Guarding the western entrance to the Mediterranean, Gibraltar has survived
on military and marine revenues. However, as Britain has cut defense
spending, so its military presence on the Rock has declined. In response
Gibraltarians have developed a vibrant offshore banking industry. Strict
antismuggling legislation, in force since 1995, has curbed extensive
smuggling from north Africa into Spain. Gibraltar's relationship with
Britain and Spain remains contentious. However, the two governments
have undertaken to resolve the territory's status by December 2002,
prompting mass protest from the colony's inhabitants, who have felt
sidelined in the discussions.
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