Quotes of the Day

José Luis Rodríguez Zapatero's office in Madrid's Moncloa Palace has an almost Zen-like atmosphere — bright and spare, with cool grey walls and stainless-steel furniture. And there's something Zen-like about Zapatero himself. The Spanish Prime Minister with the beatific smile says his role is not to shape public opinion but to follow it. "I don't want to be a great leader; I want to be a good democrat," he said in an interview with TIME last week. "I accept that when an overwhelming majority of citizens says something, they are right."

Zapatero calls this "citizen's socialism;" the opposition calls it rank populism. Either way it's a far cry from the stubborn conservatism of José María Aznar, the man he replaced five months ago. Aznar brought Spain into the U.S.-led Iraq coalition against the will of his people, and voters ousted his Popular Party (PP) three days after the March 11 Madrid terrorist attacks that killed 191. Zapatero's brand of "citizen's socialism" may be just a slogan — the Tao of political expedience — or it may be a way to impart a democratic glow to a foreign and domestic policy agenda that's long been dear to his Socialist Party (PSOE). But whether it's shtick or statesmanship, it has worked surprisingly well in the early days of Zapatero's government. Often derided as a compromise candidate who wasn't expected to win, Zapatero, 44, is riding high. A poll commissioned earlier this month by the radio network Cadena SER, which is considered close to the Socialists, found his approval rating at 60%, the highest of any Spanish politician in years.

The opposition has been fuming as it watches Zapatero dismantle prize parts of Aznar's legacy. On April 18, the day after he took office, he ordered Spain's 1,300 troops out of Iraq. He set up a government that has as many women ministers as men, and alternates them down the hierarchy, causing some to dub it la cremallera (the zipper). He canned the previous government's pharaonic €4 billion plan to divert water from the Ebro River in the north to drier regions further south, proposing a more modest desalinization program instead. He increased the minimum wage, pledged to do the same for pensions, and launched an unprecedented war against the dark side of Spanish machismo, stiffening laws against domestic violence and proposing the legalization of gay marriage and rapid, no-fault divorces.

A radical democrat committed to feminism is a major departure for Spanish politics, where the most successful politicians — among them Aznar and his Socialist predecessor, Felipe González — were macho men with killer political instincts. Zapatero's bet is that he can govern effectively and retain power simply by giving the people what they want. But that's a fickle foundation for policy. The time is bound to come for Zapatero, as for all political leaders, when he's unable to deliver on that grand promise. Indeed, the season of testing is already upon him. The coming challenges in domestic, foreign and economic policy will determine whether his "citizen's socialism" will work. "Up until now he's been throwing carrots to the masses," says Guillermo de la Dehesa, a prominent Spanish banker and economist. "It's only now that he faces tough issues, and we're all waiting to see how he does."

One of Zapatero's first tasks will be to establish his credentials in foreign policy, especially the Iraq war and the strains within the European Union. Last week he capped his country's about-face on Iraq by hosting the leaders of the E.U.'s antiwar faction, French President Jacques Chirac and German Chancellor Gerhard Schröder, at a mini-summit in Madrid. Zapatero called those countries "the heart of Europe" and inverted U.S. Defense Secretary Donald Rumsfeld's famous jibe by saying "old Europe is like new." A week earlier, during a visit to Tunisia, he called on all other coalition countries to pull their forces out of Iraq.

Zapatero constantly stresses that his government's resolve against terrorism is as firm as ever. The Socialists have faced charges at home and abroad that they only won the election because the bomb attacks scared the country into a retreat. Zapatero told TIME he "respects the views" of those who believe "that when the Spanish people voted for me they voted out of fear," but he contends such views reveal "a lack of knowledge of the Spanish people. This is the country that has suffered most from terrorism, with 1,000 killed by the [Basque] terrorist band ETA over the past 30 years. Our people have learned to adapt and understand that we have to combat [terrorism] by being firm but also by respecting democracy."

In the Parliamentary Commission investigating the March 11 bombings, the Socialists and the PP are battling each other. Last week all parties agreed to call Aznar before the commission. But the PP was furious when a majority refused to hear from witnesses the PP believes would bolster a theory — so far dismissed by police officials — that ETA and Moroccan intelligence were part of the March 11 conspiracy. Spanish authorities are holding 20 suspects in connection with the blasts, which they believe were masterminded by suspected al-Qaeda operative Rabei Osman Sayed Ahmed. He was arrested in Italy in June and awaits extradition. The PP has also made a formal request for Zapatero to testify. It wants to probe whether he was involved in organizing apparently impromptu protests in front of PP headquarters, which they say violated the law against political demos on the day before elections. Aznar won't testify until October. Zapatero said last week he would be willing to testify if called, though he told TIME he thought the request "verges on the ridiculous" since he sees the commission's remit as probing the terrorist attack, not the election.

Chirac and Schröder don't see involvement in Iraq as a litmus test for antiterrorist resolve. But both their governments reacted with notable reserve when Zapatero called the U.S. occupation "a disaster" and "a huge mistake," then yanked his troops, just as France and Germany were seeking to lower the temperature of the transatlantic dispute. The German opposition, which is now polling stronger than Schröder's weakened Social Democrats, is withering in its criticism. "Zapatero made a grave mistake when he immediately announced he would pull Spain's troops out of Iraq, sending a single message to Osama bin Laden: Terror pays," says Friedbert Pflüger, a member of the German Bundestag and foreign policy expert for the Christian Democrats. "With Aznar we had a heavyweight in Europe. Without him we have lost an interesting voice and committed opponent of terrorism in Europe."

The PP considers Zapatero callow but calculating. "The majority of countries in Europe want a strong E.U. that doesn't compete with the U.S.," says Gustavo de Arístegui, the PP's foreign policy spokesman. "Zapatero forgets that out of sheer opportunism. He's an able politician and he saw the tendency of the man on the street. But a government has to be able to take unpopular opinions; that's why they get a four-year mandate."

In fact, Zapatero has shown a commitment to a strong E.U. Last December Aznar blocked agreement on the European Constitution at a Brussels summit, rejecting a proposal that would have reduced Spain's voting weight. Zapatero embraced a similar proposal in June, and has vowed to hold one of Europe's first national referendums on the constitution in February. Spain's strong popular sentiment for the E.U., which has contributed massively to the country's climb to prosperity over the last two decades, makes a positive result all but assured. Even the Popular Party is counselling a yes vote.

Yet Spain's relations with the Continent's two biggest states might not always be so smooth as during last week's get-together. Germany, a net payer to the E.U.'s coffers, is taking a hard line on holding down spending on regional and agricultural funds. Spain has been a net recipient of an average of €6 billion per year of E.U. aid over the last decade, and it wants to be let down easy as those funds begin to flow to new members in the east. It's a problem that a PP government would have faced, too, of course, and Zapatero's aides suggest that better relations with Germany can only help.

On the economic front, Zapatero's critics say he's still learning the ins and outs. He has an exemplary teacher in his Minister of Finance and Economy, Pedro Solbes. Holding the same position from 1993 to 1996, Solbes brought Spain's budgets into trim and got the country ready for the euro zone; then, since September 1999 as European Commissioner for monetary affairs, he was a fierce defender of E.U. budgetary rules. His presence has eased many of the fears Spain's business leaders might have had over the return of Socialists to power after the probusiness Aznar years. The government did well in appointing a seasoned and respected economic team, says Manuel Balmaseda, chief economist of BBVA, one of Spain's largest banks. "These are people who know what they are doing, not just at the national level but also at the international level, and they know what businesses want."

Many expect the Socialists to intervene in business less than the PP did. Four out of five of Spain's largest companies — Telefónica, oil company Repsol, BBVA, and utility giant Endesa — have chairmen appointed by the previous government. Some fear they will get turfed out. But while the government is said to have quietly encouraged Telefónica to invest more in broadband, for instance, few expect it to get heavy-handed. A drastic bloodletting, says José Manuel Campa, professor of finance at Madrid's Institute for Advanced Business Studies, "would send a very bad signal to the markets."

Still, Spain's business community is waiting to see Zapatero's first budget, to be presented later this week. In a speech to high-carat investors in Madrid last Friday, he said the 2005 budget would yield a slight surplus. He vowed to spend 34% more on housing, 7.4% more on education, 6.9% more on health and 6.2% more on police and justice. Some of that will further his ambitious social reforms, many aimed at turning Spain away from its machismo traditions. According to Amnesty International, more than 2 million Spanish women suffer abuse from their partners every year, and putting a stop to it is a human and political priority for Zapatero.

The rest of the new spending, he has suggested, would go to correct Spain's low labor productivity. Part of the problem, he believes, is that 30% of all workers are on temporary contracts. So Zapatero has started discussions with employers and unions to encourage a shift to permanent part-time jobs, which he says would mean more security for workers and efficiency for employers. He also wants to encourage a shift to renting, which, he says, can stabilize the boom in housing prices and promote labor mobility. The goal is to "get over the false choice between efficiency and equality, between social policies and productive policies."

Easier said than done. The government's numbers will be closely scrutinized in the Spanish Cortes in coming weeks and then in the Senate, where Zapatero needs the support of all smaller parties to push it through. While growth remains strong, there are warning signs. According to Eurostat, the country's annual inflation rate in August was 3.3%, a full percentage point above the euro-zone average. That gap has widened since the Socialists took over, a trend they attribute to the country's dependence on imported oil. By the end of the year, Solbes says, he intends to get inflation down to 3%. He has acknowledged it will be "a very difficult task."

Tougher still is unemployment, which is the highest in Western Europe at more than 11%. On that front Zapatero may have already promised more than he can deliver. Earlier this month, he told shipyard workers in Bilbao that he would save the bankrupt state-owned Izar shipyards, even as their holding company was discussing a privatization rescue plan that would mean closures and layoffs. Now striking workers in five cities are calling Zapatero a liar and dozens have been injured in clashes with police. In other words, Zapatero is just beginning to address the questions that cost real money. And already looming is another passionate issue he had hoped to put off: the reform of Spain's pasted-together 1978 constitution. Increasing demands for far-reaching power in some of Spain's 17 autonomous regions, particularly the Basque Country and Catalonia, were tamped down by the Aznar government, which feared that opening a constitutional debate could only bode ill for Spain's unity. Zapatero cannot afford to ignore the problem: his minority government not only has to keep Catalonian Socialist leader Pasqual Maragall happy, but also depends on the votes of the radical pro-independence Left Republicans of Catalonia.

Zapatero took a smart first step in July, when he invited Juan José Ibarretxe, the President of the Basque region — whom Aznar refused to meet for three years — to a formal meeting at Moncloa, with the red, green and white Basque flag fluttering at the door's entrance. But the good feeling didn't deflect Ibarretxe's pursuit of a referendum — considered unconstitutional by the Madrid government — to create a Basque state merely "associated" with Spain. Catalonia's wishes aren't any easier for Madrid to swallow, but already Zapatero has given Maragall a transfer to Barcelona of Spain's telecommunications competition authority — as well as a promise that a Catalonian representative can attend the government's foreign-policy planning sessions. "Imagine the California governor sitting in on [U.S.] National Security Council meetings," says the PP's Arístegui. "Every day Maragall shows his muscle and says, 'You owe me.'"

The constitutional question could reveal Zapatero's already vaunted talante, an aptitude for consensus, as a great strength — or a fatal weakness. Zapatero says he has a "contingency view of history," citing the famous line from Spanish poet Antonio Machado: "Traveler, there is no path, the path is made by walking." If he can finesse the constitutional debate and meet Spain's other domestic and foreign challenges, he will have set the country on a bold new course. But that will be a path the traveler will have to blaze himself, not just follow.

• JAMES GRAFF | Madrid
• Spain's new Prime Minister says he bases his policies on popular will. Tough challenges will test that strategy