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A game of anagrams using the word SPAIN quickly yields SPAN, PAINS, SPIN, IN and NAPS ... Curiously, just about every possible derivative seems to fit the modern nation as tightly as a toreador's trousers. Above all, Spain is more "in" than it has ever been, its influence in Europe and the world unrivaled since the days of empire. That era was built on sheer military clout, which is superficial and fleeting. Today, Spain has presence.

The Spanish economy is growing faster than most others in the European Union. Outgoing Prime Minister José María Aznar boasted on a recent trip to America that his country's GDP now surpasses those of two G-8 members — Canada and Russia — and ranks eighth worldwide, not-so-subtly implying that Spain should be part of any Big Boys' club. Certainly the Spanish voice is being heard, if not always appreciated, from Brussels to Buenos Aires to Washington. A nation that only a few decades ago was inward-looking and oppressed now has the nerve to help scupper a pondered E.U. constitution and send 1,300 troops to help the U.S. pacify Iraq. Wherever you look — food, film, music, literature, business, architecture, sport — there's a Spaniard gesticulating. The span extends with the language — 400 million speakers and counting, 35 million of them in the U.S. The main propagator, the Cervantes Institute, has 40 centers in 25 countries, and this year will open new ones in Belgrade, Budapest, Prague and Stockholm. Its next, most ambitious, project: China.

There is pain. Terrorism still casts its dark red shadow over the Basque Country. Unemployment, although slashed in half since Aznar took over in 1996, heads the E.U.'s list, at 11.2%, and nearly two-thirds of workers under 25 are on short-term contracts. Economic growth is looking more and more precarious too, given that it is largely based on a construction boom and consumer spending that may not last. And with its own constitution recently turned 25, centrifugal and centripetal forces threaten to upset Spain's jigsaw of 17 autonomous regions. Ahead of general elections on March 14, politicians are fumbling to find a recipe best described by the new leader of Germany's SPD, Franz Müntefering: "As much federalism as possible, as much centralism as necessary."

And yes, there is spin. When it comes to media control, Spanish governments defer only to Italy's Silvio Berlusconi in WMD — Weapons of Media Domination. Dictatorship of the screen has reached the point where a Spanish court ruled last year that the main state channel, TVE-1, infringed the public's right to be informed by burying news of a general strike. Filmmaker David Trueba says he fears Spaniards will soon react to their television news the way Cubans do on opening their state-controlled newspaper Granma: "They can only laugh." But for all such shortcomings — and analysts say the country is napping on R and D and entrepreneurship — few can dispute that Spain is taking on the world in a way it hasn't before.

In its former colonial domains in Latin America, many observers predicted the conquistadores in business suits were going to get their comeuppance with the sharp decline of most of the continent's economies, especially Argentina's. Spain's largest company, Telefónica, invested heavily in the region — in Brazil alone pouring in almost $25 billion in cash and equipment between 1998 and 2002. Along with other big investors, Telefónica caught a cold when Latin America sneezed, but by holding firm, Spain gained more of that added value called presence. "It has been in Spain's interest to have a great big company it can use as a beachhead in South America," says Andrew Hazell, a Madrid-based American who has been a consultant for Telefónica and some of its rivals.

One recent report predicts the region's 19 Spanish- and Portuguese-speaking economies will grow this year on average between 3.5% and 4%, figures to turn European governments green. Most of the other Spanish players there — the banks, power, petroleum, construction companies — are now reporting profits and forecasting more. And this Spanish invasion is generally welcomed by the natives. "We think the Spanish investment in Latin America is very good," says Demetrio Sodi de la Tijera, a Senator with Mexico's Partido de la Revolución Democrática (Democratic Revolution Party). "They understand us better, and the fact that we share the same language, values and ideas is a plus."

Aznar's Popular Party talks about a second transition in Spain, the first having been the change to parliamentary democracy after Generalissimo Francisco Franco died in 1975. The new paradigm shift is to a Spain economically strong, confident enough to plant its feet before the big players in Europe — even France and Germany — and form its own alliances, particularly with Britain and the U.S. Justified or not, confidence has filtered down to the point where Spaniards are taking risks, pushing boundaries and showing that supreme sign of autoestima (self-esteem): occasionally laughing at themselves.

Part of this will to take on the world must be to do with willingness to take in the world. Last year 52.5 million tourists entered a country with some 10 million fewer inhabitants. Nature and natural hospitality also make Spain a magnet for those who want to stay. José Luís Suárez, who specializes in real estate at the IESE business school in Madrid, says of the expected 640,500 housing starts for 2003, about 100,000 are for foreigners. "The best weather of the whole Mediterranean and a very good infrastructure place Spain without a clear competitor," he says.

He forgot to mention the food. Spanish chefs, long underrated beside their French neighbors, are increasingly hailed as right up there with the crème. Catalan Ferran Adrià is regarded by some critics as the best, especially when it comes to inventiveness and food science. He and other Spanish chefs, among them Basque Juan Mari Arzak, showed off some of their skill — and humor — at the International Gastronomic Fusion Summit in Madrid in January. Before packed houses, Arzak used a coffee machine to turn out "lobster espresso," which at least sounds fluffier than his "ham coffee." Adriàtook a candy-floss machine to make what he calls a mummified version of red mullet, which might follow his "melon caviar" or "mango spaghetti." "I spend €300,000 a year on research," Adrià recently told TIME. "I could drive a Ferrari, but I think the money is better used this way."

In sport there is the same confidence and élan. Who's the youngest person to have won a Formula One Grand Prix? Spain's Fernando Alonso, last year in Hungary, aged 22. Who clinched Spain's Davis Cup tie against the Czech Republic in Brno last month? Precocious Rafael Nadal, 17. Who was football's most expensive transfer this year? José Antonio Reyes, for whose goal-scoring prowess English club Arsenal paid about €25 million. With his own signings, who has turned Real Madrid into one of soccer's biggest global brand names? Businessman president Florentino Pérez. Who has stood atop the world's 8,000-m-plus mountains more times than anyone else? Basque Juanito Oiarzabal. At sea level, America's Cup-holder Switzerland, for lack of coast, has chosen Valencia as the venue for the 2007 challenge. Whom do the New Zealanders, desperate to regain the trophy, pick to design their boat? Spaniard Marcelino Botín.

Most fields boast similar standouts. Architect Santiago Calatrava has designed a spectacular new transit station to run below ground zero in New York City. Writer Antonio Muñoz Molina — who happened to be there on Sept. 11 — has just released a book, Windows of Manhattan, which describes the city Calatrava is helping to restore. In film, female directors and screenwriters like Icíar Bollaín are hard on the heels of Pedro Almodóvar, having scooped the pool in the recent Goya awards, Spain's Oscars. Tamara Rojo, who dances with London's Royal Ballet, is considered one of the world's best, aged only 29. Singer Alejandro Sanz last month won a Grammy for his new CD, No es lo Mismo (It's Not the Same).

What's driving Spain's creative outpour? "Pain and pleasure," says Javier Bardem, one of Spain's leading actors best known outside the country for his roles in Before Night Falls and The Dancer Upstairs. "We are a Catholic country with a very strong sense of guilt. The way to fight off that guilt is to get as much pleasure as we can." In a world where war and terrorism rule the headlines, a little hedonism goes a long way. "Sometimes when I talk to people I can tell they expect me to be like a bullfighter or a seducer, full of passion," Bardem says. "It's true we don't have that same sense of shame about sex or desire that other cultures do, but it's just fun, not something we take seriously."

The same zeal (if not success) shows up in other areas of Spanish endeavor. The nation lags in many areas of science and technology, but cases abound of individual projects exhibiting Iberian inventiveness and enthusiasm. Here are just two examples, one almost out of this world, one almost completely nuts. Juan Pérez Mercader, director of the year-old Center of Astrobiology in Madrid, admits, "Once I start talking about Mars, it's hard to stop me." What particularly excites Pérez is a joint project between his center and NASA to help discover if there is or has been some form of life on that planet. Not by going there, but by digging in Andalucía. The project is at the former mining town of Minas de Riotinto, in Huelva province, where the terrain, rich in iron and minerals, appears to be akin to that of Mars. "We have now drilled holes to more than 200 m," says Pérez, "and are examining cores to see if in this extreme environment there are forms of life adapted to the high iron content, which is what makes Mars red. Before the end of 2006 we hope to develop the technology to enable similar robotic drilling on Mars."

More earthly is the science of Cristina Casadevall, a student at Barcelona's Narcís Monturiol Institute. Three years ago Cristina was watching TV with her mother, eating walnuts, when she wondered if anyone had ever thought of a use for the world's nutshells. After thousands of hours of experimenting with various shells and resins as part of a physics and chemistry project, she came up with a material she's called Ecocarcris. "It's made from treated shells of various nuts combined with a resin," says Cristina, now 18 and in the early stages of starting a business to produce her patented product. Its most practical use, given its flexibility and acoustic and thermal insulating properties, may be in buildings in lieu of more expensive cork or chipboard. She explains that, like her product, its name is a composite, from the Spanish words for ecological, shells, recycling and, of course, Cristina. Her teacher, Manuel Belmonte, says one of its attractions is that the main ingredient is a factory waste. "I marked her project 11 out of a possible 10," says Belmonte.

One thing Spaniards know how to produce is a show. Barcelona '92 was one of the best Olympics, not just for sport but for the way the city was reorganized around the Games. Now Madrid is bidding to host the 2012 Games, and Valencia has already beaten the competition for the 2007 America's Cup challenge. Madrid's recent 23rd Arco contemporary art fair featured 275 art galleries, more than half of them foreign. In the south, the new museum named for Malaga's most famous son, Pablo Picasso, is drawing big crowds. Barcelona is soon to embark on 141 days of international fun, games and dialogue in Forum 2004, an event jointly organized and funded, in a rare gesture of togetherness, by the Barcelona city council, the Catalan government and the central government, starting May 9. The 30-hectare Forum site on the city's waterfront has as its centerpiece a huge triangular glass-clad building with a 3,200-seat auditorium. Concerts, conferences — even a campsite for 1,200 children from 16 cities around the world — will have three main themes: sustainable development, peace and cultural diversity.

More prosaically, Spain easily leads Europe in housing construction, and its 17 car and truck factories last year made just over 3 million vehicles, behind only France and Germany in Europe, and seventh worldwide. On a tastier note, Spain's recent olive harvest will press to about 1.5 million tons of oil — never mind that this is almost double its E.U. subsidy quota.

For one final indicator of just how far the nation has come, consider the humble prawn, which inspires near-religious fervor in national cuisine but which in outsiders' eyes has typically been lumped with so many other stereotypes of Spain … bullfights, sangría, hooded Holy Week processions. Now a group of scientists at the University of Alicante — in a joint E.U.-funded project with colleagues in Germany and Finland — has found that the prawn can do more than adorn paella. They have shown that vegetable seeds — onions, tomatoes, beans, peppers and others — when encapsulated in a polymer made from discarded prawn peelings have a shorter germination time, are more vigorous and are less vulnerable to attack from pathogens. It's not revealed how many peeled gambas have been scoffed in the name of science, but the project pretty much encapsulates modern Spain: working with Europe, growing strongly, resistant … and still with a big appetite for life's pleasures.

• ROD USHER
• Strong, determined and self-confident, Spain is winning over the world in everything from the arts and sport to business and foreign policy