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PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
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ZNR UUUUU ZZH
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FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 4220
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3275

UNCLAS SECTION 01 OF 05 MADRID 000138 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EUR/WE 
 
E.O. 12958: N/A 
TAGS: PGOV SP
SUBJECT: SPANISH ELECTIONS: BASQUE NATIONALIST PARTY POISED 
FOR ROLE AS KINGMAKER, BUT AT WHAT PRICE? 
 
REF: A. MADRID 105 
     ¶B. 2007 MADRID 1078 
     ¶C. 2007 MADRID 1430 
     ¶D. 2006 MADRID 3111 
     ¶E. 2007 MADRID 0001 
 
MADRID 00000138  001.2 OF 005 
 
 
¶1. (U) This cable is one of a series of reports analyzing key 
issues in select Spanish autonomous regions and the potential 
role the regions might play in the March 9 general elections 
(REFTEL A) and beyond. 
 
¶2. (SBU) SUMMARY.  The national vote in the Basque Country is 
expected to fracture between the regions' principal parties 
and probably will not be enough to tilt the balance in favor 
of incumbent President Jose Luis Rodriguez Zapatero or his 
main challenger Mariano Rajoy.  However, the Basque 
Nationalist Party (PNV) could play a key role as kingmaker in 
a coalition government for either candidate.  The PNV will 
demand as the price of its support a commitment from the 
Spanish national government to begin consultations on the 
political status of the Basque people, but it would be 
difficult for any Spanish government to agree to that 
request.  A series of interviews with a wide swath of 
political and economic leaders in the Basque Country, coupled 
with the latest findings of the region's premier public 
opinion pollster, suggest that the key issues for the 
electorate will be territory, terrorism, and the economy. 
Basque Nationalist leaders are moving forward with an 
ambitious (many would say reckless) plan to call for a 
regional referendum in October demanding that the national 
Spanish government take immediate steps to address the 
"problem" of the Basque political status within Spain, in the 
hopes of forging what they are calling a Political 
Normalization Agreement.  Although both main national parties 
in Spain have declared that such a move would be illegal, PNV 
leaders show no signs of backing down, and this issue likely 
will face the leader of the next Spanish government sooner 
rather than later.  END SUMMARY 
 
 
//THE BASQUE COUNTRY AND ITS NATIONALIST TENDENCY// 
 
¶3. (U) The Basque Country ("el Pais Vasco" in Spanish, 
"Euskadi" in the Basque language) is one of Spain's 17 
autonomous communities, equivalent to a U.S. state.  The 
community is located in the north of Spain, with its seat of 
regional government in the city of Vitoria, and its most 
important business and industry located in the community's 
largest city of Bilbao.  The drafters of Spain's post-Franco 
Constitution in 1978 certainly had the Basque Region in mind 
when they established Spain's autonomous communities as an 
attempt to compromise the historic conflict between 
centralism and federalism.  For reasons of language, culture, 
and history, Basques have always seen themselves as different 
from Spaniards and have negotiated a level of autonomy that 
is the envy of other provincial governments in Europe.  The 
three Basque provinces in Spain that make up this autonomous 
community collect their own taxes in coordination with the 
Spanish government, and the Basque Region maintains its own 
police force, known as the Ertzaintza.  This region is one of 
the wealthiest regions of Spain, with GDP per capita roughly 
20% higher than that of the EU average.  It is said that 
Spain's most tasty culinary dishes and best highways can be 
found in the Basque Country, and every summer tens of 
thousands of tourists flock to the beaches near the northern 
city of San Sebastian. 
 
¶4. (U) Despite the high quality of life that Basques have 
enjoyed in recent years, a significant nationalist tendency 
continues to agitate for more authority and responsibility, 
and many in the Basque Country seek outright independence. 
This tendency has manifested itself both in efforts by 
nationalist politicians working within the Spanish political 
system, but also in violent acts by the terrorist group known 
as Basque Fatherland and Liberty (ETA).  Since 1968, ETA has 
been responsible for thousands of terrorist attacks and 
bombings, caused the deaths of over 800 people, and has been 
involved in numerous kidnappings for ransom.  ETA has 
alternated between de facto states of war with the Spanish 
government and efforts to achieve peace through negotiation 
and dialogue.  The terrorist group in June of 2007 broke a 
"permanent cease-fire" it had declared in March of the 
previous year (REFTEL B), and since that time has been trying 
its best to commit terrorist acts against the Spanish state. 
Months of Spanish operational successes coupled with ETA's 
marginalization as a political and social force in the Basque 
Country have left the group disabled and disoriented, but 
still with the capacity to carry out attacks (REFTEL C). 
 
MADRID 00000138  002.2 OF 005 
 
 
 
¶5. (U) ETA has tried and will continue to try to make its 
presence felt in advance of Spain's general election.  The 
Zapatero government embarked on a controversial and 
ultimately unsuccessful policy of peace negotiations with the 
terrorist group that was for all intents and purposes broken 
by a bombing at Madrid's international airport on December 
30, 2006 that claimed the lives of two Ecuadorian nationals 
(REFTELS D-E).  President Zapatero has told Spanish citizens 
that he started on a path of peace negotiations with the 
terrorist group in good faith (as every previous democratic 
government in Spain has to one degree or another), because he 
saw an historic opportunity to put an end to ETA violence 
once and for all.  He says now that the terrorists rejected 
their opportunity, he will give no quarter in the fight 
against ETA.  The opposition Partido Popular (PP) of Mariano 
Rajoy criticized Zapatero's efforts at every turn, and have 
sought for many months to gain electoral advantage from the 
issue. 
 
¶6. (SBU) Voters in the Basque Country will go to the polls on 
March 9 to fill 18 of the 350 seats in the Spanish Congress. 
Although the Basque vote will likely fracture between the 
region's three main parties (nationalists, socialists, and 
conservatives) and by itself will not be enough to make the 
difference for the Socialist party (PSOE) of incumbent 
President Zapatero or the PP of his main challenger Mariano 
Rajoy, Basque leaders tell us their potential role as 
kingmaker will become clear in the days following the 
election.  As neither of the main parties is expected to win 
an outright majority, the winner would then be forced to 
enter into pacts with smaller parties to form Spain's next 
government.  The Basque Country's three main political 
parties are the Basque Nationalist Party (PNV), the Basque 
Socialist Party (PSE), and the Basque People's Party (PP). 
The PNV won seven seats in 2004 and formed part of the first 
Zapatero government, but has said publicly that its support 
for a future Zapatero legislature cannot be guaranteed.  PNV 
leaders have hinted that the party may be open to pact with 
the PP should Rajoy make a strong showing, although it is 
hard to see how the PP would agree to the PNV's main demand 
and reopen discussions on the political status of the Basque 
Region. 
 
¶7. (SBU) PNV Secretary General Jesus Maria Pena told Poloff 
in mid January that his party would not enter into a pact 
with President Zapatero if the PSOE loses the election 
(although he did not make a distinction between the popular 
vote and the total number of parliamentary seats), adding 
that his party has never joined a government with a "losing" 
Spanish political party and would not do so this time.  We 
take this to mean that if Zapatero does not win a plurality 
of the seats in Congress, he will not be able to count on the 
PNV's support to form a minority government.  The most 
reliable current polling predicts the PNV will again win 
seven seats in the Spanish Congress (with the Basque 
Socialists tallying eight and the PP three), but it is 
unclear how important those seats may be in forming a second 
Zapatero government or shifting the balance to Rajoy.  For 
reference, in 2004 the PSOE won 164 seats of the 176 needed 
for a majority and the PP won 148.  The PSOE was forced to 
form a coalition government with the PNV and a number of 
smaller leftist and nationalist parties.  The PNV may very 
well help play the role of kingmaker again, but the 
victorious party will likely need once again the support of 
additional parties.  Basque leaders have said publicly (and 
confirmed to us privately) that the price of their support 
would probably not be quantified in a demand for a PNV 
minister in the next Spanish government, but rather that the 
next Spanish President make a commitment to resolve the 
current "political problem" in the Basque Country and move to 
redefine the political status of Basques in Spain. (discussed 
below). 
 
 
//KEY ISSUES FOR BASQUE VOTERS// 
 
¶8. (SBU) A series of interviews with a wide swath of 
political and economic leaders in the Basque Country, coupled 
with the latest findings of the region's premier public 
opinion pollster EuskoBarometro, suggests that the key issues 
for the electorate will be territory, terrorism, and the 
economy.  PSE leaders say that Basque voters will take a look 
at the past four years of Zapatero and reward the President 
for keeping most of his electoral promises and bettering 
their lives.  They say the PP has offered nothing but 
obstruction and conflict and has gotten in the way of 
Zapatero doing "the people's business."  PSE leaders say that 
 
MADRID 00000138  003.2 OF 005 
 
 
they have stood strong in the face of ETA terrorism and have 
improved the region economically through initiatives such as 
paving the way for the AVE, Spain's high-speed train service, 
to pass through the community.  The PP counters that Zapatero 
has allowed the "fabric of the Spanish nation to tear" by 
devolving more influence and responsibility to regions such 
as the Basque Country and Catalunya.  They also argue that 
ETA has been allowed to regain the upper hand after being 
weakened during former PP President Aznar's eight years in 
office.  Basque PP leaders express confidence that their 
party will win the national elections and say they would then 
focus on strengthening the economy, strengthening the Spanish 
nation, and fighting ETA terrorism.  Each of the main 
national parties says that voter turnout will be key, 
although this still remains the great unknown. 
 
¶9. (SBU) The issue of the economy has only come to the 
forefront in recent weeks (despite dogged efforts by the PP 
to convince Spanish voters that the economy is headed for 
recession).  Senior officials in the Basque Chamber of 
Commerce and the Confederation of Basque business leaders 
(Confebask) say that, overall, the economy in the Basque 
Country remains among the strongest in Spain.  They say that 
while the region has been and will continue to be affected by 
some of the economic problems plaguing the rest of Spain 
(rapidly cooling construction sector, rising unemployment), 
the economic fundamentals are sound.  These officials claim 
that neither Basque industry nor its famed banking sector 
have shown any worrisome downward trends.  Only a small 
percentage of Basque residents have had trouble paying their 
mortgages, and the tourism industry has recovered from 
previous years when the threat of ETA violence kept many 
away.  The past few years have been good ones for the 
majority of Basque voters, who have seen their economic 
status rise and their fear of terrorism decrease.  Basque 
leaders tell us that the local electorate is sophisticated 
enough to realize that their personal financial situations 
have greatly improved during the recent Spanish economic boom 
and that they are in a good position to weather any near-term 
bumps in the road.  One Basque business leader made the point 
that the economy may indeed be heading south, but there would 
not be many voters who would feel enough of a pinch in the 
pocketbook by the March 9 elections to have this play a 
decisive role in their vote. 
 
¶10. (SBU) EuskoBarometro polling and discussions with the 
main political parties indicate that the vast majority of 
Basque voters reject the use of violence as a form of 
defending political objectives.  These voters however are 
more pessimistic than they were just two years ago that ETA 
would renounce the use of violence.  Most political leaders 
say that ETA has been defeated as a political and social 
force, but that it still retains the capability to commit 
acts of terror.  The majority of the region's voters appear 
to believe that Zapatero acted in good faith when he tried to 
bring an end to ETA through negotiations, but they are 
divided on whether future olive branches should be extended 
to the terrorist group.  These voters tend to support the PNV 
and PSE, while PP voters remain vehemently opposed to any 
future negotiations.  Although the theme of ETA remains 
present in all discussions with Basque political and economic 
leaders, the terrorist group no longer appears to occupy a 
central position in Basque political discourse--although the 
PP tries to keep the spotlight on the group.  National PSOE 
and PP leaders maintain that no discussion on the future of 
the Basque Country can take place until ETA has disarmed and 
disbanded.  PNV leaders counter that negotiations on the 
political status of the Basque Country must proceed "as if 
ETA did not exist," and they are poised to push this issue to 
the forefront of the Spanish political debate shortly after 
the new government comes to power. 
 
¶11. (SBU) The official announcement on February 8 by Spanish 
investigative magistrate Baltasar Garzon that he was 
suspending the private and public activities of two Basque 
parties believed to have ties to ETA (Basque Nationalist 
Action -ANV and the Basque Communist Party-PCTV) had been 
telegraphed for several weeks and thus came as no surprise. 
ANV and PCTV join ETA's former political front organization, 
Batasuna, as parties to have been outlawed under the 2002 Law 
of Political Parties for their alleged support for ETA 
terrorism.  After Batasuna was officially banned in 2003, it 
is believed that many ETA supporters joined the electoral 
lists of ANV and PCTV, most recently for Spain's local and 
regional elections in May 2007.  These two parties fared 
quite well and won a number of seats in the Basque regional 
parliament and in numerous city halls around the region. 
Judge Garzon's ruling outlawing ANV and PCTV on a national 
 
MADRID 00000138  004.2 OF 005 
 
 
level does not affect these parties' activities in parliament 
or at the local level.  The mainstream Basque political 
parties appear to be split on how Judge Garzon's ruling might 
affect the voting on March 9.  It is believed that the 
outlawed parties would have been able to count on around 
150,000 votes, but it is unclear how many of the more 
"moderate" of the radical leftist Basque voters will throw 
their support to PNV, and how many will stay at home on 
election day or turn in blank voting cards.  Our PNV contacts 
tell us they are spending a lot of time reaching out to these 
voters to convince them that they are the only viable 
nationalist party remaining.  However, PSE and PP leaders 
believe that the radical left will want to send a message to 
the PNV that they no longer represent their interests and 
will in fact choose to sit out this election.  This would 
most likely help the Basque Socialists improve their relative 
electoral strength. 
 
//THE IBARRETXE PLAN AND A POTENTIAL OCTOBER PLEBISCITE// 
 
¶12. (SBU) PNV leaders say they are looking to join a 
government willing to take seriously its proposed initiative 
that would, in their words, "resolve the Basque conflict." 
In 2003, the PNV proposed to alter the 1979 Gernika Statute 
(which defined the political structure of Spain's autonomous 
communities) through an initiative they called the Plan 
Ibarretxe.  This plan is named after the current Basque 
Lehendakari (U.S. governor equivalent), Juan Jose Ibarretxe, 
and seeks the right to Basque self determination as a region 
"freely associated" with the Spanish state.  According to an 
official PNV document provided to the Embassy, Lehendakari 
Ibarretxe's plan is an institutional offer to the Spanish 
president based on two principles: the rejection of terrorist 
violence and a respect for the wishes of Basque society.  The 
plan calls for a plebiscite to be held on October 25, 2008 
that would a) demand that ETA demonstrate its willingness to 
definitively cease its terrorist activity and enter into 
peace negotiations with the Spanish government and, b) send a 
mandate to all Spanish political parties to begin a process 
of negotiations with the aim of reaching agreement on a new 
framework of relations between Basques and the central 
Spanish government.  The end goal would be to create what 
they call a Political Normalization Agreement. 
 
¶13. (SBU) The initial proposal was approved by the Basque 
Parliament in December 2004 and sent to the Spanish Congress 
for review, where it was rejected by a wide majority in 
February 2005 on the grounds that it contravened the Spanish 
Constitution.  Many Basque nationalist political leaders have 
argued that the original referendum on the Constitution in 
1978 produced in the Basque Country both the highest 
abstention rate and the highest percentage of "no" votes in 
all of Spain (the PNV endorsed the abstention on the grounds 
that the Constitution was being forced on them, and an 
abstention was therefore the lesser of two evils).  These 
leaders argue that for these reasons, Basques should not be 
bound to a constitution they never endorsed.  Senior PNV 
officials told us that a majority of Basque voters had an 
"uneasy" feeling about their political status in Spain and 
wanted to open up a national debate.  These Basque leaders 
said that, while they would never be responsible for the 
downfall of a Spanish national government, they did feel an 
obligation to their voters to move forward with the October 
referendum. 
 
¶14. (SBU) Not surprisingly, the regional representatives of 
the two main national parties say that this plebiscite is 
illegal and will not go forward.  They point to 
EuskoBarometro polling indicating that Basque voters are 
split on whether the Plan Ibarretxe is a visionary document 
or a source of instability, and that there has never been a 
clear trend in the region toward either independence, 
federalism, or autonomy.  Currently, only one-third of Basque 
residents polled by EuskoBarometro favor outright 
independence, and the PSE and PP both pledge to do what they 
can to thwart the efforts of the Basque President to move 
forward with the plebiscite.  Lehendakari Ibarretxe has been 
traveling outside of Spain to explain his plan to drum up 
international support for the Basque cause, and is due to 
tour the U.S. in mid-February and deliver a speech at 
Stanford University on the 14th.  The PNV continues to 
publicly criticize both the PSOE and PP for what it calls 
those parties' "intransigence in resolving the Basque 
problem."  As the PNV will look to join in a coalition 
government with the victorious party, the question now 
becomes what the price will be for its support.  PNV leaders 
clearly show no signs of backing down on their efforts to 
move forward with the October referendum, and this issue 
 
MADRID 00000138  005.2 OF 005 
 
 
likely will face the leader of the next Spanish government 
sooner rather than later. 
LLORENS