LONDON – The Basque autonomy question and its corollary, the future of Europe’s one remaining active, homegrown, terrorist movement, is moving into a new phase, one both subtle and contradictory.

The relatively new Socialist government of José Luis Rodríguez Zapatero works both sides of the street. On the one side it has just convened a meeting of the Anti-Terrorist Pact, a forum where the government and the opposition meet to review a joint approach to Basque terrorism. Despite their bitter differences, as recently as three years ago the Popular Party and the Socialist Party combined their forces in an unsuccessful effort in the Basque regional elections to avoid victory by the moderate Basque Nationalist Party. Both the mainstream parties do their best to stand shoulder to shoulder in their support of the security services which recently had a stunning success in capturing top leaders of ETA, the terrorist arm of Basque nationalism. Many in Madrid are now saying that ETA is effectively smashed.

This overblown rhetoric of victory sharply contradicts the insistence of the Popular Party on ETA’s connections with Islamist terrorists. Even at last week’s meeting of the Anti- Terrorist Pact the PP representatives were arguing that the government should do more to investigate the relationship between the ETA terrorists and the Islamic ones, even though no one in the security services believes that the Islamists who did the bombing had any Spanish allies of any kind.

It’s all a face saving game on behalf of the former PP prime minister, José María Aznar, who has been accused in those crucial three days between the bombing and the election of trying to mislead the electorate by insisting that the bombing was the work of ETA, despite much evidence to the contrary, in his attempt to ensure victory.

But whilst these interparty tensions are being played out Zapatero is also working another side of the street. The new government has changed the tone Madrid takes towards Basque nationalism. Zapatero recently invited Juan José Ibarretxe, the leader of the Basque Nationalist Party, to Madrid, along with the presidents of other regional governments, to discuss measures that would give the regions a more powerful independent voice, even the right to talk directly to the Brussels headquarters of the European Union about issues that concern them.

The question for the future is can Zapatero develop the pace of the dialogue with Basque nationalism so that the hard core is reduced to scores rather than the hundreds and thousands it has been? ETA is down but is certainly not out. On November 14th Batasuna, the political wing of ETA, that used to hold a small number of seats in the Basque parliament but is now banned, is planning to issue a policy document. Already leaked to the press it apparently makes no commitment to abjure violence and has been summarily rejected by Madrid.

But this otherwise conciliatory document suggests this could be the opportunity to resurrect the Lizarra Declaration of 1988 that was closely modeled on the Good Friday agreement that brought an end to IRA terrorism in Northern Ireland. The Lizarra Declaration led to ETA’s first cease-fire without a time limit in ETA’s history. Whilst blame for the breakdown of the truce can fairly be aimed at both sides it is nonetheless true that Aznar’s approach could not have been more different than Tony Blair’s in Northern Ireland. Blair was ready to make concessions, whilst Aznar stuck to his guns arguing that the Basque country already had more autonomy that any other region in Europe. But as Paddy Woodworth, the Irish Times correspondent based in Madrid and a close student of both situations, has argued in the current issue of World Policy Journal, “This is rather disingenuous because, as Aznar must have known, it was Britain’s recognition of the Irish people’s right to determine their own future that brought the IRA to the table, and not the limited powers on offer to the Stormont government. The core issue is really that, while London is now prepared to relinquish control of Northern Ireland, Madrid regards the Basque country as an essential element in the Spanish nation.”

The same could be written about Zapatero’s attitude today, even if his policy is rather softer around the edges than Aznar’s. As Blair talked to Sinn Fein, Zapatero needs to talk to Batasuna and he needs to rescind Aznar’s ban on the party contesting seats in the Basque regional parliament. Moreover, he should withdraw his opposition to Ibarretxe’s planned referendum on Basque self-determination. (In a more conciliatory atmosphere Ibarratxe could well lose it or at least win it by a majority unconvincing enough to pursue independence.) For its part Batasuna, if it is clever, must lean on ETA to declare an indefinite truce.