First we take Bilbao.

Last summer, as workers were putting the finishing touches on the Guggenheim Museum Bilbao, local booksellers were offering two accounts of how an American-run institution had come to stand in the heart of Basque country. One, Guggenheim Bilbao: Cronica de una Seduccion (Guggenheim Bilbao: chronicle of a seduction), uses copious quotes from Baudrillard's work and Beckett's "Waiting for Godot" to recount how Guggenheim Foundation director Thomas Krens, a "professional seducer," tricked Basque politicians into pledging $100 million from public coffers for an imperialist enterprise that many other European cities were smart enough to reject. The other, El Milagro Guggenheim: Una Ilusion de Alto Riesgo (The Guggenheim miracle: an illusion of high risk), contends that Frank Gehry's fanciful structure, teeming with Modernist masterworks from the museum's New York counterpart, will transform a city better known abroad for its separatist terrorists than its artistic attractions into a new cultural capital.

That these two disparate reports would appear months before the museum's October opening reflects the curiosity, confusion, and controversy that have surrounded the project since its inception. "We don't think Krens tricked anyone," says Jose Antonio Gonzalez Carerra, a journalist who coauthored El Milagro Guggenheim. "But the negotiations were conducted in secrecy, at the margin of public debate. There were a lot of things we didn't know." Basque taxpayers are not the only ones wondering how the investment will turn out: Bilbao's Guggenheim is a new model for a cultural institution, one that is funded entirely by the host country but whose artistic operations are directed from New York. And while Krens' reputation is in a sense riding on the museum's success - he has spent years trying to install such a satellite in cities across the globe - the Guggenheim itself won't suffer no matter what happens. While it is lending its collections and expertise to Bilbao, it won't have to spend a dime.

The purchase of a fully-formed museum was what politicians in Spain's Basque region, recuperating from a decline in the shipbuilding and iron industries in the '80s, bad in mind when they embarked on a $1-5 billion urban redevelopment project. "We wanted to invest in roads, improve the quality of water, and also have a cultural infrastructure," explains Juan Ignacio Vidarte, a former director of tax and finance in the regional government who now serves as director general of the Bilbao Guggenheim. They commissioned Norman Foster to build a subway system, Santiago Calatrava to build a bridge, and other large-scale improvements. But they lacked the expertise, or the resources, to create a center that, as Vidarte puts it, would become "the best museum of modern and contemporary art in the country?" So they hooked up with the Guggenheim.

The museum's container, they decided, should befit its famous collection. "They asked for a museum to bring the world to the building," Gehry says, and he obliged with a playful, over 257,00-square-foot structure on the banks of the Nervion River, composed of interconnected limestone and titanium-clad forms and topped by an enormous "metallic flower." Seen from afar, the building resembles a boat (or, as my taxi driver put it, a shipwreck), a design that evokes the city's famous port. Inside are nineteen galleries, no two alike, adorned with balconies and skylights: some are classical, "stodgy galleries," as Gehry calls them, designed for classic works of early Modernism; others are massive spaces with curving walls where such artists as Richard Serra, Jenny Holzer, and Francesco Clemente will install site-specific works. "They're nothing like Wright," says Gehry. "You can hang art in them." Uniting them all is a soaring atrium flanked by staircases, a glass elevator, and catwalks.

What will hang in those galleries has long been a matter of intense speculation. One Guggenheim proposal envisioned the Bilbao venue primarily as a setting for Minimal and Conceptual works it acquired from Count Panza di Biumo. Basque officials, who have veto power over artistic decisions, rejected that plan, opting for a more comprehensive vision that would still emphasize the postwar era. And while all the works in the Guggenheim's collection are in fact eligible to travel to Bilbao (barring those restricted by bequest), nowhere is it specified exactly which works will be making the trip over the course of the twenty-year contract - leaving some observers to wonder whether, down the line, Spain will find itself with a good deal more Donald Judds than Kandinskys.

The Basques have also allotted $50 million for acquisitions, focusing on Spanish and Basque work as well as that of international artists. They have already bought pieces by Mark Rothko, Willem de Kooning, Clyfford Still, Sigmar Polke, and Anselm Kiefer, among others. Finally, they have left a space for Picasso's Guernica - even though Madrid's Reina Sofia museum has rejected a loan request on the grounds that the work is too delicate to travel. Basque politicians have since presented a decree in the Spanish parliament to force the issue, arguing that Bilbao has a moral and sentimental right to the work, which was painted to commemorate the fascist bombing of the nearby town of Guernica. Their campaign has sparked a national debate, a sign not only of the political impact of Picasso's mural but, more to the point, of the Basques' desire to protect their investment and ensure that the museum will achieve its goal of 400,000 visitors per year.

The opening show will include some 300 works, mostly from the New York Guggenheim's collection; upcoming exhibits to be circulated from the 5th Avenue and SoHo venues include sculpture from the Nasher collection, art from China, and retrospectives of Robert Rauschenberg and Clemente. Eventually, Vidarte says, the museum will curate its own shows, but as of this summer that wasn't yet an option. Bilbao had not hired curators or its own artistic director. Fulfilling the latter post, Vidarte acknowledges, will not be easy: the candidate must have expertise in international, Spanish, and Basque art - and be willing to answer to the government as well as overseers in New York. That does not worry Vidarte: he, and his political colleagues, seem content to let New York make all the curatorial decisions for a while. "With this unique space and this important collection, we can be playing a role in the periphery that we could not be otherwise," he says. "To play in this league, you have to be associated with someone in it. Otherwise, it's hard to get there."

RELATED ARTICLE: Then We Take Berlin

Just a month after the Guggenheim Museum Bilbao opens its doors, Berliners will inaugurate yet another addition to the Guggenheim's international empire. This venue is not a government venture, as the Basque one is, but a private undertaking - it is being financed by Deutsche Bank, Germany's largest, though its corporate identity is discreetly signaled in its name: Deutsche Guggenheim Berlin.

The Berlin Guggenheim, located on the ground floor of the bank's headquarters in a '20s sandstone building, is being designed by Richard Gluckman, the American architect of New York's Dia Center for the Arts and Pittsburgh's Warhol Museum. "It is a white cube you will recognize from all the museums in the world," says Friedhelm Hutte, cocurator of the bank's own collection of modern and contemporary art. The gallery will house three shows a year, all of them - like those at the Bilbao Guggenheim - organized and developed by staff in New York.

Though the Guggenheim envisions the Berlin venue as a possible stopping point for exhibitions en route from its counterparts in SoHo and Venice, its shows will have to be relatively small - the gallery measures 138 by 28 feet, with 23-foot-high ceilings. And unlike the Basque Guggenheim, which becomes by default the major modern art institution in its region, the Berlin Guggenheim will exist among well-established museums and galleries. "We don't have many square meters," says Hutte, "So we have to have very specific, very interesting exhibitions. We have to convince the public that we offer quality."

The show that inaugurates the space in November will focus on three series created by Robert Delaunay between 1904 and 1915: windows, cathedrals, and the Eiffel Tower. The choice of Delaunay "makes a lot of sense" for the Berlin venue, says Hutte, since he was influential in the development of German Modernism.

For now, says Hutte, the bank's collection of German classical, modern, and contemporary art, which currently concentrates on works on paper by young artists from the German-speaking world, will be shown only in the offices, not the gallery. The Deutsche Guggenheim will, however, commission works for the new space by artists "of the highest stature."

- RC

Robin Cembalist is arts editor of The Forward. She writes frequently on Spanish culture.