Spain defended its "irrevocable" right to carry out checks at its border with the tiny British outpost of Gibraltar in a meeting on Tuesday with Britain's ambassador to Spain, a foreign ministry spokesman said.
Gibraltar had accused Spain of deliberately holding up cars entering the territory by searching every vehicle and creating delays of up to six hours during the last weekend in July.
Gibraltar argued that the heightened border checks were in retaliation over its decision to build a concrete artificial reef in surrounding waters, a move the territory says is aimed at stopping alleged incursions by Spanish fishing boats around the territory which Madrid claims as its own.
Tiny Gibraltar, just 6.8 square kilometres (2.6 square miles) and home to about 30,000 people, overlooks the only entrance to the Mediterranean Sea from the Atlantic Ocean.
Tensions rose further over the weekend when Spanish Foreign Minister Jose Manuel Garcia-Margallo suggested that Madrid could introduce a €50 ($66) charge to cross the Gibraltar border in either direction.
The money raised from the new charge could be used to help Spanish fisherman who will suffer from Gibraltar's new reef, the minister said in an interview published in the Spanish newspaper ABC.
Spain's secretary of state for foreign affairs, Gonzalo de Benito, told Britain's ambassador, Gilles Paxman, at their meeting that border checks were needed since Gibraltar is not part of the Schengen area — the passport-free zone of some mainland European countries with open borders.
"He explained that Gibraltar is not part of the Schengen area. It is therefore obliged to carry out border controls. They are irrevocable. They are necessary in an area where there is a lot of smuggling," the foreign ministry spokesman said.
De Benito also told the British diplomat that the Spanish government "would continue to take all necessary measures to defend Spanish interests", the spokesman added.
Britain has held Gibraltar since 1713 but Spain wants it returned and refuses to recognize British sovereignty over the waters off the land known as "the Rock".
The European Commission said Tuesday it would send a team of monitors to the Spain-Gibraltar border to ensure that the controls are applied "proportionately".
The mission however will not take place until September or October, European Commission spokesman Frederic Vincent said.
The Spanish government's delegate in the southern Spanish region of Andalusia which borders Gibraltar, Carmen Crespo, said the border checks were "proportionate" due to the sharp rise in cigarette smuggling between Gibraltar and Spain.
The amount of cigarettes smuggled between the territory and Spain, where they are slapped with higher taxes, has soared by 213 percent between 2010 and 2012.
Spanish Prime Minister Mariano Rajoy's conservative government "is open to permanent dialogue with Britain to resolve pending questions," she added.
On Tuesday, Gibraltar said it was planning a legal challenge against Madrid over the queues at the Spain–Gibraltar border.
Joseph García, deputy first minister of the British colony told the UK's Guardian newspaper that Gibraltar was now compiling data about Spanish border operations.
"We are collecting individual complaints in case we need to take action on the basis that an individual's rights have been infringed. The Spanish actions at the border are totally inhumane," García told the UK daily.
Former Socialist foreign minister Trinidad Jimenez said it would be a "clumsy mistake" for the government to try to distract attention from a corruption scandal rocking the ruling Popular Party by stoking a row with Gibraltar.
"On various occasions we have seen how certain issues are used to distract attention from other issues," she said.