The half-day visit, only his fourth to the region in 18 years on the throne, was seen as a gesture of solidarity with Basque businessmen who have increasingly been standing up against the traditional extortion - known as 'revolutionary tax' - by the Eta separatist group.
It was also seen as an attempt to display a sense of normality in the troubled region, where Eta attacks and extortion have badly affected investment.
The protests, organised by Herri Batasuna, Eta's political wing, were relatively minor and the separatists were kept well away from the monarch and Queen Sofia as they opened an industrial exhibition and lunched with 100 leading businessmen. Herri Batasuna, which described the visit as a 'provocation', was planning a midnight demonstration in the port city after the royal couple's departure in favour of independence from Spain.
Police sealed off a street, near the building where the King had lunch, to check a suspected car-bomb that turned out to be a false alarm. They also closed stretches of railway line after callers claiming to be from Eta said bombs had been planted on the lines. None were found.
The vast majority of Basques, although possibly favouring eventual independence, respect the King and Queen and welcomed the visit, cut short because of a recent series of incidents involving separatists. Some Basque politicians had advised against the trip, describing it as 'inopportune' after recent tensions in the region. A poll in the magazine Tiempo this week showed that 71 per cent of Basques questioned had a positive image of the King, compared with 41 per cent three years ago.
An incident during the King's last official visit to the region, in February 1981, was believed to have been a factor in the notorious coup attempt later that month. A group of Herri Batasuna politicians had interrupted a speech by the King in a government building in the town of Guernica, drowning him out with Basque nationalist songs.
The incident scandalised most Spaniards and, along with Eta's terrorist attacks and the surge in the Socialist Party's popularity, may have helped provoke the short-lived coup attempt. Although the monarch defused the attempt by denouncing the coup on television, many Spaniards to this day wonder whether he himself had been in on the plot, which failed to garner the support of all the armed forces.
After 12 years passing from court to court, the 15 separatists who interrupted the King in 1981 were finally acquitted by the Supreme Court last week in a controversial decision apparently aimed at cooling passions. The court ruled the separatists had merely been exercising their right to freedom of speech and were in fact expressing their 'appreciation of the King as a valid and effective interlocutor for satisfying their demands'.
The deaths in police detention last month of two Eta suspects, one described as an accident, the other from natural causes, added to tension in the Basque Country, already high since Eta's kidnapping three months ago of a well-known businessman, Julio Iglesias Zamora. The terrorist group is said to be demanding around pounds 2m for his release.
The King's visit to Bilbao was partly seen as a gesture of support for Mr Iglesias, as well as for other local businessmen who recently announced they would refuse to pay Eta's extortion money. The kidnapping has spawned an unprecedented anti-Eta peace movement that has brought tens of thousands into the streets.
'The Basque people and authorities are standing up with great courage and valour,' King Juan Carlos told the businessmen in an after-lunch speech. 'I am sure that those who maintain the strategy of violence will not succeed in breaking the back of Basque society or destroying the moral and cultural values of the Basque people.'
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