Spaniards can be absurdly patriotic. A North African taxi driver best expressed this notion on our trip to Melilla, one of Spain’s two autonomous cities on the Mediterranean coast of Morocco. Spain preserves Melilla’s independence and isolation with an 11km-long fence that encloses the city and keeps the sabre-rattlers and spear-chuckers from storming the fort, so to speak. Spain is anxious to prevent smuggling and human trafficking from the port of Melilla to the Iberian Peninsula – Moroccans were ­traditionally the largest immigrant population in Spain but were recently pipped at the boundary post by Romanians travelling overland from Eastern Europe. African migrants still brave the Mediterranean crossing in tiny boats from North Africa but in recent years Malta has taken the brunt of the attack – illegals choose to launch from the flaccid security of Libya’s coastline. According to Maltese reports, the tiny island has received over 12,000 migrants from Africa since 2002.

Our jovial taxi driver recounts an apocryphal tale of a group of pioneering sub-Saharan “amigos” who were able to outwit the Spanish border guard in Melilla last summer. On 22 June at ­approximately 22.45, Spanish footballer Cesc Fabregas was squaring up to take the winning penalty in the European Cup quarter final against Italy in Vienna. Word on the Menkés-Fès grape- vine has it that the chancers were smart enough to outfox the sentinel by simply bolting through the gate and over the fence while the sentries had their eyes closed in anticipation of Fabregas’s match-­winning goal.

The sight of Africans long-legging it into Melilla to battle cries of “Olé!” and “Viva España!” would be an irony lost on Prime Minister Zapatero if the story were true. Spain declined to comment: no wonder, since Madrid sank €33m into strengthening the entire blockade by adding another razor-wire fence to the existing two and doubling its height to six metres back in 2005 after 700 illegal ­immigrants made it over the inadequate chain-link when thousands ambushed the city in several waves.

Possession may be nine-tenths of the law, but is there any point in possessing something of little value? Melilla is basically a souvenir state, a keepsake of past colonialism. Together with the Spanish city of Ceuta to the west, Melilla is Spain’s, and Europe’s, last stand on the African continent. It is a long and taut affair representing Spanish military interests. Melilla’s base and its periphery population account for many of the euros spent in the city’s VAT-free shops; without the military the city would feel a great deal more Moroccan than Spanish.

Before the abolition of national service in 2001, Melilla was an important training ground for young Spaniards and the garrison is still a key station in Spain’s military strategy, and indicative of the country’s reluctance to revoke ownership. Melilla was decisive in the commencement of the Spanish Civil War when a group of officers revolted from the garrison in 1936 under General Franco’s command and is the only city in Spain to retain a statue of Franco in plain view. Spain has held onto Melilla with a firm grip since taking control from the Berbers at the end of the 15th century – even when other larger colonial territories were ­restored between the 1950s and 1970s.

Whirring into Melilla on a De Havilland DASH 8 prop is a bit like landing directly in the margins of an Eric Ambler novel – with the traveller taking on the role of unwitting protagonist in a mid-20th-century Maghrebi mystery primed to unfold the moment he sets foot on the tarmac. Indeed, the unchaperoned stroll from the aircraft to one of the airport’s three gates is remarkably golden-aged and civilised. Ambler, on the other hand, would have probably played up the lack of people on the streets and an ­unnatural hush in what is essentially ­Moroccan territory on his way into town.

Mercedes Benz has the monopoly on Melilla’s roads making the ride from the airport to the city’s “luxury” hotel in the port a ripped-upholstered reminder that you are in North Africa. In fact, like most of the labourers in Melilla, many taxi drivers cross the border from Morocco on a daily basis to pick up their Spanish customers. With just 70,000 permanent residents Melilla is barely a metropolis, but the city bubbles over every morning when 36,000 Moroccans churn across the border to work there. “I live 500m from the border so I walk or cycle to work at midday and then back in the evening. It’s only 15 minutes door to door,” says Chabouri Najib, the maître d’ at seafood restaurant Casa Juanito.

Spain is adamant that its occupation of Melilla is more beneficial to Morocco and northern Africa than detrimental, “[Spanish] Melilla serves as an important economic injection into the adjacent regions and we are working hard to develop relationships with neighbouring countries,” says Javier Mateo, the vice councillor for the Department of Economy, Employment & Tourism, when we meet at his brand new digs located close to the crumbling Red Cross hospital.

This is the politician’s response, yet ask any Spaniard in Melilla about their country’s interests in North Africa and you get the same characteristic company line, “Our presence is favourable to everyone around us,” a position Morocco itself contests by refusing to recognise Spain’s claim to Melilla and continually raising the contentious issue of Gibraltar by waving the double standards card in Spain’s face. Morocco has never been amused – Melilla actually translates as “The White One” in Berber, a huffy swipe taken at the “imperialists” back in the middle of the last millennium.

A dwindling population of Spanish Christians is currently giving way to an increasing Muslim community who now make up 45 per cent of the people. A small and long-standing Jewish population has been slowly diminishing but is still significant in everyday life. From his close-knit cove in the community centre on leafy Avenida Duquesa de la Victoria, Jaime Azancot Cánovas, president of the Israelite Community in Melilla, praises Melilla’s tolerance, “People from all over the world – Denmark, the Netherlands, the UK – come to visit Melilla. We are a great benchmark for multiculturalism.”

In unison, Ram Verhomal Nanwani, the leader of the local Hindus, also takes pride in his adopted city’s diversity. We are met by Nanwani and his family at home in a neighbourhood above the city centre, “When I first arrived in the 1940s things were very different. There were much greater divisions between cultures, now everyone more or less lives happily together,” he gushes.

Nevertheless, multiculturalism is not enough to sustain a settlement alone, especially one isolated from the fatherland, and so Spain is finally spending some money on its overseas relation. It is undeniable that Spain is at its best and worst with an urban plan to tinker with, especially if it involves public art, renovation and innovative street furniture.

Madrid has spent tens of millions on such projects since 2000 and continues to show confidence by lining the city’s coffers, “Melilla’s future lies in tourism and developing quality services. Melilla is without doubt the European gateway to Africa and this is why Spain and the EU will continue to invest in Melilla’s development,” says Mateo, and his sincerity indicates that Spain is intent on making Melilla work for itself.

Melilla’s only real industry is fishing so the best way to boost the economy is to attract tourists. Melilla is pretty in parts. Architecture is a brave mix of Modernism with the largest assortment of decorative Art Nouveau residences outside Barcelona; the seafood is good and less likely to leave you with the squits than Moroccan; museums, churches, mosques and temples abound for those who want them; and most ­importantly it’s tax free.

It seems the Spanish are now willing to forego a little patriotism to attract newcomers to their very own patriotic anomaly. In order for Melilla to work, they will have to set aside erstwhile customary jingoism and put their faith in some other cultures for a change. Whether Spain, or more importantly the Spanish are quite ready to embrace other ethnic groups so sincerely is a moot point. Until then, other cultures may be forced to leave their customs at the checkpoint.

Once omnipresent and often omnipotent on every continent, Spain and the UK would battle expensively for decades over the oceans and marry in and out of one another’s sovereignties at the drop of a velvet glove. Now they have been reduced to bickering over 7 sq km of granite and sand. Gibraltar has been under British rule since 1713 and, according to Jane’s Country Risk countries and territories survey, it is the fifth most prosperous region in the world. With just 30,000 inhabitants, a GDP of over €700m and a favourable corporate tax regime, it is little wonder the Spanish want it back.