Millionaire businessman John Mills, who bankrolled the Labour leave campaign during the European Union referendum, urged Madrid to look at its own enclaves across the Globe before challenging Britain over the Rock.
Mr Mills warned the remaining 27 members of the bloc they should not allow Spain too much power during the Brexit negotiations.
Madrid launched a desperate attempt to reclaim the UK’s overseas territory by setting out what it sees as non-negotiable terms to claw back the region’s sovereignty.
In the EU’s draft Brexit negotiating guidelines, it was stipulated Spain would have the opportunity to veto any post-Brexit deal involving Gibraltar.
John Mills, a key Leave donor, branded Spain 'two-faced' over its bid to reclaim Gibraltar
The EU need to be careful about allowing Spain to exercise any kind of veto over Gibraltar
Discussing the Rock’s sovereignty and Madrid’s latest challenge, Mr Mills said the EU’s position makes a ‘hard’ Brexit more likely.
Speaking to Express.co.uk ahead of the launch of his book ‘Britain’s Achilles Heel – Our Uncompetitive Pound’, the businessman said: “I do think it’s outrageous that the Spanish are taking the line they do.
“As you’re probably aware they have enclaves in North Africa, Cueta and elsewhere, which are very similar to what we have with Gibraltar.
“I think it’s really two-faced about the claims they are making anyway.”
Mr Mills moved on to insist the threats levelled by Spain would only mean Britain is more likely to negotiate a ‘hard’ Brexit as it leaves the EU.
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He urged the Government to have the courage to walk away from the negotiating table to avoid being left with a “bad deal”.
The Leave donor said: “The trouble is this sort of standoff just makes a ‘hard’ Brexit more likely.
“There must come a point when the British Government says they are too standoffish, too hardball the other side of the Channel that it’s just simply not worth having a really bad deal if the alternative is walkaway and deal with the EU 27 on World Trade Organisation terms.”
In a warning to Brussels, Mr Mills added:“The EU 27 need to be careful about overplaying their hand by allowing Spain to exercise any kind of veto over Gibraltar, this seems to me the really wrong way about going to achieve a sensible renegotiation.”
Things you may not know about Gibraltar Mon, April 3, 2017
Gibraltar is a confusing place, especially if you have never been yourself
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Gibraltar has its own political system that makes many decisions within the territory but issues like defence and foreign affairs are determined by the UK Government in London
However, the Spanish foreign minister has now said he thinks Gibraltar will not play a central role in the upcoming Brexit talks, which are due to start 11 days after Britain’s snap election.
Alonso Dastis claimed the Rock should be discussed, but Brexit negotiations should focus on a good result for all parties.
He said: “My aspiration is that Gibraltar is not a determinant issue in the Brexit negotiation.
“It’s a bilateral issue between the United Kingdom and Spain, and our aspiration is that the negotiations between the UK and EU is focused on obtaining the result, the best relations, the best partnership for the future.”