The future of Gibraltar, which became one of the most complex issues to resolve between the European Union (EU) and the United Kingdom after Brexit, is entering a new phase with the new arrangement agreed upon by the parties. The agreement, reached after nearly eight years of negotiations, envisages the significant removal of physical border controls between Spain and Gibraltar, allowing people to move more freely.[i] However, the agreement is not merely a technical arrangement facilitating border crossings. On the contrary, it represents a significant development demonstrating a redefinition of the relationship between sovereignty, border management, and economic integration in Europe.
Gibraltar, although an overseas territory of the United Kingdom, is geographically part of the Iberian Peninsula. The economic relationship between the region, with a population of approximately 40,000, and the Spanish city of La Linea de la Concepcion has long been based on mutual interdependence. The fact that approximately 15,000 Spanish workers cross into Gibraltar daily for employment demonstrates the level of economic integration between the two sides. Therefore, the border uncertainty that arose after Brexit is not only a diplomatic issue but also a structural matter directly affecting daily life and the regional economy.[ii]
What is remarkable here is that the parties were able to reach a compromise in functional areas without resolving their fundamental differences regarding sovereignty. While Spain maintains its historical claim to sovereignty over Gibraltar, the United Kingdom has not changed its position that the territory is under its sovereignty. Nevertheless, the parties agreed to establish a common mechanism for border crossings, customs procedures, and economic activities. This demonstrates that the “functional integration” approach remains valid in the current international relations literature.
According to the functionalist approach, states can develop cooperation in technical and economic areas of common interest before resolving political disputes. This cooperation can, over time, strengthen trust and pave the way for more comprehensive political agreements. The new model that emerged in Gibraltar is based on similar logic. The parties have not set aside the sovereignty dispute; however, they have chosen to limit the negative impact of this dispute on the free movement of people, trade, and economic activities. In this respect, the agreement shows that long-standing disputes in Europe can be made manageable, even if they cannot be completely resolved.
Another important aspect of the agreement is that it reveals one of the paradoxes created by Brexit. The United Kingdom based its decision to leave the EU in the 2016 referendum largely on the rhetoric of strengthening national sovereignty and re-establishing border control. However, as seen in the case of Gibraltar, economic realities presented a different picture than political rhetoric. Under the new arrangement, Gibraltar’s compliance with EU customs rules, integration into the Schengen system, and acceptance of EU regulations in certain areas demonstrate that Brexit did not mean absolute separation. This indicates that relations between Europe and the United Kingdom are being reshaped within a new and more flexible institutional framework, rather than a complete break.
The impact of this development on the regional economy is also noteworthy. Gibraltar is among the highest-income regions in the world in terms of per capita income, while La Linea de la Concepcion, just across the border, has one of the highest unemployment rates in Spain. Many businesses operating in the city derive a significant portion of their revenue from Gibraltar. Therefore, facilitating border crossings is not merely a logistical arrangement; it may also be regarded as a development tool that contributes to reducing the imbalance between two different economic structures.[iii]
A purely regional assessment of the Gibraltar Agreement would be a limited approach. This arrangement is also a significant indicator of the new relationship model emerging between the EU and the UK after Brexit. While maintaining their political and legal separation, the parties are moving towards developing more flexible cooperation mechanisms in areas of common interest such as energy, security, trade, and border management. This suggests that future EU-UK relations could move beyond complete separation and progress within a new institutional framework based on sectoral cooperation.
The Gibraltar Agreement also presents a new approach to managing sovereignty disputes. While the traditional understanding of resolving border disputes primarily ties to the ultimate resolution of the sovereignty issue, this agreement offers a different model. The parties have chosen to enhance cooperation in the areas of economic integration, freedom of movement, and border management while maintaining their legal and political positions on sovereignty. This demonstrates that some disputes in international relations can be effectively managed rather than completely resolved. Therefore, the Gibraltar example shows not that sovereignty disputes have ended, but rather that these disputes have been reframed in a way that does not hinder cooperation.
When evaluated from the perspective of the United Kingdom, it can be said that the agreement is part of a pragmatic strategy that serves to preserve the current status quo. The London administration aims to secure the economic functioning of the region and prevent a new crisis in relations with Spain, without renegotiating its claim to sovereignty over Gibraltar. This approach does not mean that the United Kingdom is compromising its sovereign position. On the contrary, it shows that London is pursuing a pragmatic policy aimed at strengthening economic stability and cross-border cooperation while preserving the status over Gibraltar.
In conclusion, the Gibraltar Agreement is not merely a technical border arrangement resolved after Brexit. The agreement sets a significant example demonstrating that sovereignty disputes in Europe do not necessarily have to completely prevent economic cooperation. This model, developed by parties pursuing shared economic interests without compromising their political positions, could also serve as a precedent for future relations between the EU and the United Kingdom. In this context, Gibraltar stands out not only as a historical sovereignty issue, but also as an important European model showing how sovereignty disputes can be managed through functional integration and pragmatic diplomacy.
[i] “UK-EU Agreement in Respect of Gibraltar: Joint Statement”, GOV.UK, https://www.gov.uk/government/news/uk-eu-agreement-in-respect-of-gibraltar-joint-statement, (Date Accessed: 19.07.2026).
[ii] Hedgecoe, Guy. “New Era for Gibraltar with Removal of 118-Year-Old Border Controls with Spain”, BBC News, https://www.bbc.com/news/articles/cwydz60j3eno, (Date Accessed: 19.07.2026).
[iii] Ibid.
