The Saturday march in San Sebastian sought international attention, highlighting the complete lack of representation for Basque concerns in central government.
Relations between government and local Basque officials have sunk so low the two sides do not talk to each other anymore.
Some are concerned Madrid and Vitoria, the Basque capital, cannot be drawn back together after 14 March general elections - when a new central government will take over.
The reasons for the rift are clear - Basque hopes for greater self rule, and disagreement on how to deal with the Basque separatist group ETA.
The central government's strained ties with Spain's "autonomous" regions lie at the heart of the election campaign.
The ruling centre-right Popular Party (PP) defends the status quo, which grants the regions wide powers of self rule, but with ultimate authority resting in Madrid.
The main opposition Socialists, who trail in the polls, favour altering the statutes governing home rule in places like Catalonia, where the Socialists govern in coalition with two Catalan regional parties.
Local Basque leader Arnaldo Otegi
joined the mass protest
But the main problem concerns the Basque Country, in northern Spain.
Refusal to talk
Prime Minister Jose Maria Aznar refuses to meet Basque premier Juan Jose Ibarrexte, in large part because of Ibarretxe's proposal to grant the Basque Country a "status of free association" with Spain.
Aznar questions the Basque Nationalist Party's loyalty to Spain and its commitment in the fight against ETA.
Meanwhile the Basque Nationalist Party, which has governed the region since 1980, sometimes brands Aznar's party as the heirs to former dictator General Francisco Franco, who died in 1975.
"If the Basque government wants a friendly relationship with the rest of Spain, it should reconsider its behaviour of recent years," said Carlos Urquijo, Madrid's representative in the Basque region.
San Sebastian was full of Basque
separatist flags on Saturday
"If you keep giving a kick in the pants to the person you are trying to talk with, you can't expect them to open the door for you," Urquijo said, referring to the so-called "Ibarretxe Plan".
Basque election hope
Such public statements suggest little hope for a breakthrough, but privately Basque leaders are pinning hopes on Mariano Rajoy, who has been hand-picked by Aznar to run as the ruling party candidate for prime minister.
Rajoy is seen as less strident than Aznar and also has a track record of defusing bitterness, as when he soothed outrage in his native Galicia after a massive oil tanker spill there in November 2002.
He pledged on Saturday to revive dialogue in the troubled region.
One high-ranking official in the Basque Nationalist Party said: "It will be better under Rajoy. At least it can't be any worse."
For its part, the Basque Nationalist Party recently replaced its long-time boss Xabier Arzalluz, 71, with 40-year-old Josu Jon Imaz, seen as more moderate.