Wow! Bilbao!

A crushed steel rose, a silver volcano in full eruption, a three-prowed ship soaring off the river and into the sky: the Guggenheim…

A crushed steel rose, a silver volcano in full eruption, a three-prowed ship soaring off the river and into the sky: the Guggenheim museum in Bilbao is many things from many angles along the river Nervion. Clad in reflective titanium, it takes on all the tints of a Biscayan autumn sky and casts them back across a city that has long been starved of light. Its impact on first-time visitors is usually spectacular; more importantly, many Bilbainos say that it continues to lift their hearts every time it enters their eyeline. Few new buildings can have been so warmly welcomed by critics and general populace alike. Frank Gehry seems to have risen to the challenge of emulating, and perhaps surpassing, Frank Lloyd Wright's landmark building for the original Solomon Guggenheim Museum in New York.

The interior is also a treasure house of visual surprises, offering unexpected takes on the river and city through gleaming frames of glass, titanium and limestone at almost every turn. What the building does for the art it houses is more problematical, and the art itself is more problematical still.

The enormous "fish room", the size of a football pitch, makes an appropriate home for Richard Serra's specially commissioned Snake, a triple wave of rusted steel 100 ft long. At the public opening on Sunday, children loved it, vanishing happily into its sinuous dark spaces. On the other hand, two Lichtensteins and a Warhol seemed less at home in this rather warehousey ambience.

The building's other major feature, a 165-foot-high atrium, is crowned with Soft Shuttlecock, which droops and flops playfully down over the surrounding galleries. A Jenny Holzer electronic installation, flashing out an infinity of erotic, disturbing and simply banal verbal messages, also gets pride of place here. Anselm Kiefer's monumental, threedimensional paintings are very well served by a large room of their own, and Sol Le Witt's wall drawings can also be seen to very good advantage. Damien Hirst, too, gets his own space for his well-executed exercises in student humour, and the equally modish Jeff Koons has a genuinely charming giant Puppy, made of pansies and other flowers, in the entrance plaza.

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The big absentee is Picasso's Guer- nica, particularly appropriate to the Basque museum since the civil war outrage which it portrays is only 15 miles away. Conservationist arguments are the official reason for keeping it in Madrid. But Gehry says he believes the decision was "politically motivated" - the Reina Sofia museum may have believed that the Basques would never have given it back. "We got the bombs; they get the art," was the acid comment of the president of the ruling Basque Nationalist Party, Xabier Arzallus.

It is a major loss to the Guggenheim, and highlights how weak (in relative terms) this museum is in the modern European masters. If you want to see Miros and Picassos, go to Barcelona, not Bilbao. If you want to get a sense of the excitement of Cubism and Surrealism, the Reina Sofia in Madrid is much more satisfying than this. Even more surprising is the very thin representation of the great Basque sculptors. Four recent works by Chillida, impressive as they may be, was less than the least that should have been done.

Overall, the opening exhibition gives an impression of top-drawer names (Motherwell, Leger, Klee, Kandinsky, Schnabel, Matisse, Duchamp, to give a random sample) represented by second or even third-rate work. The Guggenheim Bilbao is going to have to try harder if the accusation that the great American foundation is fielding a Bteam in Europe is not to stick.

`WOW, Bilbao, the tough city!" exclaimed the US sculptor Richard Serra when he discovered the crumbling Basque industrial capital in the 1980s. He was so excited that he rang his friend Frank Gehry, a Californian architect, to tell him about the sublime ugliness of the collapsing metallurgical factories along the filthy Nervion river.

Today the same river reflects a shimmering palace of culture designed by Gehry, and housing part of the art owned by the Solomon Guggenheim Foundation in New York, including a new sculptor by Serra. Weeks of celebration culminated last Saturday in the official opening of the museum by Spain's King Juan Carlos, before a stellar international audience which ranged from Bianca Jagger to Madame Pompidou.

The promoters of the Guggenheim Bilbao claim it will pitch the city to the top of the international cultural tourism league, offset the Basque Country's violent image, and prime the pump of an economic revival. Its critics fear that the cash-strapped foundation has sold the Basques a very beautiful, very expensive "parking lot", in the words of an American art critic, for works the foundation owns, but does not want to display in New York. Many observers are baffled that the Basque authorities have shelled out £110 million, and the Guggenheim not a red cent, for an institution which will remain firmly under the latter's artistic control.

"The Basques came to eat out of my hand," Krens has said of the negotiations. "I couldn't believe it." His amazement must have been fuelled by the fact that his project - essentially a shop window for the Guggenheim in Europe - had allegedly already been turned down by, among other cities, Salzburg, Vienna, Madrid and Seville. He admitted to The Irish Times that "I would never have put Bilbao on my list of 100 possible cities. The Basques came to me and asked me how they could change the misconception that they were famous only for terrorism and Jai Alai handball. I told them they should build the greatest building of the century." They not only took his advice, they let him choose the site, the architect, and the cultural policy, and paid his bills.

Krens is six foot six, a larger-than-life man in many senses, and is regarded as a brilliant maverick, a stroke-puller and organiser of spectacles in the American art world. A Basque cultural critic who works in the US, Joseba Zulaika, elicited a remarkable self-definition from the man himself:

"Seduction: that's my business. I am a professional seducer. I don't make money but I gather it in, and I have to do that on the basis of seduction . . . Seduction consists in making people desire what you desire without your having asked for it . . . In a way, I am the biggest whore in the world."

Zulaika's well-researched account of the making of the Guggenheim Bilbao, Cronica de una seduccion, has embarrassed the Basque administration and given the project's critics an arsenal of indiscreet information. Does Krens recognise himself in this mirror? Standing in the bright white centre of his object of desire last week, surrounded by celebrities and art works by celebrities, he considers the question with a tiny moue of distaste.

"I haven't read the book, because it's in Spanish. Zulaika has his own angle on the subject, and seems to have put it a little over the top. I did have that conversation, but it was after a few glasses of wine. You should understand that, as a former teacher of philosophy, I was using the word 'seduction in a philosophical sense. I certainly did not mean to denigrate the Basques."

Even the project's severest critics - except, presumably, the Basque terrorist organisation ETA, which tried to attack it with rocket grenades a week before the opening, killing a Basque policeman in the process - concede the beauty of the building. The world's prestige press flocked to the city with laptops programmed with superlatives, months before it had even been finished.

"Have you been to Bilbao?" gushed the New York Times in early September. "In architectural circles, the question has acquired the status of a shibboleth. Have you seen the light? Have you seen the future?" In the virtual reality of glossy supplements, the Guggenheim Bilbao was a triumph before the first real punter paid in and passed the threshold.

To understand why the future has chosen to alight in Bilbao, and why some of its more thoughtful inhabitants are underwhelmed by the visitation, it is necessary to turn for a moment to the past.

The 19th century mining boom in Bilbao's hinterland drew poor people, giant factories and great wealth into what had been a small but significant merchant seaport on the Bay of Biscay, with historic trading links with London. A huge influx of Spanish-speaking workers helped to obscure Bilbao's fading links to Basque rural culture, and by 1900 the unique local language, Euskera, was rarely heard on its streets. Modern Basque nationalism arose in response to modern Bilbao. Traditionalist small businessmen were aghast at a city teeming with godless Andalusian socialists and anarchists, seething with vice, and owned by a cosmopolitan local oligarchy contemptuous of the Basque Country's distinctive way of life. It is deeply ironic that the descendants of these nationalists, who today control the city and the region's autonomous government, should have invited a quintessentially cosmopolitan New York museum to be Bilbao's flagship as a new century turns.

Industrial age Bilbao became a megalopolis of filth and pollution. When I went to work there in the dying months of Franco's dictatorship in 1975, it seemed like a film set for a fascist Hades, designed by some deeply depressed expressionist. The air was noxious with poisoned smog, the buildings were caked in grime, and the dim and patchy street lighting only seemed to reveal shadowy riot police at every corner.

The advent of democracy over the next ten years, opening up trade with Europe, ironically spelled collapse for Bilbao's obsolete industries, which had stagnated successfully under Franco's protectionist economy. Vertiginous economic decline, spiralling unemployment, and a vicious cycle of political violence made the city a problematic conquest for the moderate nationalists, who shared some of ETA's aims, but rejected its increasingly indiscriminate terrorist methods.

By the early 1980s, the moderate nationalists had won a remarkable degree of self-government from the Madrid parliament, and found that autonomy brought heavy responsibilities. When efforts to attract major new industries failed to regenerate the stricken city, they reached for a model familiar to us from Temple Bar in Dublin - culturally led urban renewal. They invested heavily in refurbishment, and when Bilbao's face was thoroughly washed, it turned out to have a surprisingly attractive profile. Dull, indistinguishable blocks of buildings on the river front revealed unexpected individuality, and even elegance, when a century's gunge was sand-blasted off them. Cleaner air opened up vistas to the surrounding necklace of green hills. New features were added to the city. The prestigious British architect Norman Foster was invited to design a Metro, whose stairwells erupt onto the street in spectacular, extravagant glass canopies. The Spanish architect Santiago Calatrava contributed a playful, glass-bottomed suspension bridge for pedestrians. A little upriver from the Guggenheim site, the bridge provided a splendid vantage point from which to watch Gehry's creation taking shape, and has itself contributed to the recuperation of the Nervion river as a place of recreation. Other projects in the pipeline include a theme park and a palace of congresses.

The idea that the new, clean, globalised industries of the next century can be lured to peripheral regions by a seductive cultural infrastructure is an attractive one, but it has yet to be fully verified in practice. Whatever criticisms can be levelled at Temple Bar, however, its cultural projects were deeply rooted in Irish artistic practice. .

In contrast, the really extraordinary thing about the Guggenheim Bilbao is that it is, in Zulaika's words, a "franchise", dubbed by some American critics as Mac Guggenheim. What Krens has done represents a new model for the expansion of great museums to new territories. Krens demanded a down payment of £10 million for the use of the Guggenheim name and collection, but the reality is that the ["]use["]

remains with the parent organisation. The Basques went on to pay for the building, the acquisition programme, and all future running costs, but the museum has opened without an artistic director. According to its own publicity, programming is the Guggenheim's prerogative.

"How could we have been so stupid as to pay for everything, and leave a vacuum at the heart of our artistic policy?" asks Jose Angel Irigaray, director of Kafe Antxokia, a dynamic and forward-looking Basque cultural centre. Jorge Oteiza, one of the Basque country's best known sculptors internationally, has refused to let his works be exhibited in the Guggenheim, and denounced the whole project as "cultural genocide, a Basquedisney circus."

"Oh, he's said much worse things than that, and I still love him and hope he will come on board," Karmen Garmendia, the Basque Minister for Culture told me. She insists that other artistic programmes will not be cut because of the Guggenheim, that its funding is drawn from infrastructural, not cultural budgets. But where is the Basque cultural participation in this huge enterprise?

"We built it," she replies. She stresses that the Basques have had a reputation for introversion, and that the Guggenheim represents an opening up to the world which must be positive. "It is a bet for the future."

At present, most Basques undoubtedly agree with her. The Guggenheim Bilbao has lifted morale and generated a new kind of pride in a region undermined by industrial decline and lacerated by political violence. Only time will tell whether the bet has been the right one; whether, in the words of Yeats in reference to the Hugh Lane collection early in our own history of self-government, this young country has chosen in the Guggenheim "the right twigs for an eagle's nest".