Police said that the suspects had spent the past 20 years extracting what Eta calls a “revolutionary tax” from terrified victims, mostly in the Basque Country.

Among those arrested were Julen de Madariaga, one of the founders of Eta, and Ángel Iturbe Abásolo, the financial brains of the Basque separatist organisation. Madariaga, 73, a Cambridge University law graduate, had gone from being a hardliner in the 1950s to backing the recent peace process.

The police operation came as José Luis Rodríguez Zapatero, the Spanish Prime Minister, was preparing to start peace talks with Eta within weeks.

Juan Fernando López Aguilar, the Justice Minister, said that the arrests would not affect the planned negotiations. “This won’t make any difference at all . . . to the Spanish Government’s decision to take an historic opportunity to end Eta’s violence,” he said.

But Arnaldo Otegi, the leader of Batasuna, the banned political wing of Eta, condemned the arrests as a “clear and frontal attack on hopes for peace”.

Five suspects were arrested in the northwest of Spain and seven in the southwest of France. Most of the suspects arrested in France lived apparently respectable lives and appeared to have integrated into local society, despite their known Eta sympathies. Their ages ranged from 29 to 74. Three were pensioners.

Extortion has been the main way that Eta has funded its 38-year-old terrorist campaign for an independent Basque state in northwestern Spain and southwestern France.

Victims who refused to pay up often had their businesses blown up. Eta even sent pictures of wives and children to their targets with notes that threatened: “Pay up or your family will die.”

Police said today that money from Eta’s extortion racket was sent to offshore tax havens around the world to hide it from Spanish and French investigators. They allege that all those who were arrested acted as intermediaries for the extortionists who directly threatened victims.

But even after the terrorists announced their ceasefire in March, members of the Basque business community said that they were still receiving death threats if they did not pay the feared tax.

José Manuel Ayesa, the president of the Navarre Businessmen’s Association, said that death threats had been sent to businesses in the region in April. The Government launched an investigation.

The raids undertaken today represent a serious financial blow to the terrorist organisation, which has been badly weakened in recent years by a series of arrests of leading figures.

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