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Cablegate: Spanish Elections: Basque Nationalist Party Poised

VZCZCXRO4554
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0138/01 0420901
ZNR UUUUU ZZH
P 110901Z FEB 08
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

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