After meeting with Merkel in Chicago, where the two leaders attended the NATO summit, Rajoy said there will be no changes in the austerity drive the Popular Party (PP) government has undertaken. At a news conference, in which he didn’t take any questions, the Spanish leader announced that he will organize a conference for international investors in September and will be meeting with French President François Hollande in Paris in the coming days.

Rajoy said he went to the meeting with Merkel — which he claimed was at the request of the German leader — without “anything in mind” to ask of her.

But government sources said Rajoy told Merkel that the European Central Bank (ECB) must step in and help countries, such as Spain, that have been strictly adhering to Brussels’ austerity formulas. The Spanish prime minister echoed what many other European leaders have been demanding: austerity but with favorable terms for growth.

“The Germans have to realize that they cannot ask any partner who, like us every Friday, hassles citizens [with more measures], to assume the cost, and then there are no results because Europe is paralyzed,” said a top Spanish government official. “In the end, this goes against policy, goes against Germany, and against everyone else. I’m sure they will understand this. We are going to work hard so that they will.”[

“A bailout won’t be necessary,” Rajoy said after he arrived in Chicago for a NATO leaders’ summit. “I don’t really know if Mr Hollande said that, because if he said it, it must be because Mr Hollande has information that we don’t have.”

On Friday, ahead of attending the G8 summit at Camp David, France’s recently sworn-in new leader said that Spanish banks should be recapitalized with Europe’s aid, contradicting earlier statements made by Olli Rehn, the EU commissioner for economic and financial affairs, who said the country can do that on its own.

“It would probably be desirable to have a recapitalization,” Hollande said at a news conference in Washington Friday. “It would probably be necessary for this recapitalization to take place through mechanisms of European solidarity.”

Concern for Spain, as well as the entire economic situation in Europe, was also addressed by US President Barack Obama during a statement he gave following the G8 summit. “Put simply, if a company is forced to cut back in Paris and Madrid, that might mean less business for manufacturers in Pittsburgh or Milwaukee,” the US president said.

Moody’s Investors Service on Thursday cut the debt ratings of 16 Spanish banks by one to three notches, citing the ongoing recession and the government’s own reduced creditworthiness.

But Rehn said he believed Spain could provide its own aid to its financial institutions. “Spain is not comparable to, for instance, Ireland, which had a banking sector many times larger compared to gross domestic product,” Rehn told Bloomberg Television. “Spain has the starting point that it can deal with this challenge on its own without resorting to European assistance.”

In his brief meeting with reporters in Chicago, Rajoy emphasized that independent outside auditors were hired by the Bank of Spain to look at the health of the country’s financial institutions.

He also dismissed the Finance Ministry’s new revision of Spain’s deficit for last year, which could jump to 8.9 percent from the previous figure of 8.51 percent of GDP after auditors examined the budgets of several key regions, which showed a bigger shortfall than previously thought.

“We now know where we are, and from that point, we are going to begin to rebuild,” Rajoy said without commenting further on the new deficit figure.

Meanwhile, opposition Socialist leader Alfredo Pérez Rubalcaba said he would call Rajoy on Monday to coordinate a common strategy ahead of Wednesday’s informal EU summit. “It would be for the best if Rajoy and I defend the same position in Brussels,” Rubalcaba said Sunday.

It was revealed Friday that the Finance Ministry has ordered the State Public Accounts Department to revise the figure based on the 2011 figures included in the financial equilibrium plans of the regions approved on Thursday by the Fiscal and Economic Policy Council.

One of the regions most affected is Madrid, which had earlier declared a shortfall of 1.1 percent of GDP, safely within the target set by the central government of 1.3 percent of GDP. However, regional premier Esperanza Aguirre in February warned that the figure would have to be revised upward. Revenues had been overstated by some two billion euros, meaning that the deficit was 2.2 percent, double the original figure.

Given that Madrid represents 17.8 percent of Spain’s GDP, this will have an impact on the shortfall for the whole of the country’s public administrations.

The equilibrium plans for Valencia and Castilla y Léon also showed bigger deficit than initially stated, 869 million euros in the case of the former and 137 million for the latter.

On taking power in December of last year, the Popular Party government said the deficit had overshot the target of six percent of GDP by over two percentage points. The 8.51-percent figure had been confirmed by the European Commission.

Bankia lost 28 percent of its market value at one point in Thursday’s session on reports, subsequently quashed by the bank and the government, of a run on its deposits.

Despite Moody’s decision overnight to downgrade the ratings of 16 of the country’s banks, including sector leaders Santander and BBVA, the sector as a whole was bolstered by figures released Friday by the Bank of Spain showing that up to the end of March, deposits in the banking system had in fact increased.

Bankia’s shares closed up 23.49 percent at 1.756 euros, with its own brokeage arm particularly active in trades, and with reports of bank employees buying shares. However, Bankia is still down 53 percent from its listing price of 3.75 euros, leaving some 350,000 retail investors, including new chairman José Ignacio Goirigolzarri, with latent losses. Goirigolzarri declared to the National Securities Commission (CNMV) that he owns 23,000 Bankia shares.

Among the rest of the sector, Santander put on 2.97 percent, BBVA gained 3.69 percent, while Popular was up 1.31 percent. The blue-chip Ibex 35 added 0.44 percent to 6,566.70 points.

Spain’s risk premium also steadied. The spread between the yield on the benchmark 10-year government bond and the German equivalent narrowed by five basis points to 484 after having hit a new euro-era record high of 507 basis points on Wednesday.

A government source on Friday said it had appointed US investment bank Goldman Sachs to assess it and assigned a valuation to Bankia parent Banco Financiero y de Ahorro (BFA). The government plans to convert a 4.464-billion-euro loan granted to BFA by the state’s Orderly Bank Restructuring Fund (FROB) into shares, which will give it control of BFA and also of Bankia.

Moody’s cut Santander, Caixabank and BBVA’s ratings by three notches to A3 and those of Banesto and Banco Popular by one notch to the same level, which is also that of Spain’s sovereign debt.

Moody’s cited adverse operating conditions, the economic downturn, an ongoing crisis in the property sector and the reduced capacity of the government to help out these banks as some of the reasons for the downgrades.

“Banks will continue to face highly adverse operating and market funding conditions that pose a threat to their creditworthiness,” the ratings agency said. “The Spanish economy has fallen back into recession in first-quarter 2012, and Moody’s does not expect conditions to improve” this year.

The Bank of Spain said Friday that bank deposits at the end of March were up 0.7 percent from the previous month at 1.16 trillion euros, although compared with a year earlier the figure was down four percent.

The Bank of Spain also said that the non-performing loan ratio of the sector climbed from 8.30 percent in February to 8.37 percent in March, its highest level since August 1994.

Bankia’s shares closed down 14.08 percent at 1.422 euros after having fallen 11.12 percent the previous session. At one point Bankia was down by as much as 29 percent in Thursday’s session. The shares are some 60 percent off their listing price in July of last year of 3.75 euros.

The blue-chip Ibex 35 closed down 1.1 percent at 6,537.90 points.

In a statement submitted to the National Securities Commission (CNMC), Bankia said the pattern of its deposits in the first two weeks of May was of a “substantially seasonal nature,” adding that it is confident that the balance of its deposits will not undergo “substantial changes” over the next few days.

“Bankia’s depositors can rest absolutely assured about the safety of their savings,” the bank’s chairman, José Ignacio Goirigolzarri, said. The secretary of state for the economy, Fernando Jiménez Latorre also ruled out the possibility of a run on the bank.

Bankia has lost over half its market capitalization since Rodrigo Rato resigned as chairman of Spain’s fourth-biggest lender in terms of market capitalization. The former IMF managing director’s departure was followed days later by the government’s decision to take a controlling stake in Bankia’s parent Banco Financiero y de Ahorro (BFA), which effectively also gives it control of Bankia.

BFA reported a profit of 40.9 million euros last year and Bankia earnings of 304.7 million, but the bank’s auditor declined to give its stamp to the results, which are to be restated, in all likelihood presenting a much grimmer picture of the bank’s financial situation.

BFA is heavily exposed to the real estate sector, which has been in a dire slump since around the start of 2008. The government has required the country’s banks to significantly increase their coverage for possible losses from their real estate related assets, which will eat into lenders’ earnings, possibly causing some of them to post losses and cut off dividend payments.

Bankia shareholders’ woes on Thursday coincided with an auction of Treasury bonds in which the government’s debt management arm was obliged to sharply increase the yields offered. Spain’s risk premium climbed eight basis points to 490 basis points after hitting a new euro-era high of 507 basis points on Wednesday.

Latorre suggested the European Central bank should step in to help relieve the pressure on Spain’s sovereign debt.

“We understand we are doing everything necessary in terms of fiscal adjustment policy and structural reforms, and we understand there should be a little bit of reaction from the European Central Bank.

The National Statistics Institute on Thursday also confirmed that Spain slipped back into recession at the start of this year for the second time in three years as GDP declined 0.3 percent in the first quarter.

The memo does not allude to any allegation that has been brought up in the past by NGOs, which say that police are illegally stopping people at bus stops and Metro stations because they appear to be foreign-born.

The ministry’s memo simply tells police officers “to avoid any practice that entails unjust restriction of rights and liberties of migrants.”

For years, NGOs have filed complaints with the Interior Ministry charging that officers were stopping people because of the way they dressed or because of the color of their skin. Interior officials have always denied the allegations.

According to ministry officials, authorities want to clear up any type of ambiguities concerning such practices. But one of the rules in the internal memo will tell officers to stop taking migrants to police stations just because they do not have their identification papers with them. Interior officials also want to prevent large police raids that have taken place in certain areas of cities where migrants usually gather.

The objective, according to Interior officials, is “to put down in writing” certain criteria “to avoid any misinterpretations” of the law.

Next Thursday his ministry will propose new content for a civics education course first introduced by the Socialist government in 2006 and deemed unacceptable by conservatives and the Catholic Church because of references to homosexuality and social inequality. Opponents claimed the course was biased in favor of Socialist initiatives such as legalizing same-sex marriage.

Instead, the government will include references to the role of private initiative in "the creation of wealth" and respect for intellectual property rights. The new course content will also mention global conflicts such as terrorism, religious fanaticism and exclusive nationalisms, while striking out the mentions of "an unequal world," "wealth and poverty" and "the lack of access to education as a source of poverty."

In broad terms, the new course, which is taught at the high school level, places more stress on citizen respect for legal and constitutional limits and uses more generic expressions than the previous version.

Although there was controversy over this one-hour weekly course when it was first introduced, opposition to it has died down over the years. By 2009 there were just 114 conscientious objectors out of a body of 800,000 students, according to the latest count by this newspaper.

On Wednesday, Valls was selected to that key position when Hollande and his new Prime Minister Jean-Marc Ayrault began forming their new Cabinet.

As interior minister, the 49-year-old Valls will be expected to play an important role in helping the Spanish government to finally dismantle the Basque terrorist group ETA. What to do with the ETA prisoners will also no doubt be part of the strategic conversation when he meets with his Spanish counterpart, Jorge Fernández Díaz.

Not only is he fluent in Spanish but Valls also has a strong connection to Spain - he was born in Barcelona to a Catalan father and Swiss-Italian mother, Luisangela Galfetti. His father, the painter Xavier Valls, was a Republican who moved to Paris in 1949 and died in 2006. The younger Valls explained once that his parents wanted to have a child born in Catalonia so they decided that the mother should give birth in Barcelona while they were on vacation in the Catalan capital.

On his father's side, Valls is related to the famous Badalona-born composer Manuel Valls i Gorina, who wrote Catalonia's regional anthem. On his mother's side, his uncle is the famous Swiss architect Aurelio Galfetti, who helped renovate the Castelgrande castle in Bellinzona, Switzerland, considered a Unesco World Heritage site.

"He is a very active and committed man," his uncle told swissinfo.ch news website on Thursday. "In my opinion, I don't think he is the typical French politician."

Manuel Valls joined the Socialist Party at 17 and began his climb up with the help of party grandee Michel Rocard. He joined the staff of parliamentary deputy Robert Chapuis in 1983 and became head of the local Socialist group in the town of Bezons Argenteuil.

His first dabbling in the press came in 1997 when he handled media relations for Prime Minister Lionel Jospin. By 2001, he won his first elected position, becoming mayor of the working class town of Évry, just south of Paris, and was reelected for a second term in 2008. Valls has been a member of the French National Assembly since 2002.

In 1987, he married Nathalie Soulié, with whom he had four children. After divorcing his first wife, Valls married the attractive violinist Anne Gravoin some years back.

His candidacy in the party primaries last October showed that he belongs to the Socialists' more conservative wing. After coming in behind Ségolène Royal in the first round, Valls then endorsed Hollande in the second round.

In an article about the French Socialists last August, two months before the Socialist primaries, The Economist said that Valls has "a refreshingly modern view of the left." But the magazine lamented the fact that he was considered "too young to be a serious contender" for his party's nomination. "The day the paleo-Socialists of the Mitterrand generation allow such figures to emerge would be the dawn of a real revolution," The Economist pointed out.

“In the health sector, which I belong to, and irrespective of its management, there is a great majority of excellent professionals. All my respect to that immense majority,” said Cavadas, who has performed several world-first operations including a double hand transplant in 2006 and a double leg transplant in 2011.

In 2009, Cavadas conducted Spain’s first full face transplant.

In the controversial interview, Cavadas, 46, said he doubted whether children understood what being a doctor is really like. “You might like wearing a white coat, or believe you’re gonna make a lot of cash, or think that you’ll get to screw the nurse, but having a deep knowledge of the profession is impossible,” he said. Elsewhere in the interview he stated that “people want to work in public companies because you can be lazy and get paid just the same.”

After three days of simmering controversy, the Valencian health commissioner, Luis Rosado, asked Cavadas to make amends for what he called “unfortunate statements,” which he described as “a mistake.” “When you’ve achieved professional recognition you have the obligation to be aware of the form and the content of the statements that you make,” Rosado told him.

“I am very surprised at the motives that made you choose our profession.”

In his apology, Cavadas lamented “the fact that certain collectives may have felt denigrated.”

The nurses union Satse and the Valencian Nurse Council had also asked for a retraction, stating that nurses “are not doctors’ concubines, although one gets the feeling from his statements that this belief weighed excessively on his decision to become a doctor.”

Cavadas, who has performed over 13,000 operations, works at the Manises hospital, which is public but privately run.

The one-megawatt turbine is submerged off the coast of the Orkney island of Eday - a perfect area, according to Alan Mortimer, head of innovation at Scottish Power Renewables, "because the currents are very strong, the islands are close together and the depth is very good: around 45 meters."

With a 20-meter base and a propeller with a 10-meter radius, the Norwegian-made Hemmerfest HS 1000 turbine is already powering homes and businesses on Eday.

Following the success of the test, the Scottish government has given the go-ahead to install 10 similar turbines further southeast between the islands of Islay and Jura that would be capable of powering 5,000 homes. That project, considered the biggest of its kind in the world, will be an acid test for gauging the efficiency of wave energy. If successful, Iberdrola and other companies will be able to undertake an even bigger project to generate 1,600 megawatts (the equivalent of one-and-a-half nuclear reactors) in Pentland Firth, the strait between the Orkneys and mainland Scotland.

"The advantage over wind power is its predictability: you don't know when the wind will blow nor at what speed, but you know when and how big the tides are, which allows you to optimize the design and adapt it to the area where [it] will be installed," said Iberdrola's Álvaro Martínez.

On Wednesday, Spanish police began carrying out checks at the disputed 800-meter isthmus that separates mainland Spain from Gibraltar, causing long lines to form at the frontier.

Furthermore, the Interior Ministry is prepared to send Civil Guard escorts out with fishing vessels in the disputed waters, which were not ceded to Britain with Gibraltar and Menorca as part of the 1713 Treaty of Utrecht. Agriculture Minister Miguel Arias Cañete on Thursday said the escorts had already begun and that as a result the fleet was able to fish “in complete normality.” However, EL PAÍS was not able to confirm the Civil Guard had been deployed on Wednesday night.

In 2010, former La Línea Mayor Alejandro Sánchez caused a diplomatic incident when he announced a scheme to impose a five-euro charge on trucks going into and out of Gibraltar by preventing them from taking the normal route reserved for their activity. Sánchez justified the toll, which he took to the European Union, by saying the previous Socialist government had done nothing to generate revenue in his cash-strapped municipality. The scheme was termed illegal by lawmakers and eventually petered out.

Sánchez’s predecessor, Socialist Gemma Araujo, has displayed a more conciliatory tone toward Gibraltar in the face of the current crisis. “I understand that society demands that when a problem exists, elected representatives should resolve it and this is what I wish to do. I am sure that the chief minister of The Rock thinks likewise,” Araujo said.

On Thursday, the mayor of Algeciras and a Popular Party deputy in Congress, Juan Ignacio Landaluce, said that “patience has its limits.” “A solution has been sought but they have not given an inch. What should we do, should we go [if confronted by Gibraltarian patrols]? Who is acting irresponsibly — those who are trying to protect what is theirs or those who are making the situation tenser?”

The Gibraltar administration, headed by Fabian Picardo, has brandished a 1991 local environmental law to back its stance on the disputed waters. The fracas dates back to last March, when negotiations between fishermen’s guilds in La Línea and Algeciras and Gibraltar broke down after the latter annulled a 1999 agreement allowing the fleets to fish up to half a nautical mile from The Rock.

The heightening of tension over territorial waters comes a day after the Royal Household announced, on government advice, that Queen Sofía would not be attending a gathering of world monarchies at Windsor Castle and Buckingham Palace in honor of Queen Elizabeth II’s Diamond Jubilee.

In a statement, the Zarzuela Palace said it would be “inappropriate” for the queen to travel to England “under the circumstances.”

Foreign Minister José Manuel García-Margallo said on Thursday the decision was taken to avoid a potentially uncomfortable afternoon for the queen. “What would have happened if there had been an incident during the queen’s stay in London?” he said at a press conference on Thursday.

The European Monarchic Association said monarchs have the “obligation” to honor invitations from others. Pedro Schwenzer, the association’s president, said trying to prevent British Royals from visiting their subjects was “ridiculous.” On Thursday García-Margallo called the British ambassador, Giles Paxman, to his office to express Spain’s “upset and unease” over Prince Edward’s scheduled visit to Gibraltar next month.

The announcement, according to government sources, shows the growing tension between Spain and the United Kingdom over Prince Edward’s scheduled visit to Gibraltar from June 11-13 as part of a wider tour of British royals to overseas territories. There is also discord between the two governments over the Gibraltar authorities’ impeding the Spanish fishing fleet based at Cádiz from entering the waters that surround The Rock. Furthermore, Spain was also not amused to find that the official band of Gibraltar is to perform as part of the Jubilee program.

It is not the first time a diplomatic spat such as this has blown up. The Spanish government cried foul when Prince Charles and Diana honeymooned in Gibraltar and the episode caused a rift between the two royal houses.

The Royal House had confirmed a month ago the presence of Queen Sofía and King Juan Carlos at a lunch to be hosted by Queen Elizabeth, their cousin, at Windsor Castle and a dinner later the same day at Buckingham Palace.

Later, after King Juan Carlos fractured his hip while on a controversial elephant-hunting trip in Botswana on April 13, it was decided that Sofía would represent Spain in Britain. Now, the Spanish Royal House will be the only monarchy completely absent from the Jubilee celebrations.

The government is committed to bringing down the budget deficit from 8.5 percent of GDP last year to a Brussels-approved 5.8 percent in 2012. The health cuts will see co-payment introduced and oblige seniors to pay for prescription drugs for the first time.

“We don’t want to do it but there is no other way to get out of this situation,” said Education Minister José Ignacio Wert. “It’s an exceptional response to exceptional circumstances.”

Catalan premier Artur Mas of the center-right nationalist CiU bloc said his government would for now follow decrees issued by Prime Minister Mariano Rajoy calling for deep cuts in health and education, but he would continue with his plans to challenge them before the Constitutional Court. Mas did not detail exactly where the region would make cuts to save some 1.5 billion euros this year, but said subsidies to public firms would be reduced.

In Andalusia, economic commissioner Carmen Martínez Aguayo announced the quota corresponding to the region from income taxes would be hiked by one percentage point on salaries between 60,000 and 120,000 euros. Paycuts for Andalusian government workers would also be imposed immediately, including trimming June’s bonus by up to 30 percent.

The regional government in Seville said it would also be challenging the central administration’s austerity impositions.

The political situation in Asturias has been gridlocked since elections on March 25 from which the Socialist and the IU on the one side, and the right-leaning Asturias Citizens Forum (FAC) and the conservative Popular Party on the other each emerged with 22 lawmakers in the local parliament.

The Socialist last week had failed the garner the support of the single UPyD lawmaker to allow Fernández to be sworn in as regional premier. UPyD demanded that the regional election law be changed to impose a single election precinct rather than the three that currently exist in exchange for its support.

The Socialists were reluctant to move in this direction and conditioned any change to a cross-party accord, which they have now managed to swing, with details of the agreement still to be ironed out.

The petition called the ruling “extraordinary, indiscriminate and completely disproportionate.” Medel also pointed to Garzón’s “overwhelming” service in tackling terrorism, drug-trafficking and crimes against humanity, adding: “One thousand cases with 8,000 people charged” amply demonstrated this.

This deluge of spam caused a rapid reaction on the part of its unwilling targets. Between January 4 and February 7, 2011, the AEPD received 333 written complaints over the messages to promote Rico al instante, a game show that offers participants the chance to win 200,000 euros by sending a text.

The missives were tempting and suggestively worded: "Do you want to win 200,000 euros for the same price as a coffee? Come on the show! Just by replying RICO to 25354 you can play live (1.42 euros per text)."

Rico al instante was broadcast on Antena 3 last January. The network entrusted production of the show to Zed Worldwide, which later became Ocio Factory Time. During the publicity campaign the company sent out 35,976,137 text messages and in November the AEPD started proceedings against it for potentially breaking the law. Zed Worldwide claimed that it had not broken any regulations and that the recipients could object to the messages.

The company argues that 99.8 percent of the messages did include the option to block further publicity and in only in the case of 8,170 texts — or 0.0022 percent — was this option omitted.

"In view of the scale of the campaign," the company said, the percentage of supposed infractions is "sufficiently low" to indicates that the law was adhered to.

But the AEPD was unmoved. In the watchdog's view, the producer committed two serious infractions: firstly, due to the eventual receipt of more complaints, for sending 451 messages without consent, the firm was fined 50,000 euros. Second, the 8,170 texts that failed to contain a "simple and free" manner for users to reject such publicity the AEPD imposed a fine of 150,000 euros.

The sanction could have been higher, with the original fine set at 230,000 euros. Miguel Cobacho, a partner at the law firm salirdeinternet.com, said that this was one of the highest fines ever imposed in Spain for this type of abusive practice. Cobacho added that it will serve to help put a stop to mass spam messaging as "many businesses do not know what sort of fine they may receive," while noting that the AEPD once fined a company 30,000 euros for sending four emails and has now slapped Ocio Factory Time with a 50,000-euro penalty for sending almost 36 million texts.

The company can appeal the ruling, but in the meantime the producer of Rico al instante finds itself considerably poorer — all in the blink of a text message.

Fernando Torres Baena, who is facing more than 100 sex abuse counts, denied having sex with any of his male or female students under the age of 18 as prosecutors have charged. Once one of Spain’s top karate champions, Torres Baena only admitted having sexual relations with two of his gym monitors — his wife María José González and Ivonne González — who are also standing trial for allegedly helping him lure and bait victims for his pleasure.

“When you win national and international tournaments, you celebrate in any way you can,” Torres Baena said, referring to the sex he had with his gym monitors.

Torres Baena is the first of the defendants to testify in the so-called “karate case.” Prosecutors are asking that he be sentenced to 303 years in jail on 36 counts of sexual abuse and 13 other crimes related to the corruption of minors.

They confronted the defendant, after he took the stand in his own defense, about certain key locations where his accusers had described the abuses as having taken place, including a small room with a bed and the third floor of the gym. The court filings include a host of complaints from 61 students describing anal and vaginal penetrations, fellatio, masturbation and other sexual acts, all of which Torres Baena has denied.

The room prosecutors described in court was where Torres Baena said he kept “gym equipment” and used on occasion “to scold” students because it was better to do so in private so as “not to humiliate them.” The entrance to this particular room was restricted, he added.

When asked if he felt that his karate kids felt humiliated by his scolding, the defendant replied: “One thing is what I do, and another is what others feel.” After the court filings were unsealed, Torres Baena recalled that he read them over and over for about eight hours a day and thought “this doesn’t make sense.”

The karate instructor was prolific in his answers, concentrating on what was being asked, and never breaking once to open the water bottle near him. But the challenging grins and smirks that were evident during the opening day of the trial were gone; the only gesture Torres Baena performed in the dock was to put on and take off his eyeglasses, which dangled on a ropechain.

Investigators, who say the abuse took place for at least 15 years before Torres Baena and others were arrested, say the defendants had organized a type of sexual sect at the karate school.

Trial prosecutor Pedro Jimeno cross-examined Torres Baena with tough, to-the-point questions.

“Did you have anal sex with the witness?” Jimeno asked about one boy’s version of events. Concerning a 14-year-old male, Torres Baena was again asked: “Did you make him touch your genitals?” And referring to a 16-year-old student: “Did you and him have mutual fellatio?”

Torres Baena denied all the charges.

“Why do you think they have said all these things about you?” the prosecutor asked.

“I will explain this in due course,” the defendant responded.

Torres Baena, 57, said he had the best karate school in Spain, and had planned on bringing internationally renowned teachers to his school.

He recognized almost all of the 61 names of students who filed complaints against him, and admitted that many would spend time with him and the gym monitors at his home in Agüimes, situated about an hour and a half outside Las Palmas de Gran Canaria.

He said the mass gatherings took place before important competitions, but denied prosecutors’ contentions that these parties were actually orgies.

Torres Baena said he never tried to “sexually orient” any of his students. The entire case, he said, was part of a plot hatched by the Karate Federation in the Canaries to knock down his profitable business.

On Thursday, Torres Baena is expected to personally hear from one of his accusers. José María Palomino has agreed to take the stand on behalf of 60 of the 61 alleged victims.

Fang-Fang Ye and his guests say that they had heard about the park, but that it was their Spanish photographer who insisted that this was the ideal way to spend their wedding afternoon. They were photographed standing in front of the Puerta del Sol, the Brandenburg Gate, Tower Bridge and Lisbon's Belém Tower.

Asked if they aware of the controversy that surrounds the park, opened in 2010, and visited since by some two million people, according to the town hall, they said they knew nothing.

As well as the replicas, the town hall planted 5,000 trees, 60,000 shrubs and 120,000 flowers in the 233,000-square-meter complex, designating it a green area.

The Popular Party-controlled council says it cost 12 million euros to build, while the opposition says the real cost was 15 million euros.

There is also disagreement over the running costs, which town hall says amount to 600,000 euros a year, slightly less than the income in generates, and which provides some 120 jobs. The Socialist Party says that the annual running costs are more than three million euros. "And that is lower than in the first year, when the costs were five million euros," says the party's spokesman in Torrejón, Guillermo Fouce, adding: "It costs 200,000 euros a month in water alone."

The park has a 1,100-square-meter boating lake surrounding the reproduction of the Belém Tower. "If somebody puts their hand in the water it has to be amputated," chuckles Antonio, a Murcian tourist. "It doesn't matter whether it cost 12 million or 15 million euros, because it isn't worth either figure. The park makes no sense. The point is that the town hall can't afford to run the place. The water in the lakes has no oxygen in it. I don't think anybody uses the water skate park either, because it's very dirty," he adds, stating that he is in the park purely "because somebody in the family insisted on coming."

Juan, a Torrejón resident, goes further: "This park is pure propaganda. Even so, they have done it well. But I think it's madness, they've spent money they didn't have, and all on the back of the taxpayers."

Torrejón council has just announced a financial restructuring plan. It owes 70 million euros. A significant part of that debt, although the mayor's office won't say how much, is related to the construction of the park.

The town is not alone in facing a mountain of debt. After two decades of what many analysts and officials say has been unbridled spending off the back of easy credit during the economic boom years, growing numbers of villages, towns, and major cities are finding that revenue has all but dried up in the economic crisis.

In March Spain's government approved a new loan fund, in conjunction with banks, so that towns could soon get cash to pay suppliers. The loans would be paid back over 10 years at favorable rates.

But all this was of little concern to visitors like Ye and Xu on Europe Day last week, or Fernando, a local 60-year-old resident of Torrejón, who received some unexpected news the same day. "Yes, yes, the park is all well and good but it would have been better if they had used this money to help people that need it most. Seven years ago I asked for a subsidized home and today I received a letter saying that I had been granted it. Yes, but in Galapagar. After a lifetime here I have to go. Really I shouldn't say that it will be a bad day but that I should be happy. And I came here to meditate."

The two defendants, María Antònia Munar and Miquel Nadal, were both members of the now-disbanded Unió Mallorquina (UM) political grouping and are charged with embezzlement, falsifying documents and dereliction of their public duties.

For more than 30 years, Munar was one of the most prominent politicians in the Balearics. From 2007 to 2010, she served as speaker of the local regional parliament. Nadal, her right hand-man, served as vice president of the City Council in Palma de Mallorca.

Prosecutors claim the two defendants helped approve some 240,000 euros in contracts to the production company in which they had been part owners but which was represented by the front men. One of these was Víctor García, who was married to the cousin of Munar’s husband.

García and Miquel Sard testified on the second day of the trial that they agreed to list their names as co-owners of the company Video U at Nadal’s behest. One of their goals was to obtain a license from the regional government for a local TDT channel.

Sard, whose cousin is married to Nadal, said the company also received money from the Balearics government to produce a radio program that was never broadcast. He said Nadal gave him an envelope containing 300,000 euros that came in part from the former city councilor and Munar to purchase Video U.

Luisa Almiñana, who served as another partner in the production company, said the UM hired up to 14 people to work at Video U but who turned out to be ghost employees. The employees were in fact performing work for the party or the City Council, said Almiñana, who has also been charged in the case.

After she was indicted, Almiñana said she received pressure from UM officials not to cooperate with authorities during their investigation. The UM was closely aligned with the Popular Party, which gave it three seats in the 33-member City Council in Palma de Mallorca.

It was not until April, 2011 when labor union elections were called that workers’ representatives at the hospital were allowed access to the payroll, where it was discovered that Martí was still listed as an “associate director.” He had held the phantom post for 121 months on a salary of between “80,000 and 110,000 euros,” said hospital sources.

The administrative error has caused profound anger at the hospital, which was placed in administration in March by the regional government with debts of more than 18 million euros. Under cost-cutting measures imposed by the administration of Artur Mas, Santa Creu i Sant Pau has seen its resources slashed by 10 percent.

The details of Martí’s hoodwink have been included in a 38-page complaint presented to police by a doctor at the hospital accusing senior staff of corporate crimes including embezzlement and fraud. Martí is a heavyweight in the Spanish healthcare sector and vice-president of the Medical School Organization and director of a health management professorship at the Doctor Robert Foundation, which is attached to the University of Barcelona.

Neither Martí nor the board at Santa Creus i Sant Pau have answered repeated requests by this newspaper to give their version of events. Neither has any evidence that Martí did any kind of work at the hospital between 2004 and 2011 come to light.

Today's residents are not originally from there, either. In the center of the boulevard, on Calle Peña Gorbea, groups of Latin American men while away afternoons playing dominos or chatting on a bench. Over at one end of the avenue, there are a few junkies left over from the hardcore drug days; at the other end, a cluster of unemployed people are trying to drown their troubles in beer. The occasional car drives by blaring loud music. Police patrols frequently make the rounds to give a sense of security. There are instances of petty theft - people who steal slices of ham to sell to a pensioner who can't make ends meet. There's the occasional street fight, too, but generally it's nothing serious. People hang out there because they have nothing better to do.

But sometimes things happen that underscore growing malaise over the deterioration of the district. Three weeks ago it was a homicide. A group of young Dominicans showed up at Plaza de Puerto Rubio, near the boulevard, with unknown intentions. They attacked Jorge Luis Costas Navarro, a 16-year-old born in Spain to Dominican parents who went by the nickname of Smith Chail Brown. First they beat him up, then they shot him twice with a modified firearm. The bullets went into his side and out his neck. The victim dragged himself towards the boulevard, and collapsed on the corner of Calle de Peña Arriba. A witness said it was several minutes before he died. "It was horrible. It seemed like an eternity before the ambulance got there," he says.

The police are investigating whether Smith's killers belong to Dominican Don't Play, one of the Latin gangs considered to be "in the shadows," but which has lately featured in face-offs with other gangs, such as the Trinitarios. Just a few minutes after the homicide, officers had already arrested 10 youths, all under 18, and three of them under 14, and therefore not legally liable.

It is hard to get Smith's friends to talk about his death in the open. They're scared, and they know some things cannot be told to strangers in broad daylight. Some only talk through social networks, and they speak of a cheerful, peaceable young man who liked to dance and be with his friends in the square. They also said they know who shot him, and that things were quiet only because preparations were underway for revenge. The most widely accepted version of events among these youngsters is that the Dominican gang went out looking for their rivals, the Trinitarios, also from the Dominican Republic. Instead, they found Smith standing alone, and figured they would send a clear message that they were the new lords of Vallecas.

Experts on gangs say that most members of Dominican Don't Play used to live in the district of Tetuán, but that their parents moved to Puente de Vallecas because of the cheaper rent. And that triggered a turf war.

These days, there is no sign of either gang. Around 10pm, a pair of municipal police officers walk around the square where Smith was shot. A group of friends is out walking a bull terrier named Lola. "This neighborhood isn't what it used to be," says one. "People are sick and tired. These kids are violent. A year ago, one of them got his arm cut off. And now this. I've always liked my neighborhood, but now I am thinking of leaving. Lots of people are."

One of the people who possibly knows the most about Vallecas is Matilde Fernández Montes. A researcher at the Center for Human and Social Sciences at the Spanish National Research Council (CSIC), she has written several papers on the district. In her 2007 article Vallecas, identidades compartidas, identidades enfrentadas (or, Vallecas, shared identities, clashing identities), Fernández brings some perspective to the aggressiveness of the Latin gangs by recalling that the history of Vallecas is full of clashes between youth gangs such as Los escorpiones or Las focas and other Madrid districts in the 1980s, and disputes among Spaniards from different parts of the country who were devoted to varying images of the Virgin Mary.

The police, social educators and associations that work with minors all agree that gangs act like a family that protects youngsters who feel different or alienated. "They're regular kids who fall into a dynamic of violence imposed by the gang," says a police source who admits to the difficulty of winning their trust. "What we do is social surgery, but really the trouble is with the medicine and the GPs."

The biggest problem seems to lie with second-generation immigrants. "They don't feel they're from anywhere, neither Dominican nor Spanish," explains Antonio Llorente, of La Rueca Association. "They came here forcibly, they were separated from their grandmothers, and it takes time before they adapt to this. Now, with the crisis, they are told to go back. They're gang fodder."

Puente de Vallecas is defined by many people as a neighborhood on the brink, where families - whether Latin American, African, Gypsy or otherwise - are always facing imminent eviction. "But nobody goes hungry here," says a former educator who has been working on various social programs for the last 10 years. "The neighbor network is unbelievable. People help each other around here, just like in villages. If you have to leave your kids with someone, you can, and if you can't make ends meet, someone will help you. I started out 10 years ago. You end up staying because things work. Many of the troubled youths I had years ago are now monitors who help others. You get hooked on Vallecas."

Some 2,500 people ended a day of meetings and discussions on Sunday with a "silent scream" and promised to return on Monday to protest against the arrests of 18 demonstrators overnight on Saturday when the police moved in to dislodge the masses. The main focal points of the open debates were government cuts in healthcare and education, nuclear disarmament, the right of women to choose to abort and the rise in value-added tax.

Videos of the police action against the protesters soon circulated via the internet but in truth the social network sites were more ablaze than Spain's streets. By Sunday, the number of people returning to the capital's Sol square had fallen to around 350. "We made a few gaffes [on Saturday]," said Luis Fernández of the Adesorg Association of the Unemployed. Fernández believes the protest should have ended after the silent scream. "This would have had a different outlook," he added, casting an arm over the sparsely populated square. "If those who aren't here had seen things pan out differently, they would have been more motivated to come."

Many members of the movement said that there was no reason for the police to break up the rally as there were few people left and they would have departed sooner or later. "The protest was peaceful, we didn't create any problems," said a participant. In Barcelona, the city authorities gave permission for a camp to be set up in the central Plaza de Catalunya square.

The police made 18 arrests in Madrid during which 20 people, including two police officers, were injured. Nine of those arrested face charges of resisting arrest, assaulting a police officer and public disobedience, offenses that can carry a sentence of between two and four years. They were released on bail on Monday. The other nine were released without charges on Sunday.

Witnesses say that the police meted out beatings even to people who complied with their orders to leave. When the eviction was carried out there were some 200 people left in the square. The 15-M movement's legal commission plans to make a formal complaint about the actions of the police, who the protestors say removed their identification badges. The movement said it plans to seek redress for the "impunity with which the police acted."

The detainees released on Monday, six of whom had previous arrests on their records, told reporters that one of their number, a woman, had been beaten at the Moratalaz police station. Another, L.A.L.O., said that he had voluntarily left Sol and was arrested in a nearby square.

The public prosecutor had asked that all 18 be handed restraining orders preventing them from going near Sol while the judicial process against them remains open but the judge did not enforce this petition.

The heavy police presence also oversaw the movement's public debates, at which megaphones were prohibited. The opposition Socialist Party accused the government of over-reacting to the threat posed by the latest wave of protests.

Socialist spokesman José Quintana called the government's stance "perfectly ridiculous" and accused it of trying to criminalize the protest movement. His parliamentary colleague, Soraya Rodríguez, said that the demonstrators' right to protest had been impeded. United Left spokesman Gregorio Gordo lamented "the central government delegation's heavy-handedness in vigilance and repression," of the protestors, who he added had "not given any reason for it."

Cristina Cifuentes, the government delegate in Madrid, said in a radio interview that she was "very satisfied" with how the protests were unfolding and termed the police's performance "impeccable."

"In general the balance has been very positive, because the important thing is that people's right to meet and protest has been coupled with the right of the rest of citizens to walk freely through the streets. Above all, they have prevented an encampment that I have always said was illegal."

Cifuentes revealed last week that she had previously attended 15-M meetings to "see things on the ground. I have never been in disguise or incognito to an assembly because I don't even dress up for Carnaval," said Cifuentes, who added there was "nothing strange" in her attending such meetings. "I live in \[downtown neighborhood\] Malasaña and next to my house there is a periodic popular assembly." Describing the movement as "not as disorganized as they want people to believe," Cifuentes noted that now "it has nothing to with social movements but with the anti-system ideology of the extreme left."

The main police labor unions praised the government delegation in the capital for its "planning and clear orders," highlighting a "change in attitude" since the arrival of Cifuentes in the post. "A year ago there was no planning, they caught us by surprise and the protestors were allowed to do as they pleased," said José María Benito of the Unified Syndicate of Police. "The difference from last year is that there were clear orders. Last year there were practically none, there was simply tolerance and more tolerance."

 On May 15, 2011 a group of citizens decided to demonstrate against a crisis that hit Spain particularly hard on the back of a real estate bubble which decimated the construction sector and left banks with thousands of foreclosed homes whose value keeps dropping. The movement caught on and derived into a permanent campout in Sol. Images of the protest made world headlines and spawned similar movements in other world cities, including Occupy Wall Street in New York.

In Barcelona, around 45,000 people marched, according to police figures, although organizers put the figure at five times that amount. Elsewhere in the world, there were protests of some size in Frankfurt, Paris, London and Brussels, but very few came out in support of the 15-M agenda in Lisbon and Athens.

Despite concerns that this year’s protest in Spain would turn violent, the police only took action at 5am to clear out the square after around 300 protesters decided to defy the government’s sit-in prohibition.

“While I was picking up my things the police were pushing me towards Calle del Carmen,” said Emilio, a 26-year-old public servant who was sleeping inside a tent in the square. “They pulled a girl by her hair.”

Other protestors confirmed that the police used force to evict them from a spot that has become the national symbol of citizen discontent. In the days prior to the protest, government representatives had warned that sit-ins would not be tolerated, and that protestors must stick to the approved schedules. But the ruling Popular Party (PP), which was in the opposition during last year’s 15-M protests, also knew that it could not use undue force against a movement that enjoys broad citizen support.

Protestors chanted slogans that have become classics of the 15-M movement, such as “Who voted for those markets?”, “We’re not paying for this crisis” and “They call it democracy, but it isn’t.”

“Today was a day for reliving the hopes of 15-M,” said activist Olmo Gálvez. “We have picked up that energy to keep moving forward.”

During their weekly conference, the justices in Washington last Thursday studied Odyssey’s appeal along with several others filed against Spain, including petitions by the Republic of Peru and some of the descendants of the passengers of Nuestra Señora de las Mercedes, who said they were the rightful owners of the coins.

The top court didn’t give any reasons as to why it wasn’t taking up the case, only posting a succinct “denied” in the Supreme Court docket on Monday.

“All of the team is very pleased by the decision today, which makes our victory absolutely final,” said James Goold, the Spanish government’s lawyer who led the US federal court battle to get the coins and other treasure after Odyssey plucked them up from the bottom of the Atlantic in early 2007.

“The Supreme Court rejected three petitions claiming that the decision for Spain was contrary to US, Spanish and international law. Spain’s position that unauthorized looting of our underwater cultural heritage, in the case the historic frigate Mercedes, is illegal has been upheld at every level and today’s decision eliminates any possibility of any further challenge to our victory,” Goold said in an email message.

There was no immediate reaction by Odyssey lawyers.

On February 26, Spanish military cargo planes airlifted the coins back to Madrid after the Supreme Court refused to stop the transfer while it was considering the appeal. The US Appeals Court in Atlanta had already ordered Odyssey to turn over the mostly silver currency after rejecting Odyssey’s arguments.

The Culture Ministry has said that it will put the coins and other artifacts on display at different museums.

A Tampa judge has also ruled that Odyssey must turn over another part of the trove that has been stored in a warehouse in Gibraltar.

The Mercedes was sunk by the British navy off the coast of Portugal in 1804 when as it was sailing from South America toward the port at Cádiz.

It said it had notified the Fernández administration of the existence of a dispute under the Investment Promotion and Protection Treaty between Spain and the Latin American country, which is expected to result in arbitration by the World Bank’s International Center for Settlement of Investment Disputes.

Prior to the case going to arbitration, Repsol and the Argentinean government have six months to try to reach a negotiated settlement. Repsol claims that Argentina has violated a number of regulations stipulated in the bilateral treaty signed with Spain.

“With this notification, Repsol has formally announced the immediate start of legal actions under international law for [the seizure of YPF] to be declared illegal and for Argentina to be ordered to return [it] and/or make full reparation for damages and harm that may have been caused,” Repsol said in a statement.

The government last month seized a 51-percent stake in YPF held by Repsol. The Spanish firm retains a further 6.4 percent of the company. Repsol is looking for compensation of about eight billion euros for the loss of the stake, but Argentina has disputed this figure.

Indeed, in his letter dated July 18, the day that General Francisco Franco’s military uprising was announced, García Lorca still seems unaware of the cataclysm about to be unleashed: “In your letter there are things that you shouldn’t, that you can’t, think. You are worth so much, and you will be recompensed.

“Think about what you can do, and let me know straight away so that I can help you in whatever way, but be very careful. I am very worried, but knowing you, I am also sure that you will overcome every obstacle because you are overflowing with enough energy, grace, and happiness, as we flamencos say, to stop a train.”

Ramírez had met 38-year-old Lorca, author of Blood Wedding, Yerma and The House of Bernarda Alba, in Madrid the year before, where he was completing his studies to become a civil servant. An aspiring actor, he had performed in several productions staged by Lorca, and the pair had fallen deeply in love.

Lorca was well connected and politically active, and was aware of the rumors of a military revolt against the Second Republic. He had already decided to accept an invitation to visit Mexico, but now he wanted to go with Ramírez.

The problem was that Ramírez came from a traditional provincial family of 10 children, and his father felt betrayed that his son had secretly pursued his dream of a career in acting, although he had passed his exams.

Lorca could probably have arranged for false papers for Ramírez, who was still not old enough to travel, but refused, telling his lover that he must explain things fully to his father, and get his permission to leave the country.

“I think of you all the time, and you know this without me having to say it, but silently, and between the lines, you should be able to read the love I feel for you, and the tenderness in my heart… Count on me always. I am your best friend and I ask you to be political and not allow yourself to be washed along by the river [of fate],” Lorca wrote.

According to Ramírez’s diaries, he and Lorca discussed leaving Spain together and both went to their separate homes to bid farewell to their families in the weeks leading up to the outbreak of civil war.

Ramírez details his father’s angry opposition, refusing to issue his son with papers so he could leave Spain. Lorca’s decision to return to Granada would cost him his life, and historians have often wondered why he put himself in danger.

Ramírez did not receive Lorca’s missive until July 22, shortly before all communication links broke down between areas controlled by Franco’s forces and those of the Republican army.

By this time, the poet and playwright had left Madrid, and was staying at his family’s summer home near Granada. A month later, on August 18, Lorca was seized by pro-Franco thugs and shot the next day. His body has never been found.

The murder happened during a period when Franco’s supporters took advantage of the chaos of the war to unleash a reign of terror against anybody suspected of Republican sympathies. There has also been speculation that Lorca’s homosexuality, which was well known, was also a motive.

The letter is part of a collection of papers that include a poem written in Lorca’s hand on the inside cover of a textbook to which EL PAÍS has been given exclusive access. The papers have come to light two years after the death of Ramírez, who had kept his relationship with Lorca a secret until his death, aged 91, in 2010.

The short poem, dated May 1935, is entitled Romance, and describes Ramírez as “that young man from La Mancha,” repeating: “he came, mother, and looked at me. I cannot look at him!”

It was apparently written on a journey the two lovers made to the southern city of Córdoba. The poem is handwritten on the back of a receipt for the Orad Academy in Madrid, where Ramírez de Lucas was studying.

A handwriting expert has reviewed the poem and declared that it was written by García Lorca. The poem was composed at the same time as Lorca was writing his famous “dark love” sonnets.

Lorca experts have welcomed the decision by Ramírez de Lucas to allow his personal documents to see the light, given their historical importance. Laura García Lorca, the poet’s niece, already knew about the existence of the letter, and said it could be “of enormous interest” for the archives of the Lorca Foundation, which she heads alongside her sister.

The publication of the letter and love poem to Ramírez comes in the run-up to a major exhibition that Laura García Lorca is organizing in New York.

Lorca biographer Ian Gibson, who lives in Spain, says he believes the documents will shed new light on Lorca’s last days.

Gibson says that during his exhaustive research into Lorca, Ramírez’s name came up as someone who was close to the poet in his final weeks, but that he had always refused to be interviewed.

“I did everything possible to interview him,” reveals Gibson. “I knew that his relationship with Lorca was very important. I did manage to talk to him, but he said he didn’t want to talk to me; he said that he was working on publishing something himself, and I thought he just wanted to get rid of me.”

“We can only hope that the papers will be made available soon,” says Gibson, who believes the letter is likely to be the last one that Lorca wrote. “According to my information, the painter Pepe Caballero wrote a letter to Lorca around this time, but it was returned to him unopened.”

A novel by Manuel Francisco Reina, Los amores oscuros (The dark loves), which is due out on May 22, retraces that relationship, while Ramírez de Lucas’ family is reportedly talking to a major publisher about a book deal.

Like many others looking for a way to erase the sins of the past after the Civil War, Ramírez de Lucas joined the Blue Division, the military unit that Franco sent to help Hitler after the invasion of Russia in 1941. He was wounded and decorated.

After the war, with the help of poet Luis Rosales, he found work as an architecture and art critic for the newspaper Abc, working there for the rest of his life until his retirement in the 1980s.

Ramírez de Lucas never talked about his relationship with Lorca, although it was well known among his colleagues. Not even his new partner, with whom he spent 30 years, knew about his affair with the famous writer.

In later life, after the death of Franco, he began to write about the tragic events that had marked his early life.

Shortly before his death, he handed over the documents, along with the material related to Lorca, to one of his sisters, saying he wanted them to be published.

“We knew there was a great love who in a way provided inspiration for the Sonetos del amor oscuro [Sonnets of dark love], but we didn’t know his name,” says the poet Félix Grande.

“In many conversations I had with Rosales he told me that all the days that Lorca spent hiding in his house, he kept correcting those verses nonstop. I never managed to get him to say the name. Rosales had promised Federico that he would keep the secret, and he was a man of his word,” he says.

For more than 70 years he kept all the memories of his sentimental tragedy - the drawings, the letters, a poem and a diary - locked up inside a wooden box. But before dying, he handed his legacy to one of his sisters, so that she might make it public. Despite the strict silence he observed during his entire lifetime, and the support of friends who knew about the relationship but never said a word, Ramírez de Lucas did not want the memory of his great youthful affair to be lost forever. The name of his love? The poet Federico García Lorca.

They met in Madrid during the tumultuous period of the Republic, and had kept their families in the dark about their romance, given that one came from a very conservative background and the other from a family of Socialists, who were very straitlaced when it came to homosexuality.

Ramírez de Lucas was a very attractive and cultured young man, who dreamed of being an actor, and Lorca promised to take him to all the stages of the world. They were madly in love, and decided to move to Mexico. By then, Lorca was a successful author and a household name halfway across the globe; he was also tremendously reviled by violent right-wing groups in Spain. But even though his friends kept insisting that he was in great danger, the poet did not want to travel alone. In July 1936, the couple said goodbye to each other at Atocha train station. Ramírez de Lucas, who was only 19, was on his way to Albacete to seek his family's permission to go to the Americas with the poet. Lorca boarded a train to Granada to say goodbye to his own parents before leaving for Mexico.

Lorca experts have welcomed the decision by Ramírez de Lucas to allow his personal documents to see the light, given their historical importance. Laura García Lorca, the poet's niece, already knew about the existence of the letter, and said that it could be "of enormous interest" for the archives of the Lorca Foundation.

A novel by Manuel Francisco Reina, Los amores oscuros (or, The dark loves), due out on May 22, retraces that relationship, while the heirs of Ramírez de Lucas are in talks with a publisher over the possibility of making his diary and other documents public.

At this point in time it is unnecessary to explain that the couple's plans could not have turned out any worse than they did. Just as Ramírez de Lucas suspected, his father was enraged, and threatened to go to the Civil Guard if he attempted to leave Albacete without his permission (which was necessary at the time until the age of 21). Juan had been sent to Madrid to study public administration, and despite his good grades, the father felt that his son had betrayed his trust. His parallel life as an actor at the Anfistora Theater Club, created by Pura Ucelay to showcase Lorca's work, did not fit into his father's plans for him - much less a relationship with a homosexual poet. Otoniel, the eldest of his 10 siblings and the only one who knew about Juan's double life, tried to intercede on his behalf, but it was in vain.

Meanwhile, down in Granada, Lorca telephoned Ramírez de Lucas and encouraged him to be patient, assuring him that his parents would end up accepting it. Juan received a letter dated July 18. But that was the last he ever heard from him. Lorca's arrest at the home of the Rosales family, and his subsequent execution, remained initially obscured by the confusion surrounding the outbreak of war. But when he did find out, Ramírez de Lucas was in shock. And his feelings of guilt only grew stronger with time.

After serving with the Blue Division (a Spanish unit of volunteers in the German army during WWII) to wipe his slate clean, Ramírez de Lucas returned to Madrid and rebuilt his life. But Agustín Penón, the writer who traveled to Granada in 1955 to investigate Lorca's death, found out about the relationship and made note of it in his annotations, which were later published by the historian Ian Gibson and Marta Osorio, another Lorca scholar. They were just a few lines lost in between hundreds of pages, but Lorca's lover never replied to any of the requests for interviews by either one of the researchers.

A good friend of Lorca's, the poet Luis Rosales, found him a job at the newspaper Abc, where he began a career as an art and architecture critic. He started a diary and never let go of the memories of his time with Lorca, including a poem written on the back of a receipt from Orad Academy, where he once studied. Not even his new partner, with whom he spent 30 years, knew about his affair with Lorca.

But after two years of extensive research, the scholar Manuel Francisco Reina is sure that Ramírez de Lucas is the real subject of Sonetos del amor oscuro.

"We knew there was a great love who in a way provided inspiration for the Sonetos del amor oscuro, but we didn't know his name," says Félix Grande, a poet. "In many conversations I had with Rosales he told me that all the days that Lorca spent hiding in his house, he kept correcting those verses nonstop. I never managed to get him to say the name. Rosales had promised Federico that he would keep the secret, and he was a man of his word."

That last letter from Federico to Juan, sent four days after Franco's uprising and just before mail service was interrupted, smelled of jasmine - the poet had slipped in a flower from his parents' garden between the sheets of paper. The message to Juan was that he should be strong and try to convince his parents to respect his ideas.

"You can always count on me. I am your best friend and I ask you to be skillful and not let yourself get carried away by the tide. Juan, it is necessary for you to laugh again."

From Madrid and the son of Claudio Sánchez-Albornoz, an eminent historian and president of the Republic in Exile, the 84-year-old has taught at various universities throughout the world. He is Professor Emeritus at New York University, and was the first director of the Cervantes Institute. Today, he lives in a house overlooking his home city, where he wandered as a member of FUE (Federación Universitaria Española, or Spanish University Federation), which grouped together dissatisfied students in the post-war period. Until the police caught up with him and his colleagues in the anti-Franco fight, that is. Their capture ended in unreasonable sentences, doubled in length by the brutality of the time. The escape of Sánchez-Albornoz and his fellow prisoner Manuel Lamana from the slave labor practiced at Cuelgamuros in 1948 was one of the legends that most damaged Franco. The prisoners were aided in their escape to France by anthropologist Paco Benet (brother of Spanish novelist Juan Benet), American journalist Barbara Probst Solomon and Barbara Mailer (sister of Norman Mailer).

In the democratic era, the escape formed the basis of a film by director Fernando Colomo (Los años bárbaros, or The Stolen Years) and of a book by Probst Solomon, along with many other publications. As a consequence, Sánchez-Albornoz didn't want his book, (Cárceles y exilios, or Prisons and exiles, published by Anagrama) to revolve around this episode. But it is in there. Above all, the book is an expression of anger: Cuelgamuros, the Valley of the Fallen, was a major symbol of Franco's desire for vengeance - he wanted to humiliate his adversaries. It is there where our conversation begins.

Question. You write: "The Franco regime never conceived of peaceful co-existence among Spaniards without political exile."

Answer. That is clear. There was a war, and the victors had to finish it off. That may mean brutalities and persecutions but the victor is always abusive. What happened with the Franco regime, however, was that this went on systematically for 40 years after the war. In World War II, there were also victors and the vanquished, but two years later, it was all settled. Why couldn't Franco settle up in two years?

Q. Why not?

A. Because he was a bitter man who was not interested in a peaceful existence for Spaniards, but in maintaining power.

Q. And he continued the executions until the end.

A. There were different stages: the period from 1939 to 1942, for example, in which, according to reports from the time, more than 100,000 people were executed. But my account is not from that time as I didn't experience it firsthand. My account begins in 1947, and I am sure there were still firing squads then because I lived through it. The executions lasted until Julián Grimau in 1962. Supposing that the Allies still had reasons for killing people, they did so quickly. That didn't happen here. In Spain, Franco kept killing after the war. Grimau was executed for war crimes.

Q. When you finish your book, you are left with the feeling that our history has been ill-fated. How did you feel writing it?

A. I was at peace. As far as ill-fated goes... no, it's not ill-fated. The history of Spain would have been very different if this intrusion had not taken place. In its economic history, it is clear that Spain was more or less gaining ground. And then the war came, and the Spanish economy went into rapid decline, not returning to its 1927-1928 levels until 1956. And this same deterioration took place in social relations and cultural life. Without the war, for those 40 years that the Franco regime lasted, Spain would have had a much higher level than it did in 1976.

Q. The regime ended. But when your father returned from exile in 1976, then Interior Minister Manuel Fraga Iribarne prohibited a formal dinner in his honor. So, the regime was still there.

A. And it is still here today. There is a de facto group, which stands for everything that fuels that dark side of a segment of the Spanish population. But they are not Spain. Spain is something different. I think it's clear that if Spaniards had been left alone, Spain today might not be the most brilliant country, but it wouldn't have been that of the Franco regime.

Q. How did you and your father feel when Fraga prohibited that dinner?

A. At the time, we weren't happy about it, but neither were we surprised. Fraga was a person who was very involved with the Franco regime, a conformist. I state several times in the book that the only thing that allowed the Franco regime to exist was conformism. The regime established certain rules, which were very cruel at first, and after it had to survive in a world that had turned its back on it because Germany had lost the war; so the regime tried to conform, while remaining as true to its original line as possible. But it couldn't maintain it in all aspects.

Q. Given what you say, as well as the controversy over the sentence handed down to Judge Garzón, what do you think should be done regarding Historical Memory?

A. First, all the cards should be laid on the table. Everything must come out, and that's what we have historians for. The post-Franco state has taken great care to ensure access to government and military sources has been closed. Historians have made great strides but they haven't managed to clarify everything. First, the truth has to come out and after that it must be made public. Finally, the descendants of the victims must be given closure.

Q. The issue of Historical Memory and the Garzón case prove that Francoism is not dead. In that sense, the judge is a new victim.

A. Of course. Although I would change your wording ever so slightly. It's true that Francoism has not died out, but you have to add that what remains just represents a segment of the population, because other groups will not have it. Unfortunately, it is quite a large segment that is still very active in the social and political apparatus of the country. But it must be acknowledged that the majority of Spaniards are disgusted by these things, and in general, Spaniards are much better than those nuns who stole the babies.

Q. Your book counters the image of Franco as an austere man.

A. The entire system was corrupt. Franco's authority rested on two elements: death and punishment, and corruption. To me, this is evident and I would like people who weren't there and didn't live through it to understand this. Everything was based on corruption.

Q. You said that Spanish society is better than the Franco regime. But are there significant residues of Francoism in our society?

A. Yes, of course, starting with the justice system. And the Church. I don't have a lot of evidence, but I have one piece that I will mention: when the head of police at Porlier prison had finished reading a list of people who were to be executed the next day, the priest there asked, "There aren't any more?" One of the prison staff told the story later; this same corrupt civil servant who dabbled in the black market was taken aback by the priest's dehumanization. There are witnesses in the Church to the hierarchy's collusion with the Franco regime. The pressure the Church exerted on social life was monstrous. It's what [Archbishop of Madrid] Rouco is missing, because though he might be saying mass, nobody is paying any attention.

Q. You have written that "Memory is not restricted to the past, but is a guarantor of the future." That is at the root of your book.

A. I took that from the comments of a Polish Jew who had emigrated to Canada and was speaking about the situation in Poland today. He found that because things had not been spoken about, national integration and, in part, the integration of Jews within Polish society were weakened. Memory is not just an act of remembrance. Full memory is also necessary to reestablish peaceful relations among citizens. And it's the future that matters, not just knowing the truth, but it is something that is necessary for national co-existence. This contrasts with Franco's previously mentioned desire to prevent co-existence - because in order to live together peacefully, knowledge of the past is needed. Franco was not interested in having that past revealed, and he tried very hard to taint the image of the past. So the question that must be considered is whether we are interested in the peaceful co-existence of Spain's various groups or not.

Q. You were the son of a Republican, and consequently, a communist. After the police arrested you and you were tried, what were you thinking when the sentence that would send you to prison for eight years was read? Did you say to yourself, "No, I don't want to spend that time in prison?" What went through your mind?

A. I have managed to reconstruct events in detail. There was a first request sent to the prosecutor. Later, a second request was sent for him to reduce the sentence even though the Council of War was being held. They didn't tell us the verdict right away, maybe because the international press was there, and it was 1948. The moment of truth came at eight in the evening: the sentence was brutal, even harsher than the one the prosecutor had requested. I became enormously angry, and decided that I was not going to stand for it.

Q. And the idea of the escape was hatched...

A. A friend of mine, Luis Rubio, spoke about it to the CNT, which had begun planning escapes. The truth is that the CNT were very good to me, and they included me in a plan they had drawn up.

Q. It must take nerves of steel to escape from Cuelgamuros...

A. Yes, or a lot of youthfulness, or will to live. Fernando Olmeda says in his book that there were 44 escape attempts, including ours, and ours was the only successful one. The rest of them ended up going back to their home village, and they caught them there. We went abroad, that was our plan. We were very quiet about it, not many people knew. We waited at the gate; we were two young men, Lamana and myself, and two young foreign women, Barbara Probst and another Barbara, Norman Mailer's sister, in a car that was very apparently American. It wasn't a group that would raise the suspicions of the Civil Guard.

Q. There was a period in your life when you founded the publishing company Ruedo Ibérico along with José Martínez, which was historically significant in terms of reconstructing how to tell Spain's story.

A. I set it up it for two reasons. We reached the conclusion that the regime at the time had created an ideology that had successfully spread. People might not agree with the Franco regime, but it had soaked through even into their language. They spoke easily of the glorious uprising, and they were talking about the communists. They might insult Franco, but they had swallowed all of the Franco regime's propaganda. So we saw that there was territory there that could be worked by publishing stories that could open their eyes. I think that with Ruedo Ibérico, we managed to do that. It was a success because these books immediately had a large following and an impact in Spain.

Q. Exile allowed you to get to know that migrant Spain in which your father was already living. France, Argentina, America... What were your impressions of this world and how did yoou find your father?

A. In Buenos Aires, I met a lot of people that I had previously heard or read a lot about. Rafael Alberti, for example, in Cuatrecasas' house. There were thousands of Republicans in Buenos Aires. They held talks, they shared and talked about their own experiences, and that kept the Republic and the Civil War very alive there. It was useful for learning about what was not being spoken about in Spain. But the Spain of that time was not very present. They had created their own world, but they had little knowledge of what I had left behind. So I soon began to circulate with Argentinean students, whom had had experiences much more similar to ours.

Q. How did your father's relationship with his adopted country develop?

A. He never stopped longing for Spain. He even kept a watch set to Spanish time in one pocket, and one set to Argentinean time in the other. And his students and colleagues kept him up to date, not so much politically, but culturally. He also knew what was going on through his contact with other Republicans in Mexico and France, who wrote to him or sought his opinion.

Q. And your return in 1976? You came back together.

A. It was a very emotional moment because all of that longing could be finally satisfied. He jokingly said he had run a race against Franco, and Franco had won. He was quite advanced in years when we returned, and at that age, it's hard to give up the life you have built. What's more, he had his students, his magazine, and it was hard for him to give that up, which is why he returned to Argentina.

Q. And how do you feel in this country?

A. Looking back, and I think that is what the book does, I feel good. It's not the Spain that I knew; we are going through a period right now that won't shine in the history books, but even so...

Q. How do you see this current period?

A. There is a global economic crisis led by the financial system and its abuses, which in the case of Spain has been worsened by a dreadful economic policy created by the PP in its last government to give free reign to the real estate sector, which resulted in a certain level of euphoria at the time. And Zapatero didn't put a stop to it; he didn't know how to burst the bubble. What is alarming in the current situation is the level of improvisation. The government doesn't know what to do so it is improvising. Improvisations and dehumanization... There is a return to certain Francoist roots in society, and that is worrying. A very unpleasant Spain is surfacing. The big difference from the Franco regime is that an authoritarian regime designed by a party was imposed, and so far in Spain, the principle of free elections is being upheld. So at least there is some hope.

Q. Do you think the Republican spirit still lives on?

A. There are two Republican spirits: one is evocative of the Republic, and the other is a new kind of Republican spirit, found in people who were not Republicans in 1931 and may ignore the period from 1931 to 1936, but most certainly question why that man should be king. It's a rediscovered republicanism.

Q. You have had a very long life. Notable moments?

A. There have been a lot. My return to Spain was very moving, of course.

This period was followed by the Barcelona Olympic Games, which marked the beginning of the internationalization of larger Spanish companies and a period of economic development that turned Spain into a positive example for countries joining the European Union. Per capita income reached the EU 15 average, the population swelled by six million people, the number of universities skyrocketed and for 14 consecutive years, starting in 1995, the economy grew by an average of 3.5 percent a year. The grand finale was the housing boom, when international experts officially christened Spain's "economic miracle."

Now, Spain is in its fourth year of crisis, with 5.5 million people unemployed and a second recessionary dip. The economy is also witnessing the deterioration of the intangible: its brand. This can be seen in concrete figures in the financial markets but also in more indeterminate aspects, such as the reemergence of the old clichéd images of wine and flamenco, or in the disdain of European leaders such as Nicolas Sarkozy and Mario Monti for their Spanish neighbor. Spain is no longer in vogue; Spain is trading low.

"Nobody wants to be like Spain now. Spain is only good for flamenco and red wine," Richard A. Boucher, the deputy secretary general of the Organisation of Economic Cooperation and Development (OECD), said a few weeks ago. He made the comments at a seminar in Marseille organized by NATO's Parliamentary Assembly, and in the presence of Socialist lawmaker Diego López Garrido, the Spanish representative in the forum. "At a cocktail gathering later, representatives of various countries, including Canada, Germany, Portugal and France, approached me to express their condemnation of his words, and Boucher later sent a letter of apology. There is a disparity between Spain's economic woes and the deterioration of the country's international image, of its credibility, and this loss of prestige is costing us a lot of money," says López Garrido, former secretary of state for the European Union. Garrido called for greater "non-partisan solidarity" in defense of Spain.

Along with the bursting of the credit bubble, trade relations have also been marked by a feeling that there has been some kind of rupture in Spain's golden image, following a period of economic fortune that even included sports victories.

"In the past, we let ourselves get carried away by euphoria; we were the apple of the world's eye. But now we are at the other extreme," says Miguel Otero, director of the Leading Brands of Spain Forum, an institution formed by the government and large Spanish companies. But he doesn't approve of half-measures. "What needs fixing is not the country's image, but its real problems; with what is happening here, it's difficult to go abroad and change perceptions."

In 2008, the Financial Times included Spain in the PIIGS countries, an acronym for Portugal, Ireland, and later Italy, Greece and Spain, and wrote that the flying pigs were now mired in the muck. "It wasn't an insult, it was a classification, and the problem wasn't that they called us that, but that we were in the group," says Otero.

He stresses, however, the need to highlight the positive aspects of the economy in order to prove that not everything was a mirage, such as the global expansion of big groups such as Inditex and Mango. Unfortunately, these highly publicized commercial successes mask the fact that, in general, the Spanish business world, which is comprised mainly of small and medium enterprise, still has a long way to go in terms of its internationalization. "Exports per capita in Spain total $5,400 [3,300 euros] versus $9,500 in Italy [5,800 euros] and $16,000 [9,800 euros] in Germany," Otero points out.

Selling Spain today is not easy. And nobody checks the faint pulse of flagging international confidence more often than those in charge of investor relations departments, who are tasked with promoting the benefits of Spanish firms abroad. "We are taking a beating. Even though your company is on a solid footing, you are penalized for the Spain name. Even if you offer a fantastic deal, you are penalized by investors. The worst part is that they don't consider Spain a country suitable for investment; they have ruled out the possibility of putting money into this country," says the head of investor relations for one large Spanish corporation.

International investment funds have changed their tune significantly over the past few years. "Now, 60 percent of our meetings are focused on macroeconomic issues; we bring analysts who specialize in these subjects with us to meetings. Nobody wants to hear about investment returns in 2014; there is a lot of mistrust with regard to the medium term," he adds.

The finger of blame for this mistrust can be pointed in a very specific direction: the stock market and government bonds. The Spanish bourse has fallen more this year than it did in all of 2011 (more than 18 percent), placing it among the worst-performing in the world. And 10-year government bonds are currently trading with a yield of six percent, more than 400 basis points (or four percentage points) above the benchmark German bond. In 2007, Spain's risk premium - which acts as a barometer for measuring the creditworthiness of a country's economy - averaged 8 basis points.

Daniel Gros, director of the Brussels think-tank, CEPS, warns that "the international perception of Spain has suffered a blow because the country's government avoided acknowledging the extent of the housing bubble. Initially, the banking sector had a very strong image, but this has also been tainted because there are new losses every year." Moreover, "the new government botched the communication of its fiscal adjustment plans."

For Gros, "the banking system must be cleaned up as soon as possible; realistic housing prices must be set, ones that are lower than the current ones; the labor market must apply the reforms; and the government must fulfill the promises it has made to its partners."

The Ministry of Foreign Affairs also believes the moment has arrived for economic diplomacy. The agency plans to present a new marketing strategy aimed at polishing up Spain's tarnished image abroad in an official act presided over by the king. Ambassadors are to receive new training in foreign trade, and embassies will be instructed to provide greater attention to Spanish companies abroad. "The idea is that all the different bodies and all their activities are aimed at promoting the Spain brand," sources at the ministry explain. The project also includes the appointment of a special commissioner for the Spain brand. Originally scheduled for a couple of weeks ago, the presentation was postponed due to the budgetary debate in parliament. Now the government is waiting for the king to recover from his hip operation before going ahead.

The Elcano Royal Institute, which has just published its first global presence index (based on 2010 figures), says that Spain ranks ninth in the world as a foreign investor. The Ministry of Foreign Affairs has just witnessed Argentina's nationalization of Repsol's subsidiary in that country, YPF, and not long after, Bolivia announced the nationalization of the subsidiary of Spain's national electric company there. When announcing her country's move, Argentinean President Cristina Fernández de Kirchner made a mocking reference to an elephant's trunk, in light of the scandal over the king of Spain's hunting trip to Botswana, where he ended up breaking his hip.

Madrid is, undoubtedly, going through a rough patch with its partners. During his failed re-election campaign, Nicolas Sarkozy used Spain as a bad example several times. "Look at the state of Spain after seven years of socialism," the then-president and candidate declared at the beginning of April. Sarkozy also spoke of "the major crisis in confidence that the great country of Spain finds itself embroiled in now," adding: "There is not a single French citizen who wants to go through what Greece did, and what Spain is experiencing right now." More friendly fire came from a country also experiencing serious budgetary imbalances: Italy. The country's prime minister, technocrat Mario Monti (who is becoming more political with each passing day) blamed Spain for Italy's risk premium problems.

Raphael Minder, Spain and Portugal correspondent for The International Herald Tribune, lived in Spain in the 1990s, returning again in April 2010. "I don't think that Spain is an isolated case, but due to the size of its economy, it causes more concern than Ireland, for example," he says. "But north-south stereotypes are not really useful in this matter: Holland has also stirred doubts," he says, in reference to the Liberal-Christian democrat government losing the backing of the far right for cuts designed to help the country reach its budget deficit target.

Spain's economic instability is not an issue of perception. But it is a reality, and the economic figures refuse to budge. "The perception abroad is really no different than that in Spain: optimism is fast disappearing," adds Minder.

It's true that the crisis of confidence is also palpable inside Spain's borders: consumer spending is in free-fall, credit has dried up, and Spaniards, a society already given to self-flagellation, are seeing that their economic splendor had feet of clay.

Víctor García de la Concha says he has not noticed a fall in Spain's prestige. Since he was appointed to head up the Cervantes Institute more than two months ago, he has receiving countless invitations to set up centers in other countries. "There is no indication of a negative country image at all; it is buffered by the general European crisis and the fact that there are still bugs in the EU system that need to be worked out," he says. He adds, however, that "there is a need to transmit a new, different message in Latin America, which is based on common culture and interests."

"Spain's reputation, which can be understood as admiration, respect and trust toward our country by citizens of the G8 countries, fell between 2010 and 2011, but it is still quite strong, and comparable with neighboring countries such as Great Britain and Italy," says Fernando Prado, Spain director for the Reputation Institute, a global reputation management consultancy. He warns, however, that though Spain "is still strong in soft qualities such as lifestyle, friendly people, and leisure, entertainment and cultural offerings, there are weaknesses in hard qualities such as innovative capacity, technological development, brands, and well-known and successful companies."

Which is to say that there is a need now, like the one Verdú described in 1985, for Spain to put a new spin on what it has to offer, one that brings it back into the global embrace and puts it in vogue once more. Marketing and diplomacy, however, need the backing of an economy that regains its ability to inspire confidence.