Spain has a new government. After two months of tough negotiations following the general elections which failed to produce an absolute majority for Mr Jose Maria Aznar's Partido Popular, Mr Aznar was finally sworn in as Prime Minister, with the support, at a price, of nationalist groupings in Catalonia, the Basque country and the Canaries. He thus becomes the first conservative to replace a left wing prime minister peacefully in Spain since 1934.
It was time for a change. Even the Socialist Party (PSOE) privately acknowledged that 13 years in power had exhausted its potential. The extraordinary proliferation of financial and political scandals in recent years suggested that some PSOE leaders and their associates had come to regard the country as their private fiefdom. The fact that their vote held up surprisingly well enabled their charismatic leader, Mr Felipe Gonzalez, to speak of "a sweet defeat" and of Mr Aznar's "bitter victory".
But power will be sweet, at least initially, for Mr Aznar, who has pursued it relentlessly. The pact he has negotiated with the minority nationalist parties will ensure him a broad degree of goodwill where he might have expected fierce opposition. His willingness, drastically revise some would say reverse - his policies and attitudes to achieve this agreement could be described as ether flexible or unprincipled. But it holds out the historic prospect that the traditional and often bloody antagonism between Spanish conservatives and regional nationalists, may have been finally resolved.
The Spain he inherits from Mr Gonzalez has been transformed, in many ways for the better. The PSOE programme of modernisation has produced an impressive infrastructure and more efficient industry and agriculture. Social attitudes have been liberalised almost beyond recognition; the arts are flourishing, and a welfare state has been consolidated. The fact that the prospect of a military coup, so close to reality 13 years ago, is now almost unthinkable, is a credit to the socialists skilful management of the senior army staff. The PSOE can justly claim to have brought Spain to, the centre of European affairs, and the country is on course to be part of the fast track of EU financial integration.
But modernisation has had a high social cost, "particularly in unemployment, currently running at 22 per cent - one of the highest rates in Europe. Even more seriously, the PSOE has failed to bring ETA's terrorist war for Basque independence to an end. Worse still, it has left the legacy of a "dirty war" which has tarnished the entire security establishment and very senior political figures.
Mr Aznar will face a tough struggle to show that conservative economic policies can create new jobs, where state intervention has failed. He knows it would be enormously unpopular to dismantle the welfare state. But if he has miscalculated the cost of his agreement with the Basque and Catalan autonomous governments, he will certainly be tempted to cut vital social programmes, if the alternative is to fail to meet the Maastricht criteria. Such cuts would certainly produce misery and probably volatile social upheavals.
His pact with the Basque government will cut no ice with ETA itself, which has made a fetish out of an "armed struggle" which still enjoys a disturbing level of support. But if Mr Aznar can conduct a sensitive security policy within the law, he will at least now enjoy the support of many moderate Basques who would previously have distrusted him. He will copperfasten his credibility if he sees that the crimes of GAL, the group which conducted the "dirty war" against ETA in the 1980s, are fully investigated and punished. Perhaps the greatest challenge he faces however will be to achieve anything approaching the same stature in Europe, and the world, as Felipe Gonzalez.