Talks between Spain's prime minister and the Basque president on a plan to give the region more independence have ended without either side giving way.
Zapatero (left) disagrees with the Ibarretxe plan
Jose Luis Rodriguez Zapatero is the first Spanish leader to agree to talk about the plan - but he refused to give it his support.
The document put forward by Basque leader Juan Jose Ibarretxe has already been endorsed by the Basque parliament.
But it seems certain to face rejection before Spain's national parliament.
Some believe failure to reach agreement could lead to a constitutional crisis.
Mr Zapatero, his governing Socialist Party and the opposition Popular Party are strongly opposed to the proposal, known as the Ibarretxe plan after the Basque leader.
Speaking after the four-hour meeting, Deputy Prime Minister Maria Teresa de la Vega said there was nothing to negotiate.
She said her prime minister had told Mr Ibarretxe his project was a mistake which could never succeed.
The plan would give extra powers to the Basque region
Spain's government argues the plan for "free association" goes against the constitution, will cause divisions within the Basque country and is rejected by the rest of Spain.
Mr Ibarretxe wants to hold a referendum on the plan within the Basque region, although opinion there has so far been divided on its merits.
He argues Basques have a right to decide their own future.
Basque separatists have been fighting an armed campaign for an independent homeland since the 1960s. There has also been a strong movement for independence which rejects the use of violence.
As well as changing the Basque region's relationship with Madrid, the proposal would also give the region its own court system and representation on international bodies, such as the European Union.
The Basques presently have control over their finances, police, schools, healthcare and other public services.
Much of the support for the Basque plan comes from the outlawed Batasuna party - the political wing of militant group Eta, which is why Spain's politicians are opposed to it.
Socialist MP Rafael Estrella told the BBC: "You cannot change the constitution of Spain from the will of a region, it has to be agreed by the national parliament.
"And the national parliament will reject any change of power for the regions which indirectly are changing the Spanish constitution."
Gorka Espiau, spokesperson for Basque mediation group Elkarri, said it was "almost impossible" for the proposal to be approved in the Spanish parliament.
He said a political dialogue needed to begin between the majority within the Basque parliament and the majority within the Spanish national parliament.