STRASBOURG — Britain reacted with fury after European lawmakers accused Gibraltar of making it easy for Russia to exploit sanctions loopholes and branded the territory a "colony."

The spat, just the latest chapter in the centuries-old saga of the tiny Mediterranean outcrop's disputed ownership, came as the European Parliament vetoed the European Commission's attempt to remove it from its money-laundering naughty step.

The move comes at a particularly sensitive time, as the EU and U.K. close in on a deal on how to manage issues related to border control and movement of people between Spain ― and, by extension, the whole 27-nation bloc ― and Gibraltar, which was left out of the original Brexit agreement in 2020.

A text approved by the Parliament on Tuesday said there was “important and recent evidence suggesting” Gibraltar and four non-European countries “lack efforts in addressing, or even facilitate the evasion of, sanctions imposed on Russia” and “may act as platforms for circumvention of sanctions” against Moscow. Russia has been the subject of sanctions imposed by the EU, U.K. and U.S. since its invasion of Ukraine in February 2022.

The territory has long been under scrutiny because of allegations that it provides a safe haven for tax evasion and turns a blind eye to the smuggling of black market goods, such as tobacco, into the EU.

A spokesperson for the U.K. government, who declined to be named, said it was “completely inaccurate and unsubstantiated to suggest Gibraltar is undermining sanctions efforts against Russia,” adding that "U.K. sanctions apply in full, and are enforced, in all U.K. overseas territories and crown dependencies.”

Notion of 'colony' is outdated

Spanish lawmakers from Spain's right-wing party Vox attempted to include language in the Parliament's legal text referring to Gibraltar as a "colony" — seen by the U.K. as a provocative description because of its connotations of racist empire-building and subservience.

The territory, known colloquially as "the Rock," is officially classed as a British overseas territory and, although attached to the Spanish mainland, has been owned by Britain since 1713. Madrid has long claimed sovereignty over it.

The U.K. “reject[s] the outdated characterization of Gibraltar as a 'colony'," the spokesperson added.

MEPs voted to block the removal of Gibraltar from the Commission's money-laundering watchlist, along with the UAE, Barbados, Panama and Uganda. Its decision had come after global anti-money laundering watchdog the Financial Action Task Force deemed them safe enough.

The Parliament ultimately rejected the "colony" language in the legal text.

Poisoned by politics

U.K. Foreign Minister David Cameron visited Brussels earlier this month to hammer out details of an agreement between Britain and the EU, which both sides said achieved “significant progress." They said the deal would be concluded "over the coming weeks."

The European Parliament isn’t the only body to have taken a swipe at the U.K. over Gibraltar recently. Earlier this month, Commission Vice-President Margaritis Schinas was rebuked by Spain’s foreign minister after joking that Gibraltar was Spanish.

The U.K. government spokesperson said it was “extremely disappointed at the decision.” The Commission and the bloc's diplomatic service were also against the move.

In a statement after the vote, the government of Gibraltar said the Parliament's stance is "clearly not the result of any technical assessment" and is a "position poisoned by politics," name-checking specific Spanish MEPs and political groups.

This article has been corrected to specify the location of the EU-U.K. talks on Gibraltar.