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I think it might not have been handled well, but I suspect it was probably an attempt to prevent panic rather than anything more malicious. After all, one of the big triumphs of Aznar's time in office was the capture of many ETA leaders - last year, ETA killed only three people, its lowest total ever. So why would he want it to look as if ETA had gotten the ultimate revenge on him just before the election?

Also, the fact that ETA members had been caught trying to load suitcase and knapsack bombs onto Madrid bound trains just 2 months ago, and that they had also been caught just the week before trying to bring a van load of explosives into Madrid would certainly lead to the impression that they were trying to stage an attack on trains in Madrid.

AQ, on the other hand, had never said anything about attacking Spain, other than Bin Laden's comments about Al Andalus.

However, people are much more afraid of AQ than ETA, and I think it was reasonable not to rush out and blame AQ before there was even any reliable information of its involvement.

I think what you really have to attribute it to is the leftist and media spin. The very day after, there were members of the usual "peacenik" crowd standing around holding signs blaming Aznar for making Spain a target of AQ; the left really, really wanted it to be AQ so they could say this.

I still think it will be found that ETA was involved, possibly by supplying the materials. (Both the blasting caps and the explosives were manufactured in the Basque Country.)

but I suspect it was probably an attempt to prevent panic rather than anything more malicious

And if we find that our government lied about AA587? So what if it was to "prevent panic?"

It's the Internet age. Lies need to be better-crafted these days.

It was neither, it was simply what they honestly thought at the time, from limited evidence. ETA terrorists had been caught trying to move explosives the previous month. They have tried to hit trains late last year. It was a natural supposition. But there was no misleading and no withholding anything. We knew instantly when they found things out - the van, the tapes, the Moroccan suspects, etc. The outgoing government caught people tied to AQ, before the election. It is absurd to pretend they hide a damned thing. The left is just lying straight to our face about that. They thought AQ benefited them and wanted it to be AQ, said so, and preemptively accused the government of wanting otherwise and lying about it, when it simply did not such thing.

Also, the fact that ETA members had been caught trying to load suitcase and knapsack bombs onto Madrid bound trains just 2 months ago, and that they had also been caught just the week before trying to bring a van load of explosives into Madrid would certainly lead to the impression that they were trying to stage an attack on trains in Madrid.
AQ, on the other hand, had never said anything about attacking Spain, other than Bin Laden's comments about Al Andalus.

This was what I first heard that led Aznar's government to suspect ETA rather than AQ. The reason AQ was first suspected was the massive human loss and the coordination of the bombs(which was my first thought, not knowing about the prior attempts).

What this story says to me, is that the anti-Bush jihad is working on an international scale. It is the same method of attack being used on an ally of GWB. It is actually an easy line of attack since it's complexity goes right over the head of the sheeple. Maybe Aznar held off some number of hours hoping that it was ETA rather than AQ for his political wishes, but considering how he is being punished for being wrong in the first 72 hours, that may be just the reason he held off. We still don't know for sure today everyone involved, it could still turn out that the earlier foiled attempts were test runs ETA did for AQ, we just don't know yet.

I hope in the end Aznar is vindicated by the complete story. He was a strong ally, and his Ambassador(granted probably biased) today pointed to his many economic successes during his time in office.