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Bizkaia - Bizkaia and the Guggenheim effect

A year on from the Basque separatists' ceasefire and the region is booming, led by Bizkaia, largest of the three Basque provinces. Its capital city, Bilbao, is upgrading its infrastructure to cope with the huge numbers of visitors to the new Guggenheim Museum. It's attracting international banks and technology companies, partly thanks to favourable tax rates. But Madrid is contesting these. Meanwhile ETA extremists remain a threat. Jules Stewart reports.

Bizkaia is one of the three provinces that were united as Euskadi, the Basque Autonomous Region, under the 1978 constitution that decentralized Spain's political administration after the death of the dictator Francisco Franco. It accounts for more than half of the Basque region's GDP and although its economy is now mainly service-based, more than a third of output still comes from industry. However, Bizkaia's GDP is forecast to grow by 4% this year compared with 3.7% for the rest of the Basque Country and Spain.

Over the past couple of years, Bizkaia's star has been finally in the ascendant. Along with the collapse of its industrial lifeblood the Basque Country has had to bear the cross of political terrorism by ETA, the separatist group that since the late 1960s had been waging open warfare for Basque independence, fancifully defined as union with the province of Navarra as well as the three French Basque provinces.

The breakthrough came in September last year when the main Basque political parties and trade unions including ETA's political wing, Herri Batasuna, issued a statement agreeing jointly to seek a solution to the issue of self-determination for the region. A few days later ETA, which by this time had lost most of its popular backing as well as its infrastructure, seized the opportunity to throw in the towel.

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