'Si, si," said the taxi-driver, who spoke English as his native language but used Spanish to answer the question. "I am a Gibraltarian first and British second. But Spanish? No. No way."

The taxi-driver would have been one of those outraged yesterday when British Foreign Secretary Jack Straw met his Spanish counterpart Josep Pique and agreed that the two countries would sort out their centuries-old differences over this lump of rock called Gibraltar by next summer.

The 30,000 Gibraltarians who cling to the rock were shouting "sell-out" as they accused the British Government of trying to hand them by stealth to the accursed Spaniards. Jack Straw, naturally, disagreed, saying that he only had the rock's residents at heart, and was trying to give them greater self-government and ensure them a prosperous future.

At most other times, the fact that Britain was even discussing the destiny of one of her 16 remaining colonies - the last remnants of her once worldwide empire - with a foreign power would be front-page news. War elsewhere means otherwise.

It is also ironic that the discussions come at a time when the far-flung corners of the British Isles - Scotland, Wales and possibly the North-East of England - are asking for a greater say in the running of their lives. Yet, the people of even further-flung Gibraltar are so against it.

But Gibraltarians know their history. While Scots still seek ways out of the 1703 Act of Union which joined their proud nation with England, Gibraltarians want the 1713 Treaty of Utrecht which joined their jutty rock with England to be enforced.

The English, with the help of the Dutch, captured Gibraltar in 1704. The two-and-a-half square mile rock has great strategic importance: it guards the only entrance to the Mediterranean and has long been sought by all the world's great powers.

The Romans called it "Ne Plus Ultra", which translates as "go beyond at your peril". Then came the Arab Moors during the Eighth Century. Their leader was Tarik-ibn-Zeyad, and the rock became known as "Tarik's Mountain" - or Gebel Tarik, as it is in Arabic, or Gibraltar as we know it today.

When the Moors declined, the Spanish were finally able to claim ownership to the toenail of their peninsula in 1501. They called it the "key of Spain", but only kept hold of it until 1704.

By then, the English were on the rise and were fighting their deadly enemies the French in the War of the Spanish Succession - the war was about whether the French or the English should be allowed to impose their preferred king on Spain.

In 1704, with the help of the Dutch, the English captured Gibraltar because it was the key to getting their man on the Spanish throne. However, the French won the war and put a Bourbon king on the Spanish throne. But the English were allowed to take certain bits of territory that took their fancy - Minorca, Nova Scotia and, of course, Gibraltar. The Treaty of Utrecht stated that the rock was English "for ever" - although it also said that should England ever tire of it, it should revert to Spain. There is no mention in the Treaty that the Gibraltarians should ever be allowed self-government or independence, which is why Jack Straw's discussions with Josep Pique have aroused such suspicions.

Britain used its new-found rock as a naval base, although it was Italians from Genoa who realised its importance as a trade gateway. In fact, more Genoese settled there than British, which accounted for the jet black eyes, dark skin and bushy moustache of our "British" taxi-driver.

But Gibraltar developed a very British feel, even if, when I visited a couple of years ago, it felt like a theme-park of what Britain used to be, a Beamish museum set in the 1950s. Policeman wore blue British uniforms and helmets. They were even on the beat, as opposed to skulking in panda cars as they do at home.

They were red cabinet phone boxes on most corners, as opposed to the flimsy see-through things that BT has erected all over Britain. There were real British pubs selling real British ale - not loud lager warehouses that dominate at home. There was even a Marks & Spencer.

Naturally Gibraltarians, whose currency is not centimes but sterling, feel very British. In the last referendum in 1967, 99 per cent voted to remain British.

Yet for Spain, Gibraltar rankles. Imagine if Spain owned the toe of Britain, Cornwall, and was refusing to give it back. Imagine how every night on the television weather, you'd see this little part of you picked out in a different colour telling you that you don't own all that should geographically be yours, reminding you of how once you were so insignificant you were kicked around by the international powers. It would rankle, too.

It rankled so much that, during the 18th Century, Spain regularly besieged Gibraltar in the hope of forcing it to surrender. The longest was the Great Siege of 1779 which lasted three years, seven months and 12 days.

In the 20th Century, the Spanish were a little more civil in expressing their grievances. In 1969, following the overwhelming referendum result, General Franco closed the border and it wasn't reopened until 1982.

Although Spain joined the European Union in 1986, there is still barely hidden hostility. In the EU, borders are meant to be fluid and people are allowed to live and work wherever they want. Indeed, Alan Milburn would like Britain's National Health Service to be saved by Spanish nurses.

But still, when the Spanish are feeling awkward, it takes three hours for a Gibraltarian to cross the border into Spain. There are no flights between the rock and Madrid and, silliest of all, for years, Spain refused to accept Gibraltar's telephone code. It clearly still rankles.

When Tony Blair became Prime Minister in 1997, he found that the Gibraltar question was preventing Britain and Spain having a mature, modern relationship. He also found that, despite Gibraltar's vital position during the world wars, Britain no longer required a strategic outpost at the gateway to the Mediterranean. A decade ago, British military spending accounted for 65 per cent of Gibraltar's economy; now it is down to six per cent.

Indeed, earlier this year, the naval outpost proved more of an embarrassment than a safe port in a storm. When the nuclear-powered submarine HMS Tireless limped into Gibraltar, both the Gibraltarians and Spanish wanted rid of her as quickly as possible in case she leaked something nasty into their waters.

And so the talks began. Yesterday it was announced they would be concluded by the summer.

But, as yesterday's bitter demonstrations showed, the majority of Gibraltarians want to remain British. They don't want to be devolved away.

Reaching the top of the rock, our British taxi-driver concluded his tour by pointing out the Barbary apes that are the only naturally-occuring monkeys to live in Europe. "There is an old saying," he said in a Spanish accent, "that if the Barbary apes leave, so will the British. I hope they never leave. Never."