By Jon Nazca
GIBRALTAR (Reuters) - "Brexit Bombshell -- but Gibraltar will not surrender" stated the Gibraltar Panorama on Monday as the British enclave's future took center stage in the wrangling over Britain's break from the European Union.
Residents of "the Rock" on the southern tip of Spain said they hoped for London's support as Prime Minister Theresa May's government negotiated the divorce.
But they also adopted a typically British stance on the row -- keep calm and carry on.
"Spain is going to jump at this opportunity to try and take advantage of the situation but when it comes to the crunch I think we've got to take one step at a time and not over-react, be calm," said firefighter Liam Byrne, speaking in a street on the peninsula.
Gibraltarians voted overwhelmingly in last June's referendum to stay as part of the EU but Britain's decision as a whole to leave potentially takes the overseas territory with it.
But an EU draft position published on Friday said any agreement on Gibraltar had to be agreed between Britain and Spain, which has long claimed sovereignty over the enclave.
On Sunday a former British minister, Michael Howard, suggested Britain would be ready to go to war with Spain to defend the outpost -- a display of saber-rattling that evoked memories of the 1982 war with Argentina over the Falklands.
That drew a rebuke from Brian Reyes, a columnist for the Gibraltar Chronicle, who said Howard's words helped no one.
"This is a time for firm but measured diplomacy, not war rhetoric," Reyes wrote. "What we need is a Rock-solid commitment from the UK that it will include Gibraltar in any future trade deal with the EU."
Captured by Britain in 1704 and ceded in the 1713 Treaty of Utrecht, Gibraltar has long been a bone of contention between London and Madrid. The border was closed for many years during the Franco dictatorship.
In a 2002 referendum, Gibraltarians rejected by 98 percent a proposal for joint British-Spanish sovereignty.
Once a major British military base, the territory of 33,000 people is now an off-shore financial center drawing funds and insurance companies with its attractive tax and regulatory regime.
It has a strong flavor of Britishness, with pubs named "The Gibraltar Arms"' and "The Angry Friar". One souvenir stall had for sale a red bag with the slogan "Gibraltar. British since 1704".
Gibraltar was not mentioned in May's Article 50 letter which triggered the process to leave the bloc last Wednesday.
Ron Westdorp, managing director of Gibraltar-based fund Taler Asset Management, said the line in the EU draft which said Spain would have a veto on Gibraltar was not helpful.
"It is upsetting in an extremely early phase of renegotiating these relations," he told Reuters by telephone.
Retiree Alfred Medina was also suspicious of Spain's motives.
"Even though I voted to leave the EU, I was expecting this from Spain and I just sincerely hope that Britain will back us up and they will take care of us like they've done in the past," he said.
(Additional reporting by Angus Berwick in Madrid, Writing by Sonya Dowsett; Editing by Angus MacSwan)