A Tight Fight

It would be "like expecting pears from an elm tree," said Juan Manuel Eguiagaray, referring to the chance that big business might look kindly upon a return to power by the left in Spain's general elections next Sunday. But Eguiagaray, Industry Minister in the last Socialist government, took heart from a February survey which showed that only 52% of business executives thought rule by the left would slow Spain's speedily growing economy. "If 48% think the opposite, then that's a great success," boasted Eguiagaray.

The line of least rejection is the way most parties approach neck-and-neck elections, and Spain is no exception. Jose Maria Aznar, one of Europe's endangered species of conservative prime ministers, is seeking a second term after his Popular Party put an end, on March 3, 1996, to almost 14 years of Socialist governments under Felipe Gonzlez. The incumbents insist they now represent modern Spain's center, and are the key to moving the country into the higher ranks of European Union economies. The Socialists (PSOE), under new leader Joaquin Almunia, claim the PP is just the old right in new suits, that for the past four years the government's main interest has been looking after its corporate friends. The truth is that "middle ground" does not readily translate into Spanish.

The Popular Party's denial that it is a business-for-buddies party has not been helped by a flurry of mega-mergers that have concentrated media and banking ownership, or by a stock options bonanza involving the privatized and ever-expanding Telefnica company. Its president, Juan Villalnga, happens to be a former high school classmate of the Prime Minister's.

On the Socialist side, the rejection issue is almost medical in nature. The PSOE has taken into its ambit what until a few months ago was a distinctly foreign body to it: the United Left, a group controlled by the Spanish Communist Party. The PSOE and the United Left have long baited and berated each other, but Almunia--like Eguiagaray, a Basque by birth--saw that he had little chance of ousting Aznar if he could not heal the split in the ranks of Spain's left. He cut a deal with his United Left counterpart Francisco Frutos, and on March 12 they will find out if voters approve. Both men are convinced that enough Spaniards will prefer a shotgun marriage of the left to a return to la derecha, four years that Almunia calls "a gray parenthesis" presided over by a government "which has seen 11 people named by Aznar in control of two out of every three shares on the stock market."

Almunia and Frutos have drawn up a modus vivendi comparable to that engineered in 1997 by Lionel Jospin and French communist leader Robert Hue. They stress that this pact hasn't caused the French sky to fall. Like Jospin and Hue, they talk of the "plural left."

When to this mix of brotherly lefts, revamped rights and movable centers are added Spain's Basque, Catalan, Galician and Canary Islands nationalist parties, a clear result looks about as possible as paella without rice. The one most predicted is that again no single party will be able to dominate the 350-seat lower house of parliament, the Congress. At present the PP has 156 seats, 20 short of a majority, but 15 more than the Socialists. The formerly go-it-alone United Left has 21.

Spain's nationalists wield their clout in their own regional parliaments, but in the central government the three parties represented there now muster 25 seats, 16 of them held by the Catalan coalition Convergence and Union. With Aznar, as with the last Gonzlez government, the inability of either of the two big parties to dominate has proved that political mice can sometimes roar.

Convergence and Union's Jordi Pujol, who has been presiding over Catalunya for 16 years, is a master of the second part of give-and-take. His latest push is to have the biggest take of all in regional hands: full tax collection. Neither Almunia nor Aznar admits that possibility, but both main parties know that Pujol may again be the piper that must be paid to play their tune. Pujol's party abhors the United Left, but Almunia might have the option of wooing Basque Nationalist Party (PNV) votes in the Congress--at present five. The PNV and Aznar have fallen out over how to handle Basque terrorism.

Most surveys give the PP only a slim lead over the Socialists, and Aznar must be wondering what he has to do to win friends and influence voters. Unemployment has been cut from about 22% to 15.5% over the past four years; public debt is down; consumer confidence is up; the economy grew 3.7% last year. The only negative was that 1999 inflation rose to 2.9%, double the '98 figure. Hardly a bad end-of-term report. Aznar boasts, "Before it was Spain looking at the outside world, now it is the world looking at Spain." Most members of his cabinet have respectable approval ratings, especially Interior Minister Jaime Mayor Oreja and Economy Minister Rodrigo Rato, a man whose taciturn exterior belies an interesting taste in music for a man in charge of budgets: he likes Dire Straits. Rato's success in steering the economy was briefly overshadowed last month by the resignation of Employment Minister Manuel Pimentel over a financial conflict of interest of one of his senior appointees. But the worst the Socialists have been able to make stick in four years is relatively minor.

Almunia, who at 51 is four years older than Aznar, was not tarnished personally by the scandals that marked the PSOE's decline and fall, but his route to its helm has not been easy. He was defeated in post-Gonzlez leadership primaries--an innovation he must regret having suggested--and only took over when the victor, Catalan Josep Borrell, stepped down. Almunia has gained confidence since then, and his deal with the far left showed, as Gonzlez says, "there is no room for doubt about who's in charge of the party."

The PP strategy has been to have Aznar release its policies piecemeal at rallies. They include the goal of 1.4 million more jobs over a second term, with talk of unemployment below 10% by 2004. Last week, he promised to cut the minimum tax rate from 18% to 15%, and the maximum from 48% to 46%. Small business is also being offered lower imposts, and--with Spain having Europe's lowest birthrate--working mothers would be excused from social security payments for two years, and tax breaks would be raised for parents of young children.

Almunia answers that the PP promised to reduce tax before it came to office in 1996, but thanks to indirect duties the overall bite has gone up, not down. Last week he urged voters to do what Americans did to George Bush Sr., of read-my-lips fame, when he stood for re-election. "They only believed him once," says Almunia. The PSOE says it won't lower taxes overall, but will distribute the burden more favorably for low earners. Almunia is also committed to reversing Aznar's policy of part-privatizing hospitals. This allows them to become "health foundations," which, while retaining public employees, have the freedom to take many of their own decisions, including buying and selling property and seeking alternative revenues. The government says it's efficiency; the Socialists and the United Left say it's the beginning of the end for the public health system.

Such issues bond almunia and Frutos, but there are several that divide them. Before their agreement on policies a "plural left" could support, both sides made concessions. Frutos, for example, had to swallow his party's deep dislike of nato, agreeing not to demand Spain's withdrawal from the alliance. Almunia had to promise that a government he headed would pursue a 35-hour working week, although he insists he is not committed to do so by legislation, as was the case with Jospin and Hue.

The leader of the main employers' group, Jose Maria Cuevas, said last week business was "not for one party or the other," but worried that Almunia and Frutos might have done more dealing than has been made public. Aznar accuses the two leaders of having a "hidden program." Almunia denies this, and says a government he ran would meet all E.U. stability pact requirements on inflation, budget deficit and public debt.

Despite increasingly American-style rallies full of triumphal music and cheek kissing, neither contender has much of that C word party leaders are supposed to exude. Spaniards, however, appear to be less interested in abstract matters like charisma than in practical questions: perennial issues like job security or pensions, new ones like Internet access (more Spaniards than French are online, and more Spaniards than Germans have mobile phones).

Most indicators justify Spaniards' general optimism that they will keep catching up with the stronger E.U. economies. Now they have to decide which of the two candidates--Aznar or Almunia--would continue that process fastest and most fairly. The fact that the two are so close going into the election may mean that most voters think it will make little difference, never mind arguments about who is right, center or plural left. The Spanish have a saying about politicians: "Same dogs, different collars."

With reporting by Jane Walker/Madrid

By ROD USHER

A community of people who don't speak any Gaelic--or much English--looked to Northern Ireland on Good Friday last year, when peace finally appeared to have broken out there. Many in the autonomous Basque region of Spain wondered if that settlement offered them some hope for an end to their own long and bloody "Troubles."

But the Northern Ireland solution has since come unstuck, and in any case the two conflicts have as many natural differences as similarities--particularly the issue of religion. What is certain about the "Basque problem" as Spain goes to the polls next Sunday is that its end appears to be as far away as at any time over the past three decades, during which the separatist terrorist group ETA has killed nearly 800 people and maimed more.

"Peace is possible," insisted Juan Maria Uriarte, a bishop in the Basque city of San Sebastin last week. Uriarte has been the mediator in scant contacts between the government of Prime Minister Jose Maria Aznar and ETA's representatives. They came to nothing. Uriarte says the only way out of the tunnel is dialogue, plus "prayer, patience ... advocating forgiveness, and defending fundamental human rights, such as the right to live."

Non-violent Basques, who are the vast majority, and millions of people around the rest of the country who take to the streets to support them, hoped such sentiments might prevail when ETA called a truce in late 1998. It lasted 14 months, during which time the Basque Nationalist Party (PNV), which governs the region, allied itself with Euskal Herritarrok, a party seen as the political face of the separatists. It was a gamble, angering Aznar's central government, which had an electoral pact with the PNV. But PNV president Xabier Arzalluz argues that negotiation is inevitable, that police efforts to defeat ETA are doomed to failure.

During the truce, however, many of ETA's "commandos" were caught, thanks in part to cooperation between French and Spanish security forces (ETA also seeks to "liberate" a chunk of France). Aznar's Interior Minister, Jaime Mayor Oreja, called the truce an ETA trampa, or trick, to reorganize and rearm. Certainly it sustained throughout the truce its campaign of low-level violence: in 1999, there were 390 attacks of vandalism and fire bombing in the region, nearly a third of them against the property of members of Aznar's Popular Party or of the main opposition Socialist Party.

The tone of the politicians increasingly reflects the desperate state of the region. Aznar accuses the PNV of siding with "the Europe of Kosovo, that of ethnic cleansing." Last week, PNV leader Arzalluz said Madrid is using ETA as an electoral weapon to win "blood votes." Far-left leader Julio Anguita accuses Aznar of being "insecure, weak, zigzagging and lacking in ideas."

Meanwhile, ETA is again using the only language it knows. In January, one of its car bombs killed an army colonel on his way to work in Madrid; on Feb. 22 another killed Socialist Fernando Buesa and his police bodyguard Jorge Diez near the Basque parliament. Like Northern Ireland, the northern Basque country remains beautifully green--with horrendous splashes of red.