Spain and Britain on Wednesday launched talks to
solve a dispute over an artificial reef at Gibraltar, the Foreign
Ministry said in Madrid.
The two countries will create working groups to handle the issue, their foreign ministers agreed over the phone.
Spanish Prime Minister Mariano Rajoy and his British counterpart David Cameron first discussed the matter in a phone call which Cameron described as "constructive."
A Downing Street spokesperson, quoted by Gibraltar Chronicle, said Spain had agreed to reduce border controls that have created queues at the entrance to the British enclave.
But Spanish officials said Rajoy had only told Cameron that the controls were legal under European Union rules.
The outcrop of 6.8 square kilometres on Spain's southernmost tip has long soured relations between Britain and Spain, which claims sovereignty over the British overseas territory.
Tensions mounted again after Gibraltar placed dozens of concrete blocks in the sea to create an artificial reef.
It says the reef protects biodiversity, while Spain says it disrupts fishing.
Spain subsequently tightened controls of vehicles entering Gibraltar, creating queues lasting up to four hours. Gibraltar has complained about the queues to the European Commission and threatened to take the case to European courts.
Spain has also said it is considering other measures. They could include a 50-euro (65-dollar) fee for crossing the border, tighter tax controls on more than 6,000 Gibraltarians living in Spain, and closing the Spanish airspace to flights in and out of the enclave.
Gibraltar Chief Minister Fabian Picardo has accused Spain of "saber-rattling" and of behaving like North Korea.
Rajoy told Cameron the "unilateral" measure of dropping blocks into the sea was "unacceptable."
The blocks created "serious damage to Spanish fishermen and the environment," Spanish Foreign Minister Jose Manuel Garcia-Margallo told his British counterpart William Hague over the phone.
Spain "reserves the right" to carry out border controls, to fight tax fraud or any violations of EU law, Garcia-Margallo said.
Downing Street said there was a "real risk" of bilateral relations deteriorating unless the situation at the border improved.
A spokesman for Spaniards working in Gibraltar said the situation at the border was back to normal. Unusually long queues of vehicles could no longer be seen, though controls of motorcycles were being stepped up, Juan Jose Uceda said.
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