There are plenty of reasons for Basques to be optimistic about the future. Joseba Azkarraga, the region's minister for justice, employment and social security, lists a few of them: income levels in the mountainous northern corner of Spain are among the highest in Europe, unemployment is a low 2.5 percent and the poverty rate is 3.7 percent.

And a bit farther afield, there's Kosovo, which is on the brink of declaring independence from Serbia.

Kosovo proves that new states can form in Europe, Azkarraga said. Just as they cheered on Montenegro's independence after a referendum in 2006 and were buoyed by the recent success of the Scottish Nationalist Party, Basque nationalists are watching what is happening in Kosovo "with respect and interest," Azkarraga said.

"I am an optimist," Azkarraga said of the chances his own region has for independence from Spain. "You simply can't impose identities. A lot of us consider ourselves Basques and Europeans only. We are not Spanish and we are not French."

Search for an identity

The Basque region has long been the summer destination for Spain's elite. Its crown jewel, San Sebastian, is a string of white sand beaches at the foot of the Pyrenees Mountains. The city hosts a major international film festival each year. Further south, the industrial city of Bilbao has become a cultural destination in its own right since the architecturally stunning Guggenheim museum opened in 1997.

Basques are incredibly proud of their heritage and have always maintained a sense of separateness from Spain. The Basque language, whose origins continue to confound linguists, was outlawed during the four decade-long dictatorship of Francisco Franco, as were all signs of Basque nationalism. But many Basques remained unhappy with the autonomous status they were handed after Franco’s death in 1975 and the subsequent transition to democracy.

The Basque separatist group, ETA, has been fighting for an independent Basque state in northwestern Spain and southwestern France since the 1960s. ETA is considered a terrorist group by both Spain and the European Union and is blamed for 800 deaths.

ETA remains a major problem for moderate nationalists like Azkarraga. His Basque Solidarity Party (EA) condemns violence as do the EA's coalition partners the Basque Nationalist Party (PNV). Yet the ongoing violence has sabotaged any possibility of meaningful dialogue between the Spanish and Basque governments, Azkarraga said.

In the end, it's Basque nationalism that suffers, Azkarraga said.

Calls for change

A recent poll showed that 60 percent of Basques are unhappy with the current state of democracy in their region, despite a high level of self-government. Yet there's no clear consensus on what they want from Spain. Some Basque nationalists want reform of the current status as an autonomous region. Others push for a federal system and still others advocate out-and-out independence.

There is, however, general agreement among Basque nationalists that the region should get a chance to decide its future for itself.

The Basque region's premier, Juan Jose Ibarretxe, has vowed to hold a "peace vote" on Oct. 25 that would condemn ETA and demand Madrid sit down with Basque political parties and talk about options for reforming the current system.

Both of Spain's main political parties, the Socialists and the People's Party, are currently gearing up for hotly contested national elections in March. Both have been unequivocal in condemning Ibarretxe's suggestion and insist that the vote has no legal basis.

Return to violence

The current political impasse is a stark contrast to the euphoria in the Basque region just over a year ago. J.P. Linstroth, a leading scholar on Basque issues with Nova Southeastern University in the US state of Florida, visited the region after ETA declared a permanent cease-fire in March 2006. He said there was a lot of optimism that the violence had ended.

A few weeks after he left, ETA then set a bomb off in the parking garage of Madrid's Barajas Airport, killing two people. The terrorist group maintained the cease-fire was still in force, but called it of in June 2006.

Since then, Basque nationalism has been in a crisis, said Linstroth. Basque political activists have faced judicial scrutiny and arrest for alleged ties to ETA.

"I think there are a lot of angry people who feel disenfranchised and caught in the middle," Linstroth said.

Gorka Espiau is a long-time peace activist and an advisor to the Basque government on current peace programs taking place in cities around the region. He agrees that there is a certain amount of pessimism because of the return of violence.

During the cease-fire, "we were very optimistic" he said. "With the killings and bombings happening again, it creates a very depressing atmosphere for everybody. We thought this was something we left in the past."

Hope for a peaceful future

In January, ETA promised "long years of conflict" in a rare interview with the Basque newspaper Gara. In the same interview, ETA cited Kosovo and Scotland as models for independence and offered them as proof that the goal of breaking away from Spain is not a utopian fantasy.

Espiau also sees Kosovo as offering hope, but for a different reason. Kosovo's situation is very different, but it does show that the future of a nation can be negotiated. He said the same goes for Belgium and Scotland.

Espiau said he hopes the EU will support the Basque region's effort to hold a "peace vote" that would open a dialogue with the Spanish government. For the most part, the EU has maintained that the Basque problems are internal and has refrained from getting involved.

Paul Rios, who coordinates Lokarri, a group which advocates dialogue instead of violence in the Basque region, said when looked at from a long-term point of view, there is reason for optimism. He's called the ETA a dinosaur. It's the last violent national conflict in Western Europe and with the vast majority of society against ETA, the group simply can't last much longer, he feels.

"It's one thing to say that the situation today is very complicated," Rios said. "But we are on an irreversible road to peace."