Over the last year, ETA has suffered a number of significant setbacks. The Madrid train bombings radically changed the political environment in Spain , allowing the government to take far more robust action against all terrorist threats. The huge public outcry against terrorism that followed these deadly attacks, including within the Basque region, also seriously undermined ETA?s moral legitimacy even amongst its hardcore Basque separatist support base. Prior to the Madrid bombings, ETA had generally tried to conduct terrorist attacks that were destructive enough to further their cause but not so deadly that such attacks would undermine their support base in the Basque region. However, the Madrid bombings, carried out by an Islamic terrorist group, changed all that, and the resulting backlash also hurt ETA, even though it was not connected to this atrocity.

This setback was compounded in the early autumn when, as a result of increased cooperation between the Spanish and French authorities, the operational leader of the ETA, Mikel Antza and other key ETA members were arrested in France and several sizable arms caches seized . This crucial setback was exploited expertly by the ?timely? leaking of a letter penned by jailed ETA leaders in August that argued that the time had come for ETA to recognize that it was not winning its war with the Spanish authorities and that it should, therefore, reject terrorism. The future looked bleak for ETA. However at that time, the WAR Report cautioned that this was not the first time that ETA had appeared to be ?on the ropes? and then bounced back, and it could do so again.

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