The proposal also calls for granting Basques the right to send their own representatives to international bodies such as the European Union. Debate is expected in March. Both the ruling Socialists and opposition conservatives are dead set against the proposal, making its passage unlikely. Some call the proposal sedition, treason and a threat to Spanish democracy. Prime Minister Jose Luis Rodriguez Zapatero calls it a "dead-end street". But the Basque leader behind the plan vows to push ahead and call a referendum in his region, setting the stage for another showdown in a country weary of three decades of separatist violence. Indeed, no government wants to lose a piece of its nation, much less a wealthy one that is as key to the national economy as the Basque country, three small but industrially dynamic provinces at the foot of the western Pyrenees.

Politicians and everyday citizens across Spain fear the Basque blueprint is a step toward breaking away completely. If the Basques bolt, Catalonia - the rich region around Barcelona in the north-east - might be tempted to follow suit, analysts warn. The Catalan government is watching keenly as the Basque drama unfolds. Like the Basques, Catalans, with their own distinctive cultural identity and language, also want more autonomy. Catalan officials frequently travel abroad promoting the region as a separate entity from Spain, and the regional government has more than once taken out advertisements in foreign newspapers with maps showing Catalonia with no mention of Spain. But the Catalonia dilemma is a tricky one, politically, for Zapatero.

In Catalonia, his Socialist Party rules in a coalition with a pro-independence Catalan party that backs the Basque proposal. Zapatero also relies on that party, the Republican Left of Catalonia, for support of his minority government in the Spanish legislature in Madrid. "Zapatero is in a difficult situation," said political analyst Alberto Surio. Since 1979, Basques have run their own police force, schools, hospitals and - unlike other semiautonomous regions - collect their own tax revenue.

The proposal engineered by Basque regional President Juan Jose Ibarretxe would go much further, giving the region its own courts and representation at international bodies. The region would be transformed into a "free state" associated with Spain, their status quasi-equal. Basques compare it to Quebec's status in Canada, or Puerto Rico's relationship with the United States. "The nationalists don't dare state it openly, but the plan is a backdoor way of achieving independence for Basque country," said Antonio Cerezo, 56, an employee of a telecommunications company who opposes the blueprint. The plan was passed in a key vote on December 30 by a divided Basque legislature. Approval was assured only when lawmakers considered close to the armed Basque separatist group ETA - blamed for more than 800 deaths since the late 1960s - cast their swing votes in favour. ETA, however, opposes the Ibarretxe plan as insufficient.