The Zen Of Zapatero

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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."