Here's our take on Gibraltar, which hasn't changed because of the recent non-binding and unofficial referendum. The referendum did show that the Gibraltarians (we'll call them the Giblets) overwhelmingly want to keep their current status. Well, public opinion in the UK, notwithstanding British behavior regarding Hong Kong, has a thing about giving loyal subjects away to some other country against the will of said subjects. Remember, for example, the Falklands War. Tony Blair's hands are tied. Relinquishing British sovereignty, or even part of it, over Gibraltar, would be a very serious political negative for Blair, and we all know that Tony Blair is notorious for tailoring his words and deeds to fit public opinion, rather like a somewhat more ethical Bill Clinton. (This is why we have been gratifyingly surprised at Blair's backbone during the entire War on Terrorism so far, since a significant proportion of Brits oppose an attack on Iraq and even opposed the Battle of Afghanistan. Perhaps we shouldn't have been so surprised, since Blair also showed backbone in the Northern Ireland negotiations, the Balkans, and in Sierra Leone. If Tony doesn't think an issue is a life-or-death matter, it seems like he's a leaf turning itself this way and that in order to get the most sunlight possible. But we'll have to give him a lot of credit for being tough and clearheaded and usually right when he has to make a decision that may affect history.)
Anyway, back to the Giblets. It's true that Gibraltar no longer has any particular strategic value, not with the US naval base at Rota only a hundred kilometers away. It's also true that Gibraltar is a haven for smuggling into Spain, but this is a problem that can be stopped with some decent police work; you don't have to change sovereignty to solve this one. If the Spaniards would agree to let a few Royal Navy speedboats patrol the coasts, smuggling would, I'm sure, be greatly reduced. There really is no particular reason Gibraltar can't keep the status it has. Nothing would much change if sovereignty of this tiny peninsula with some 20,000 inhabitants were transferred from Britain to Spain in the long run, and nothing would much change if it weren't, either. Nothing's broke. There's no reason to try to fix it. There's nothing for anyone to get his undies all worked up over. There's no crisis. So, since we all agree that democracy is a good thing, let's be democratic. Let the Giblets have a binding referendum on what they want to do, become independent, go over to Spain, or stay with Britain. Co-sovereignty is a dumb idea that will never work, so don't even include it as a choice. The Giblets will vote nearly unanimously to stay with Britain, and their wishes should be honored.
Comparisons with the Basque Country are silly. Perhaps 30% of the Basques want independence, whereas 99% of the Giblets want to stay with Britain. I actually wouldn't mind amending the Spanish constitution to give the Basques a referendum on independence (under the Spanish constitution Spain is indivisible) provided it was stipulated that it would be 50 years before another such referendum could be held. Or 100. I don't normally like the idea of amending constitutions, figuring that as few changes in the basic law of a country should be made as possible as long as said constitution is generally fair and decent. In the Basque case, though, a clear defeat for the independentistas might do a lot to remove anything left of ETA's legitimacy. Hell, let the Catalans have a referendum, too, under the same conditions. The independentistas would lose and lose badly. Then they might shut up for a while.
Comparisons with Ceuta and Melilla, however, are appropriate. Ceuta and Melilla are small Spanish cities on the north coast of Morocco which form an integral part of Spain; they do not have colonial status (neither do the Canary Islands, which are also an integral part of Spain). Morocco claims them, and Spain quite justifiably refuses to hand them over to Morocco. The Ceutans and Melillans, of course, want to remain part of Spain, as do the Canarians. Massive hypocrisy here on the part of the Spaniards, right? We want to keep our enclaves in Morocco, but we want you to give up your enclave on our shores. The tortuous explanation that Spanish diplomats will give you is that Ceuta and Melilla have been Spanish since the Spaniards themselves founded them in the 1500s and the modern country of Morocco did not exist at that time, while Gibraltar became British under the 1713 Treaty of Utrecht when Spain was recognizably the same entity as it is now (for example, it's still ruled today by the same royal family, the Bourbons, that acceded to the Spanish throne precisely according to the terms of the Treaty of Utrecht), and Gibraltar was definitely Spanish territory before it was ceded to Britain. The Spaniards therefore, they say, have the right to demand that their land, Gibraltar, be given back to them, while the Moroccans do not have the right to do so because Ceuta and Melilla were never their land. I don't buy it, of course.
During the Franco days, the Spaniards used to argue that Britain had to give up Gibraltar because the Brits had violated one of the clauses of the Treaty of Utrecht by allowing Jews to settle in Gibraltar; the treaty had specified that no Jews were to be allowed to get so close to Judeophobe Spain. This claim is, of course, no longer made. Also, the majority of the Giblets are some kind of mix of Maltese, seafaring Italian (e.g. Genoese, Pisans, and Venetians, not, say, Calabrian peasants), Spanish, and British, with probably a good dash of North African. Atlético Rules has a very different take on this subject..