Spain lost control of Gibraltar in 1704 and ceeded the territory under article X of the Treaty of Utrecht in perpetuity to the British Crown in 1713.

The Rock's two main political parties, the Gibraltar Social-Democrats (GSD) and the Gibraltar Socialist Labour Party (GSLP) are opposed to any transfer of sovereignty to Spain. Although Gibraltar is run on democratic principles, with freedom of speech, freedom of political movements and freedom of the press well-established, no political party or pressure group in Gibraltar supports union with Spain. However, an overwhelming majority of the population holds the view that better relations are desirable, and that the Spanish restrictions on telecommunications, cruise ships, aircraft, participation in sport etc. must be removed.

Despite this, Spain continues to claim sovereignty of Gibraltar.

Previous Spanish governments have insisted that the Gibraltar dispute is a purely bilateral matter and that the current Gibraltarians are mere settlers whose role and will are irrelevant. This vision underlied the UN resolutions driven by Spain on the decolonization of Gibraltar in the 1960s, which focused on the "interests" and not the "wishes" of the Gibraltarians. However, the strategy of ignoring the Gibraltar people has proven to be a dead-end for Spain.

In 2002 an agreement in principle on joint sovereignty over Gibraltar between the governments of United Kingdom and Spain was reached. There was a robust campaign to reject these proposals by the Government and people of Gibraltar, culminating in a referendum amongst Gibraltar's residents (99 per cent voting "No" at an 88 per cent turnout). Gibraltarians have further argued that one cannot claim to be acting in the "interests" of a population, while at the same time ignoring its wishes and democratic rights.

With the election of a moderate left-wing government in Spain (2004), Spanish officials noted that, even if Spain does not give up its claim to assume the sovereignty of Gibraltar, no advance could be achieved without taking into account the wishes of the Gibraltarians. The result of this new approach was the creation of a tri-partite forum with the participation of the Gibraltar government. Such movement was qualified by Spanish right-wing parties as a surrender. At the same time Gibraltarians consider that nothing of a positive nature has been seen in this "improvement in relations".