Gibraltar becomes major MI5/MI6 station

For most of its 300 years as a British possession, the military importance of Gibraltar overshadowed all other considerations. During the Second World War, the Allies possessed not a single spot of ground in all the region of Western Europe, except for the Gibraltar fortress, as General Eisenhower noted in his memoirs. Gibraltar was the key to the Mediterranean. 

Gibraltar was an intelligence nightmare, a web of intrigue, with German agents spying relentlessly on every move that was made on the Rock, through powerful telescopes from luxury villas in Algeciras, some of which are still there today. The Reina Cristina Hotel in Algeciras was a centre of espionage. The area was dubbed Spy Row.
Added to the 24-hour telescopic surveillance of the Rock, in Gibraltar itself the thousands of frontier workers who crossed the border daily could engage in closer observations and could overhear conversations. Sailors from visiting ships would engage in careless talk in the girlie cafes and bars that abounded on the Main Street, such as the Universal which at one stage was closed down by the authorities. Gossip and rumour spread all the way back to Spain.
All this information could provide valuable intelligence about Allied plans beyond the confines of the Rock. Ship movements and supplies provided a useful insight to plans being conceived and being got ready. Newly arrived military personnel were easily distinguishable by the much paler colour of their skins than those already stationed here. It was obvious to the intelligence community that the most minute detail could serve to open a door to major developments.