Reminiscing about the Spanish Civil War, Republican minister Federica Montseny wrote to historian Burnett Bolloten in 1950 that the government had planned to offer the Canary or the Balearic Islands to Germany in exchange of its neutrality.

[3] After the Fall of France in June 1940, Hermann Göring advised Adolf Hitler to occupy Spain and North Africa, rather than to invade the British Isles.

As early as June 1940, before the armistice with France had been signed, General Heinz Guderian also argued for seizing Britain's strategically-important naval base of Gibraltar.

They then travelled on to Algeciras, where they stayed some days to reconnoitre the approaches to Gibraltar, and they returned to Germany with the conclusion that Franco's regime was reluctant to enter the war.

When he reported to Field Marshal Wilhelm Keitel, Canaris gave his opinion that even if Germany were able, with the co-operation of Spain, to seize Gibraltar, the British would land in Morocco and French West Africa.

Soon afterward, Franco dispatched Serrano Súñer to Berlin to get an idea of Hitler's attitude since Canaris had assured him that Germany would not forcibly intervene in Spain.

Franco responded that Spain was simply not capable of supporting the German Army because of shortages of food and the crippled infrastructure and nature of the country still recovering from its recent civil war, which had just officially ended on 1 April 1939.

Franco answered negatively to another request from Hitler to join the war that was received on 6 February citing the precarious state of Spain's economy and army.

On the outbreaks of war with Italy, most of the civilian population were evacuated to the United Kingdom and other parts of the Empire, except for those in vital jobs in the dockyard or who were members of the Gibraltar Defence Force.

Work started on a programme of improvements to Gibraltar's fortifications, including a new network of tunnels deep inside the Rock and a system of strongpoints and minefields covering the land border.

The second role, in the event of Franco colluding with the Germans, was to demolish Spanish ports and infrastructure and to organise resistance and sabotage with the participation of the Special Operations Executive.

It proposed that as soon as the invading forces in the Soviet Union reached a line between Kyiv and Smolensk, hopefully by 15 July, units could then be withdrawn to prepare for the Gibraltar operation, which it was thought could begin on 15 October.