Spanish victor opens dealing for a coalition

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Spain's conservative Popular Party, the victor in Sunday's general elections, admitted yesterday that it would be unable to govern alone, and started to discuss prospects for co-operation with other political forces.

The PP leader, Jose Maria Aznar, said he would have liked more than the 156 seats his party won, 20 short of an absolute majority and only 15 more than the vanquished Socialists. He added that he had opened a dialogue with other parties with a view to making pacts.

As politicians adjusted to the new and inconclusive balance of forces, Eta Basque separatists struck again. A car bomb in the northern city of Irun killed a Basque policeman yesterday morning. The victim, Ramon Doral, was described in Eta's newspaper Egin as an organiser of anti-Eta operations.

A resurgence of Eta terror had been feared in the wake of a PP victory, as the party had promised a hard line against Basque separatism.

Mr Aznar, already beginning to look statesmanlike, said he was proud of the PP's achievement: "We have succeeded in converting the PP into the leading party of Spain and a great party of the centre." But he added: "I know that the situation is very difficult, following the decision of Spaniards that we respect, and the problems are difficult to resolve."

He pledged to form a stable government for the next four years and promised: "We will talk to everyone without exception." He did not specify what kind of co-operation he had in mind, and did not ruled out either a formal coalition or temporary ad hoc deals.

Mr Aznar is under pressure to act swiftly to steady the nerves of the business community, which was disappointed that the party in which it had invested great hopes would not be able to govern without support. Spain's stock exchange suffered the second largest fall in history yesterday. The peseta also fell. Mr Aznar recognised the potentially disastrous economic consequences of a hung parliament.

Obvious candidates for a partnership with Mr Aznar are the nationalist Catalan Convergence and Union party, led by Jordi Pujol, and the conservative Basque Nationalist Party, led by Xabier Arzalluz. These two seasoned old warhorses, veterans of Franco's jails and schooled in the art of screwing benefits from Madrid, are rearing and plunging as they wait for Mr Aznar's outstretched hand.

Neither is making the first move. Mr Pujol's party won 16 seats, one fewer than in the last parliament when he supported Mr Gonzalez for more than two years, but a good showing against a PP offensive in Catalonia. Mr Pujol observed yesterday that the PP, with its centralist espanolista convictions, struck fear into the hearts of many Catalans. His party said that it was not disposed to support Mr Aznar as the Prime Minister.

The CiU's coolness towards the PP is reciprocated. But Mr Aznar may have to eat his pre-election remarks that Catalans were only interested in what they could grasp from Madrid. It was a sign of the times that the habitual victory chorus among PP supporters, of "Pujol, dwarf, learn to speak Spanish", was hushed up by party officials on Sunday night. Without Mr Pujol, Mr Aznar's government is doomed.

The party of Mr Arzalluz, an austere former Jesuit priest, held its five MPs against a PP upsurge in the Basque Country. He has also been riled by Mr Aznar's campaign comment that his 100-year-old party should learn to be democratic before being nationalist.

"We are ready to share in the tasks of government," Mr Arzalluz said, "but it is up to Mr Aznar to offer conditions for coalition or co-operation."

The outgoing Prime Minister, Felipe Gonzalez, 54 today, has shed 10 years in 24 hours and was smiling as he conceded defeat. Freed from the burden of a government dying on its feet and with his party intact, he seems to relish the prospect of moving into his own home for the first time in 13 years and laying into the new government as leader of a strong opposition.