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Aznar sets up pact to take power in Spain

Spain's conservative Popular Party and the Catalan nationalists reached agreement last night on a pact that will enable the PP leader, Jose Maria Aznar, to form a government.

The deal ends two months of limbo following inconclusive elections in March and removes the immediate prospect of fresh elections.

Mr Aznar may have to wait another week before he is voted in as prime minister, after a parliamentary debate which is akin to the Queen's Speech in Britain.

Mr Aznar and Jordi Pujol, the leader of Catalonia's Convergence and Union Party (CiU), met until late yesterday to give their approval to a deal painfully hammered out over the past weeks.

The deal must be submitted to the CiU's ruling committee, probably tomorrow. A Catalan spokesman made clear that this would be more than a rubber stamp, and the PP should not assume it was home and dry.

The PP has been champing at the bit throughout, while the Catalans have been playing a waiting game, to the point that commentators talk of Mr Aznar having been humbled, even humiliated, by the Catalans savouring their moment of power.

Mr Aznar was forced to this point by falling 20 seats short of an absolute majority in elections on 3 March. He won backing from four MPs from the Canary Islands, but needs the 16 Catalans to rule.

Humbled or not, Mr Aznar has probably assimilated more knowledge of Catalonia in the past seven weeks than in the last 10 years.

The deal is likely to include concessions to Catalan nationalism that go beyond anything contemplated by the outgoing Socialists, and which will make the PP's Francoist forebears turn in their graves.

At the heart of the pact is regional financing: Catalonia will receive 30 per cent of revenues raised by Madrid. Road-traffic control will be transferred to Catalonia's regional police, provincial "civil governors" appointed by Madrid will be dropped, and military service will be abolished in 2001.

These mark big concessions by Mr Aznar on issues he has opposed in the past.

Felipe Gonzalez, the outgoing prime minister, is kicking into his new role as leader of the opposition. Even before the deal was announced, he declared that he was "very worried" about the regional financing proposals, which he said went too far. They were, he asserted, so revolutionary that they needed months of debate in parliament.

Absolved by a Supreme Court judge of responsibility in the activities of the anti-Basque Gal death-squads - the principal cause of his election defeat - Mr Gonzalez is preparing to blitz the new coalition.

The PP had tried to woo the five moderate Basque nationalist MPs, but the Basques withdrew after failing to win concessions.

It was like haggling over a marriage agreement, a spokesman complained, "and we aren't even in love."