Order Code RS22615
March 1, 2007
Spain: Current Issues and U.S. Policy
Steven Woehrel
Specialist in European Affairs
Foreign Affairs, Defense, and Trade Division
Summary
In the more than three decades since the death of Spanish dictator General
Francisco Franco, Spain has become a mature democracy and has experienced rapid
economic growth. It has also become an increasingly important player internationally,
including in NATO and the European Union. The United States and Spain have
generally enjoyed good relations. However, problems have arisen in recent years over
such issues as the war in Iraq, promoting democracy in Latin America, and the tactics
to be used in fighting the war on terrorism. This report provides information on Spain’s
current political and economic situation, its struggle against Islamist terrorism, and its
relations with the United States. It will be updated as needed.
Background
Due to the repressive regime of Spanish dictator General Francisco Franco, Spain
was isolated from key developments elsewhere in Europe after World War II, such as the
success of democracy, free market economics, and the establishment of the European
Union and NATO. Franco’s death in 1975 sparked a sea change in Spanish domestic and
foreign policy. Within three years, Spain moved from dictatorship to democracy.
Economic reforms begun in the late Franco period were expanded and rapid economic
growth ensued. Spain joined NATO in 1982 and the European Union in 1986. Spain has
played an increasingly prominent role in the EU and other international bodies, with
Spanish diplomats and politicians often assuming positions of leadership.
The United States, looking for reliable allies in the Cold War, acquired naval and air
bases in Spain in exchange for economic aid to the Franco regime. This support for
Franco fed anti-American sentiment in Spain, particularly among the Spanish left.
Nevertheless, it should be noted that the United States and Spain have generally
maintained good relations in the post-Franco period, whether under Socialist or right-of-
center governments. According to the terms of an Agreement on Defense Cooperation,
the United States has retained access to several Spanish military bases, including a naval
base at Rota and an airbase at Moron, which is a key transportation link between the
United States and U.S. forces in Iraq and Afghanistan.

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Current Political and Economic Situation
The Socialist Party (PSOE), led by Prime Minister José Luis Rodríguez Zapatero,
has led Spain since the country’s March 14, 2004 parliamentary elections. Zapatero,
whose party had campaigned in part on a pledge to remove Spanish forces from Iraq,
trailed the Popular Party (PP) of staunch U.S. ally Prime Minister José María Aznar in
public opinion polls in the weeks leading up to the vote. However, Islamist terrorists
bombed four commuter trains in Madrid on March 11, 2004, killing 191 persons and
wounding over 1,800 others. The Socialist Party won the elections three days later. The
Socialists won 164 seats in the 350-seat Congress of Deputies, up from 125 in the
previous parliament. The PP won 148 seats, down from its previous total of 183 seats.
The Socialists fell short of an absolute majority, and formed a minority government which
depends on the support of several small leftist and regional nationalist parties.1
Many analysts attributed the unexpected election result in part to public anger over
how the Aznar government handled the response to the bombings. Aznar had insisted the
attacks had been the work of Basque terrorists until a few hours before the polls opened
when several suspected Islamist extremists were arrested. Some voters also may have
blamed Aznar for provoking the attacks on Spain by his support for U.S. policy in Iraq.
Despite his narrow victory, Zapatero has forged ahead with actions that have
infuriated the PP, the Catholic Church, and conservative sectors of Spanish society.
Under his leadership, Spain has legalized gay marriage and liberalized divorce. He has
called for a law that would publicly assign sole blame for the bloody 1936-1939 Spanish
Civil War to General Franco, and force the removal of his name from streets and towns
throughout Spain. Public debate over the war, and the misdeeds of Franco’s dictatorship,
had been muted for more than three decades in order to permit Spain to consolidate its
democracy.
Zapatero has also taken controversial steps in other areas. He negotiated a wide-
ranging autonomy statute with the Catalonia region, giving increased powers over tax
collection, the judiciary, and other key issues to local authorities. Opponents charged that
the move was unconstitutional and would lead to the breakup of the Spanish state.
Zapatero has also tried to negotiate an agreement with the Basque terrorist group Eta to
permanently give up violence. This effort suffered a devastating blow in December 2006
when Eta exploded a bomb placed in a parking lot at the Madrid airport, killing two
persons. Zapatero’s political reputation took a further beating after the attack when he
initially appeared reluctant to give up the negotiations. After withering criticism from the
PP and even from some in his own party, he acknowledged the attempt to negotiate with
Eta had been a mistake.
The PP has largely failed to capitalize politically on Zapatero’s missteps on the Eta
peace talks. The PP and the PSOE remain in a virtual dead heat in public opinion polls.
1 The PP maintained control of the Senate, which represents Spain’s regions. However, the
Senate has much less power than the Congress of Deputies. For example, efforts by the Senate
to block or alter legislation can be overridden by a simple majority of the other body. King Juan
Carlos I is Spain’s head of state, but his powers are mainly symbolic.

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Some analysts believe that voters may be turned off by the PP’s aggressive partisanship
under leader Mariano Rajoy. New parliamentary elections are due in 2008.
Spain’s Economy. Spain’s economic performance has been impressive in recent
years. Growth in Gross Domestic Product has exceeded 3% per year for every year in the
past decade, with the exception of 2002. Year-on-year GDP growth was 3.8% in the third
quarter of 2006. The Socialists have continued sound fiscal and monetary policies similar
to those of their PP predecessors. A tax reform has reduced burdens on individuals and
corporations. Inflation is decreasing, falling to 2.7% in 2006. Spain’s strong economy
has produced many new jobs. Unemployment is falling, but remains substantial at 8.1%
in the third quarter of 2006.2
Spain and Islamist Terrorism
Spain has been a key base for Islamist extremists throughout Europe, including some
of those who carried out the September 11, 2001 attacks in the United States. In
September 2005, Spain’s High Court convicted a group of Islamist extremists accused of
assisting in the September 11 attacks on the United States. The group’s leader, Imad
Eddin Barakat Yarkas, was sentenced to 27 years in prison for conspiring with the 9/11
plotters, but was cleared of charges of murder. Seventeen others were sentenced to lesser
terms, mainly for membership in a terrorist group. Six defendants were acquitted.
Spanish police have made progress in breaking up the terrorist cell responsible for
the March 11 attack. Spanish officials determined that the Al Qaeda-linked Moroccan
Islamic Combatant Group carried out the bombings. On April 3, 2004, seven men
suspected of involvement in the Madrid attacks were killed when they blew themselves
up after they were surrounded by police. Police found evidence that the group was ready
to commit additional attacks. Twenty-nine other suspects in the 3/11 attacks went on trial
in February 2007. Several figures reportedly associated with the 3/11 bombings remain
at large.3
Spanish police remain concerned about possible “sleeper cells” that may continue
to operate in the country. They are particularly concerned about terrorists who leave
Spain to fight against U.S. forces in Iraq and may then return to Spain or other countries
to launch new attacks. In January 2006, Spanish police arrested a militant and 20
associates involved in recruiting Muslims from Spain to fight in Iraq. Spanish officials
are worried about terrorist recruiting efforts in Ceuta and Melilla, two Spanish enclaves
on Morocco’s coast. More than 300 men have been imprisoned in Spain for offenses
related to Islamist terrorism. France, Britain, Italy, and Spain have reportedly developed
a list of about 200 suspected Islamist terrorists at liberty on European soil, 20 of whom
are living in Spain.4
2 Economist Intelligence Unit Country Report: Spain, February 2007.
3 Daniel Wollis, “Spain Finds Al-Qaeda Tie Runs Deep,” Associated Press wire service, March
11, 2005.
4 “The Jihad in Spain,” El Pais English edition, January 7, 2007, 2.

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Observers believe Prime Minister Zapatero’s philosophy on fighting terrorism may
differ somewhat from that of the United States. Zapatero has said that he views military
force as a “last resort” in the war on terrorism. He has stressed the need to address social
and economic roots of terrorism both in Spain and in Islamic countries. He has called for
an “alliance of civilizations” among Western countries and Islamic ones. Zapatero has
underlined the need to integrate the Muslim population in Spain. Estimates of the Muslim
population (mainly of Moroccan or Algerian ancestry) run from 600,000 to 1 million, out
of a total Spanish population of 44 million. Most have been in Spain less than 20 years.5
Spain has boosted law enforcement resources devoted to fighting Islamist terrorism,
a change from the period before March 11, when the main focus of Spanish efforts was
on the Basque terrorist group Eta. (The 9/11 attacks had only a modest impact on Spain’s
counterterrorism priorities.) Improvements include enhancing coordination between
Spanish law enforcement and intelligence bodies, establishing an integrated database of
suspects, and increasing the number of law enforcement officers and Arabic language
translators. Spain has strongly backed anti-terrorist cooperation with its EU partners,
although these efforts have reportedly been hampered by some countries’ reluctance to
share sensitive intelligence. Spain has also been eager to highlight its cooperation with
the United States in fighting terrorism. In March 2005, the two countries set up a group
of experts and prosecutors to improve legal and police cooperation on terrorism. Senior
U.S. and Spanish officials have also met to try to improve the flow of anti-terrorism
intelligence between the two countries.
In November 2005, Spanish press sources claimed that CIA planes, perhaps carrying
terror suspects, made at least 10 secret stopovers at Spanish airports in Majorca and the
Canary Islands between January 2004 and 2005. Spanish officials replied that all flights
concerned were legal under Spanish law, but pledged to be “vigilant” about such flights
in the future. The issue is politically sensitive due to European investigations into alleged
secret CIA detention facilities in Eastern Europe and abuse of detainees allegedly
committed or facilitated by the United States in various parts of the world.6 On February
9, 2007, the Spanish government agreed to release to a Spanish High Court judge
documents providing details on the secret flights. The judge is investigating whether
terror suspects were held illegally or tortured in Spain. The government says that it has
no evidence that such crimes took place on Spanish soil, but has conceded that the flights
could have conveyed detainees to other countries where crimes were committed.
U.S.-Spanish Relations: Current Issues
U.S.-Spanish relations deteriorated after Prime Minister Zapatero took office in
2004. Zapatero has shifted Spain’s foreign policy from the strongly pro-U.S. focus of the
Aznar government to favoring ties with EU partners France and Germany. Zapatero has
also placed more emphasis on strengthening the European Union’s foreign policy role
than his predecessor did. After his election victory, Zapatero strongly attacked U.S.
policy on Iraq in highly undiplomatic terms, claiming that it was based on “lies,” and
5 “Setting an Example?: Counterterrorism Measures in Spain,” Human Rights Watch report,
January 2005.
6 Renwick McLean, “Spaniard Calls CIA Plane Case ‘Very Serious,’” New York Times,
November 16, 2005, 7.

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suggested that Americans vote President Bush out of office in November 2004.7 Since the
re-election of President Bush, Spain has tried to repair its relationship with the United
States, including with the exchange of many high-level visits. Personal ties between
President Bush and Zapatero reportedly remain cool, however. The two leaders have yet
to hold a bilateral meeting. The United States and Spain enjoy important links in other
areas, including increasing cultural ties between Spain and Americans of Hispanic
descent, and a strong economic relationship. The United States is Spain’s largest export
market outside of the European Union.
Iraq. Iraq has been a major point of tension between the United States and Spain.
On April 18, 2004, the day after the new Spanish government took office, Zapatero
announced the withdrawal of Spain’s 1,300 troops from Iraq. In a five-minute phone call
to Zapatero, President Bush expressed regret about the “abrupt” Spanish decision and
warned against taking actions that would give “false comfort to terrorists.” Some U.S.
officials sharply criticized the way the withdrawal was planned, saying it was done
without proper coordination and in an “unprofessional” way that could unnecessarily
jeopardize operations and lives.8 After the January 2005 Iraqi elections, Zapatero offered
to train Iraqi soldiers in demining at a site near Madrid, as well as to contribute to a
NATO trust fund to support Iraqi security forces.
In October 2005, Spain’s High Court issued warrants for the arrest of three U.S.
soldiers for firing on a Baghdad hotel and killing a Spanish cameraman in April 2003.
The men had been exonerated by a U.S. military investigation, which concluded that
enemy troops had been firing from the hotel at U.S. forces. The Spanish government
challenged the warrants on technical grounds, saying that the court must first rule that the
case merited prosecution. The warrants were then withdrawn, but reissued in January
2007 after the High Court made such a ruling.
Afghanistan. Despite conflicts over Iraq, the United States and Spain have
continued to cooperate in Afghanistan. Spain currently contributes about 700 troops to
the NATO-led International Security Assistance Force (ISAF). Spain operates a
Provincial Reconstruction Team in a remote region of western Afghanistan and leads a
forward support base in Herat, in cooperation with Italy. The Spanish force has suffered
losses. In August 2005, 17 Spanish soldiers died when their helicopter crashed during a
training exercise. In 2003, Spain lost 62 peacekeepers when the plane transporting them
home from Afghanistan crashed. At a meeting of NATO defense ministers in the Spanish
city of Seville in February 2007, Spain rejected U.S. calls to send troops to southern
Afghanistan, where the potential for conflict with Taliban insurgents is high. Instead,
Spain has offered four unmanned aerial reconnaissance aircraft and training for the
Afghan army.
Latin America. U.S.-Spain relations have been negatively affected by differences
over Venezuela and Cuba. The Zapatero government has sought to improve ties with the
leftist regimes in both countries. Spanish officials say that they are dedicated to the same
7 Keith Richburg, “Spain’s Next Prime Minister Says U.S. Should Dump Bush,” Washington
Post, March 18, 2004, 23.
8 Robin Wright and Bradley Graham, “Spain Plans to Hasten Withdrawal of Troops,” Washington
Post, April 22, 2004, 25.

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human rights goals as the United States in the region, but believe that engagement, rather
than isolation, is the best way to secure improvement. Spain has strong cultural ties to
Latin America and Spanish firms are major investors there. Spain is a key player in EU
policy toward the region.
U.S. officials expressed particular concern about Spain’s agreement to sell ten
military transport planes and eight coast guard vessels to Venezuela. They claim it is part
of an arms buildup by President Hugo Chavez that could destabilize the region.9 Spanish
officials say that the equipment is earmarked for anti-drug trafficking operations. In
January 2006, the United States blocked the sale of the planes, by refusing to permit the
use of U.S. military technology in them. Spanish officials responded that the U.S. move
was unjustified and that the sale would go forward after the U.S. parts were replaced by
technology from other countries. However, Spain cancelled the aircraft deal in October
2006, after it failed to find the replacement parts it was seeking.
Middle East. In November 2006, Spain, France, and Italy proposed a peace plan
for the Israeli-Palestinian conflict. The plan would involve a cease-fire, exchange of
prisoners, and the formation of a national unity government by the Palestinians.
International monitors would oversee the cease-fire, and an international conference
would be held in Madrid to restart Middle East peace efforts.10 However, other EU
countries, taken off guard by the Spanish initiative, were unenthusiastic about the plan,
and it has not been adopted as EU policy. The United States did not publicly denounce
the plan, but greeted it coolly. The EU, along with the United States, Russia, and the
United Nations, form the “Quartet,” an informal group aimed at promoting an Israeli-
Palestinian peace. In addition to its active role in Israeli-Palestinian peace efforts, Spain
plays an important role in UNIFIL, the U.N. peacekeeping force in Lebanon, contributing
1,100 of the force’s 11,000 troops.11
9 “America and Spain: Renewing a Strategic Partnership,” speech by Deputy Assistant Secretary
of State Kurt Volker, April 2, 2006, from the State Department website, [http://www.state.gov/].
10 Associated Press news agency dispatch, November 17, 2006.
11 EFE Spanish news agency dispatch, December 23, 2006.

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