappointment" at Mr Hoon's "unfriendly" presence.

Mr Moratinos told Spanish newspaper El Pais: "This commemoration of a past military event weakens the relationships with Spain. It turns out to be very strange that in this 21st century, the military occupation of part of an EU member-state's territory is commemorated by another member-state."

Gibraltar's Chief Minister Peter Caruana retorted that the celebrations were "none of their business - how we choose to celebrate our very close links with Britain and our British sovereignty is a matter for us."

Spaniards were even more infuriated when HMS Grafton kicked off this week's commemorations by firing a 21-gun salute as it sailed into port on Saturday - the first British ship to do so since 1954.

British sailors yesterday took part in a Freedom Parade following a special meeting of Gibraltar's Parliament, the House of Assembly, at which the Freedom of the City was bestowed on the Royal Navy.

The Queen's Colours, normally flown only when a member of the Royal Family is present, were on parade in an exceptional gesture because of the importance of the event.

While Gibraltarians are guaranteed the final say over sovereignty, there is no way the colony will be absorbed back into Spain. Indeed in June this year, Gibraltar voted for the first time in elections to the European Parliament when it was included in the UK's South-West region Euro constituency.

Unless Spain marches in the crown colony and takes it back by force, it

seems the only way it will cease to be British territory is if Ted Heath's dream of political and defence union becomes a reality. At the moment, that looks like being the 12th of Never.