In a medium saucepan, bring water, sugar, salt, and 2 tablespoons of oil to a boil. Remove it from the heat and add the flour. Stir vigorously until the dough forms a ball and separates from the sides of the pan.
Heat a generous layer of oil in a deep pan or deep fryer to 180°C. Place the churro dough in a piping bag fitted with a star-shaped nozzle. Pipe long strips of dough into the hot oil and cut them off with a knife. Deep fry the churros until golden brown and crisp, about 2-3 minutes on each side. Drain on paper towels. 
Heat the milk in a saucepan over low heat to just below boiling point. Add the cocoa drops and stir until completely melted and combined. Add the sugar and a pinch of salt, and stir well until well combined and the sugar has dissolved.
Serve the warm Spanish churros immediately, sprinkled with some extra sugar or cinnamon if desired, and serve the hot chocolate dip on the side. Some people also like churros with ice cream and coffee – the choices are endless!