Nearly 70 years ago they died but they do not rest in peace. This winter the ghosts of Spain's bloodthirsty civil war live again, dominating the agenda for both the Church and State.

Last month the ruling PSOE (the Party of the Spanish Socialist Workers) passed a law of historical memory (la ley de memoria histórica), assigning public funds to the families of victims of the 1936-39 civil war so that they can exhume their bodies. In 2000, 13 unmarked graves of dead Republicans were discovered in a hamlet in northwest Spain. Their deaths, as the losers in the civil war, had never officially been honoured or even mentioned. As dozens of similar Republican graves were found all over the country, the Spanish began, for the first time, to talk openly about the war. It was a radical departure from El Pacto de Olvido, the consensual agreement to simply “forget” and never to discuss the war or the 40-year dictatorship that followed it.

After the death in 1975 of the victor, General Franco, silence was judged necessary to reconcile Las dos Españas, “the Two Spains” opposed during the war. As Carlos García de Andoin, federal co-ordinator of the Roman Catholic wing of the PSOE, says: “During the transition [the period between the end of Franco's dictatorship in 1975 and Spain becoming an official democracy in 1978] looking at the past meant reopening old divisions. It was a delicate time. We needed to talk of reconciliation and try to forget the past. Forty years later, things are different: remembering the past is no threat to the stability of the state.”

The conflict, which began in July 1936 with a military uprising against the left wing, democratically elected Second Republic, still impacts on the Spanish today. Many families were divided, with one son defending the Republic and another joining the Nationalists. The Church was caught up too, supporting the Nationalists. Even today, stripped of the political power granted by Franco, the Church exerts considerable influence over Spain's 40 million citizens, one quarter of whom are regular Mass-goers; 80 per cent define themselves as Catholic, compared with 0.6 per cent as atheists.

Designed mainly to honour the Republican dead, the law of historical memory eventually covered “all victims of the war killed for religious or political reasons”. The words “religious reasons” refer to the war's other victims, the nearly 7,000 Catholic priests, nuns and monks murdered in the conflict by Republicans. Their ghosts still haunt the Spanish.

Three days before the law of historical memory was passed, nearly 500 of those religious victims were honoured by the Catholic Church in a mass beatification ceremony. The 498 individuals now on the path to sainthood were killed, often after being tortured, in 1934, 1936 and 1937.

The Vatican described them as “martyrs of the 21st century”. Spanish Catholics such as Alejandro Rodríguez de la Peña, secretary-general of the Asociación Católica de Propagandistas (The Catholic Propagandists' Association), describe them as innocent victims of the wave of anti-clerical persecution that swept 1930s Spain.

“The Left wants to portray the martyrs as politicised clerics ,” says Rodríguez. “They don't want to recognise the fact there was a religious persecution. These were simply Christians who died forgiving their assassins, and were killed out of hatred for the Christian faith.”

Not all Catholics agree, however. Redes Cristianas, a Catholic grassroots community, opposed the beatifications. Evaristo Villar, a spokesman, explains: “The war unleashed waves of accumulated hatred. Institutions have greater responsibility as they exist to control violent passions. The Church was not up to the task of reconciling the two sides.”

Though the Vatican initially backed the Republic, within Spain, as anti-clerical violence spread, leading prelates began to term the war “a crusade”, even “a war waged against the Christian and Spanish spirit”.

“The Church needs to make a serious examination of conscience before beatifying people,” says Villar. “Had it done so it would see that [these deaths] were the result of the people reacting to a clergy which had always oppressed them. Sections of the hierarchy have twice made attempts to apologise for its role, but, as Christians died on both sides, this is not enough.”

That is not the full story, says Rodríguez: “The Church was hugely decisive in Spain becoming a democracy.”

Villar also objects to the fact that the clergy who died fighting for the Republic in Catalonia and the Basque regions were not beatified. “Those priests died because they were fighting for a political cause, not because they were priests,” argues Rodríguez.

Despite wrangles, signs of a reconciliation between the two Spains are on the horizon. The beatifications offered a chance for the Socialist Government and the Church — at loggerheads over new laws promoting gay marriage, quicker divorce, citizenship classes and the role of religious education in schools — to build bridges.

The Government claims such measures reflect a changing, pluri-religious Spain. Opponents such as Rodríguez claim that the Socialists want to “artificially accelerate the rhythms of social change. They want to modify the soul of Spain”. A thaw in hostilities was signalled at the beatifications by the presence of Spain's Foreign Minister, as well as the parliamental deputy responsible for the law of historical memory.

At the last moment an amendment was inserted into the law modifying a clause obliging churches to cover their plaques to “the fallen” if they featured Francoist symbols. And this week Monsignor Ricardo Blásquez Pérez, the president of the Spanish bishops' conference, upheld the right of “every social group” — including the Catholic Church and political parties — “to recall its history”. “Collective memory cannot be selective,” he added. “It is quite possible for different evaluations of the same events to exist side by side. If a genuine desire to discover what happened exists, these accounts will be reconciled” — and the ghosts of the Civil War laid to rest at last.