Occupying the major part of the Iberian peninsula in southwest Europe, Spain has both an Atlantic and a Mediterranean coast, and is dominated by a central plateau. After the death of General Franco in 1975, Spain managed a rapid and relatively peaceful transition to democracy under the supervision of King Juan Carlos I. Since EU membership in 1986, there has been an increasing devolution of power to the regions. For just over 13 years from 1982, Spain had a center-left government, but the right-of-center Popular Party has dominated since 1996.

A vigorous regionalism, suppressed under Franco, now flourishes. Catalonia is an example, with Barcelona its vibrant capital. In the Basque region, the ETA separatists who fight for independence by waging a high-profile terror campaign remain in a minority.

Spain today has one of the lowest birthrates in Europe, just half that of 1975. The influence of the Roman Catholic Church on personal behavior has declined, and attitudes to sexuality are now relaxed. The divorce rate is very low, and family ties remain strong; men often live at home until their late 20s.

Economic growth from the 1970s led to a change in the composition of society. Migration from poor rural regions to the coast was associated with the arrival of job-seeking immigrants from Latin America and – especially – north Africa. A rise in racial tensions and racism has resulted from the subsequent economic downturn and competition for scarce jobs.

Spanish women are increasingly emancipated and more influential in public life, making up 27% of the deputies and senators in the Spanish parliament, and heading 30% of businesses.

Strengths

Spain has one of the fastest-growing OECD economies. Well-qualified labor force with relatively low labor costs. Privatization has introduced greater competition into the gas, oil refining, electricity, and telecommunications sectors. Recent major investment and expansion into the Latin American market.

Weaknesses

Massive foreign penetration of economy and absence of Spanish multinationals. Low investment in research and development, concentration in declining industries, and low productivity – notably in agriculture. Persistent high unemployment.

Profile

Real convergence with the major European economies first became a realistic objective in the late 1980s, as Spain posted the highest investment-led output growth in the OECD. By 1991, GDP per capita stood at almost 80% of the EU average. Recession in the early 1990s was turned around in mid-decade, and growth averaged 4% over 1997–2000, with public debt brought below 60% of GDP by 2001. The economy slowed markedly through 2001, and the annualized growth rate dropped to around 2%. Spain succeeded in meeting the economic convergence criteria necessary for European economic and monetary union and was among the 12 EU countries to adopt the euro fully in January 2002.

Since 1978, Spain has been a semifederal multiparty parliamentary monarchy. Each region has a legislative assembly.

Profile

The PSOE's long period in power blurred the boundaries between party and state. The Cortes (parliament) failed to check executive power, and political disputes were often left to the judiciary, while political corruption undermined voters' faith in Spain's political system. The PP government led by José María Aznar from 1996 benefited from being seen as a fresh start. Its relative success in running the economy helped it win a second term in 2000, despite an electoral pact between the PSOE and the United Left. Ideological issues no longer sharply divide the main parties, which hold similar views on economic policy and EU membership.

Main Political Issues

Increasing regionalism

Spain's 17 autonomous regions all vie for greater funds or independence from Madrid. Many have bypassed central government to borrow funds on the international money markets, and have come close to breaching their legal debt limits. In 1996 the PP government approved a new model of financing for the regions which gave them new powers for raising tax revenue. The Basque separatist movement ETA has, with intermittent cease-fire announcements, waged a protracted violent struggle for independence, prompting large-scale demonstrations against violence. The Basque country, Catalonia, and Galicia each use their own language alongside Castilian Spanish.

Clean government

Initially the PP government suffered less from the corruption scandals which dogged the last years of its PSOE predecessor, but in 2001 its reputation was tarnished by major allegations relating to the Telefonica telecoms group and the Gescarta stockbroking house.

Spain remains an enthusiastic EU member, but has been chary of enlargement, which it sees as a threat to its direct financial benefit. Relations with Morocco, already strained over illegal immigrants, were jeopardized in 2002 over sovereignty of rocky Mediterranean islets. There is a long-standing grievance against the UK over the status of Gibraltar. Recently Spain and the UK have been willing to negotiate, but the colony itself opposes any change. Elsewhere, Spain has sponsored an Ibero-American Community of Nations (a Hispanic Commonwealth). Spain's first contribution to a UN peacekeeping force was for operations in the Balkans.

A substantial, largely state-owned and commercially nonviable defense industry is subsidized for strategic reasons. Full integration of NATO military structures was approved in 1997. Defense spending has fallen in recent years, and is now well below the NATO average. National service has been abolished, with the last conscripts working out their terms of duty in the course of 2002.

Spain lacks natural resources, especially water, and is heavily dependent on imported oil and gas. Coal, mined mainly to generate industry, is a declining but still subsidized sector, concentrated in the Asturias region. Spain has one of the world's largest fishing fleets, but EU restrictions have forced cuts in catches since the 1990s.

Until very recently environmental matters had little significance, but public opinion is becoming increasingly vocal. Renewable energy, although still tiny in extent, is becoming more visible, particularly with the growth of wind farms. The benefits of a national tree-planting scheme to reduce soil erosion have been offset by increasingly frequent intentional forest fires. More land has national park status than any other country in Europe. A long-awaited project to bring water from the Cantabrian mountains down the east coast went to the Congress in April 2001. While necessary to counter desertification in the south, environmentalists oppose the construction of many dams and canals.

The AVE high-speed train links Madrid and Seville; more routes are planned. The state-run rail company RENFE is to be privatized.

Public health care is of high quality and readily available. Public hospitals, although widely considered to be superior, are outnumbered by private ones. In spite of very high tobacco and alcohol consumption, Spain has a healthy population, possibly due to its Mediterranean diet. The incidence of AIDS has risen alarmingly, however, to become the highest in western Europe and higher than that in the USA.

The school leaving age has increased gradually from 14 to 16 since 1990. The latest secondary education reforms, announced in 2000, offer a number of additional subjects, improvements in mathematics, philosophy, and languages, and increasing attention to information technology. Autonomous regions regulate by decree the teaching of languages other than Castilian Spanish, such as Basque or Catalan.

Spain is a major crossroads in the world narcotics trade, and drugs-related crime is rising. Illegal immigration soared in 2000, with authorities in the south unable to cope with the influx.

In the late 1980s, it became fashionable in Spain to compete openly, make money, and acquire consumer goods. Rapid economic growth at this time greatly enriched the professional and managerial classes. The latter became the best-paid, in real terms, in Europe, and Spain quickly became an important market for luxury cars and yachts. In the early 1990s this ostentatious affluence waned in the face of recession and as the unemployment rate soared to become one of the highest in Europe. The boom of 1997–2000 boosted the number of jobs, but also gave rise to anxiety over inflation. By 2001 this boom too had subsided, and there was less financial security, with about one-third of employees on only temporary contracts.

Tourism earnings in 2000 topped $31 billion, with Germany and the UK still accounting for almost 50% of all arrivals. Long dominant in the vacation package sector, Spain has recently adopted marketing strategies to boost additional cultural, historical, and environmental tourism. Several areas began levying an environmental tax on tourist arrivals in 2001. The cut-price package industry has benefited from political turbulence in potential competitor countries in the Mediterranean.

United under Ferdinand and Isabella in 1492, Spain became a dominant force. A long period of economic and political decline followed, however, and by the mid-19th century, Spain lagged behind many other European countries in stability and prosperity.

• 1874 Constitutional monarchy restored under Alfonso XII.
• 1879 PSOE founded.
• 1881 Trade unions legalized.
• 1885 Death of Alfonso XII.
• 1898 Defeat in war with USA results in loss of Cuba, Puerto Rico, and the Philippines.
• 1914–1918 Spain neutral in World War I.
• 1921 Spanish army routed by Berbers in Spanish Morocco.
• 1923 Coup by Gen. Primo de Rivera accepted by King Alfonso XIII. Military dictatorship.
• 1930 Primo de Rivera dismissed by monarchy.
• 1931 Second Republic proclaimed. Alfonso XIII flees Spain.
• 1933 Center-right coalition wins general election.
• 1934 Asturias uprising quashed by army. Failure of attempt to form Catalan state.
• 1936 Popular Front wins elections. Right-wing military uprising against Republic. Gen. Francisco Franco subsequently appointed leader.
• 1939 Franco wins civil war which claims 300,000 lives.
• 1940 Franco meets Hitler, but does not enter World War II.
• 1946 UN condemns Franco regime.
• 1948 Spain excluded from Marshall Plan.
• 1950 UN lifts veto.
• 1953 Concordat with Vatican. Spain grants USA military bases.
• 1955 Spain joins UN.
• 1959 Stabilization Plan is basis for 1960s rapid economic growth.
• 1962 Franco government applies for eventual membership of EEC.
• 1969 Gen. Franco names Juan Carlos, grandson of Alfonso XIII, his successor.
• 1970 Spain signs preferential trade agreement with EEC.
• 1973 Basque separatists assassinate Prime Minister Carrero Blanco; replaced by Arias Navarro.
• 1975 Death of Franco. Proclamation of King Juan Carlos I.
• 1976 King appoints Adolfo Suárez as prime minister.
• 1977 First democratic elections since 1936 won by Suárez's Democratic Center Union.
• 1978 New constitution declares Spain a parliamentary monarchy.
• 1981 Leopoldo Calvo Sotelo replaces Suárez. King foils military coup. Calvo takes Spain into NATO.
• 1982 Felipe González wins landslide victory for PSOE.
• 1986 Joins European Communities. González wins referendum on keeping Spain in NATO.
• 1992 Olympic Games held in Barcelona, Expo '92 in Seville.
• 1996 PSOE loses election; José María Aznar of PP prime minister.
• 1998 Former PSOE minister found guilty of involvement in Basque kidnappings. September, ETA cease-fire; holds until December 1999.
• 2000 Aznar and PP win elections.
• 2002 Euro fully adopted.