ETA, the Basque separatist organisation, claimed responsibility for five small bomb explosions in northern Spain on July 20. Warnings were given before the bombs went off, with police consequently evacuating parts of four seaside resorts in the Cantabria region, each of which was targeted. Despite injuries from flying debris no one was seriously hurt in the attacks. The towns singled out for the bombs included Laredo, Noja, and Getxo. The attacks fitted a familiar pattern of an ETA summer bombing campaign, designed to hit the tourist trade. The Madrid government condemned the attacks. Prime Minister José Luis Rodríguez Zapatero broke off peace talks with ETA after the organisation killed two people in a bomb attack on Madrid airport in December 2006, ending a 10-month ceasefire. In May 2008 ETA had bombed a Civil Guard barracks in Legutiano, giving no advance warning and killing one policeman and injuring four others. However, the organisation was thought to have been significantly weakened later than month when police in southwest France arrested Francisco Javier López Pena and three other leaders. Despite ETA’s renewed activity, BMI’s newly released Q308 defence and security report predicts a solid outlook for the Spanish defence industry and a stable internal and security outlook. Relations between the central government in Madrid and the country’s 17 autonomous regions can be difficult, sparking disputes over a wide range of issues. Spanish security forces continue to focus their attention toward international threats. There are currently no major conventional military threats to the country, but the threat from international and domestic terrorism remains very real. The Madrid bombings of March 2004 had a profound effect on both Spain’s domestic and foreign policy, in terms of Spanish counter-terrorist operations and the withdrawal of Spanish troops from Iraq. The country remains committed to an active international peace-keeping role, despite having to pay the price: six Spanish peacekeeping soldiers were killed in a car bomb attack in Lebanon in June 2007. The ongoing modernisation process at the heart of the armed forces, combined with an increase in Spain’s involvement in peacekeeping operations, has justified an overall increase in the defence budget. Also, in light of the Madrid bombings and the pressing need to boost counter-terrorism operations, the administration opted for a 17.1% increase in the Security Services’ budget. Total expenditure is forecast to increase steadily from EUR9.03bn in 2005 to reach EUR11.1bn by 2010. The defence industry will benefit from planned increases in government expenditure. Restructuring and consolidation in the Spanish and European defence industry, and the state’s continued relinquishment of its hold on the industry, has allowed Spanish firms to increasingly integrate into pan-European and transatlantic markets, and gain greater access to international markets. As a result, arms exports are expected to rise in the near future, and imports are also likely to benefit from the government’s modernisation plans.