By Robert Kozak

REUTER 16/3/1995

OTTAWA Canada claimed victory on Thursday in its bitter war with Europe over dwindling fish stocks as Spanish fishing vessels remained outside a disputed fishing grounds off the coast of Newfoundland.

A Spanish fishing ship, the Estai, was freed by Canada on Wednesday, calming the feud with the European Union after a week of accusations and Canadian threats to seize more vessels on the high seas.

Prime Minister Jean Chretien said late on Wednesday that Canada proved it meant business by seizing the Spanish vessel.

"The time has come for us to put our foot on the ground and to show we're doing that for conservation and we meant business," Chretien said.

Chretien spoke directly with Spanish Prime Minister Felipe Gonzalez by telephone on Tuesday to help end the standoff, which had prevented negotiations on the fishing dispute from starting, he told reporters.

The dramatic seizure of the Estai in international waters last week after a chase by Canadian gunboats, and Ottawa's imposition of a 60 day moratorium on fishing for Greenland halibut, sparked the fierce diplomatic clash.

Canada alleged the Estai had been overfishing and accused Spain and the European Union of piracy. They returned the piracy charge.

The Estai was freed on Wednesday after its owners paid a Canadian $500,000 bond (US$350,000), but its captain, Enrique Davila Gonzalez, still faces charges of illegal fishing and three counts of obstruction of justice.

Hard feelings remain between Canada and Spain.

"The Spanish have had a long and difficult history of improper practices wherever they have gone," Canadian Fisheries Minister Brian Tobin told the Canadian Broadcasting Corp on Thursday.

In Brussels on Thursday European Union and Canadian officials held talks to try to resolve their bitter fisheries dispute, but major problems remained.

"The political and juridical problem continues," Spanish Agriculture and Fisheries Minister Luis Atienza told a radio interviewer in Spain. "It is essential that full international legality is restored."

The aim of Thursday's bilateral talks was to prepare a multilateral deal at a meeting of the Northwest Atlantic Fisheries Organisation (NAFO) in Brussels later this month.

A major issue at the meeting will be Canadian fish protection laws.

Canada introduced measures in May last year to extend its jurisdiction beyond the 200 mile limit and on March 6 banned Greenland halibut fishing for 60 days while a solution is found.

Canada's Tobin said on Thursday that the talks will be very difficult, since Canada will demand better rules for monitoring overfishing and better enforcement measures.

A Canadian official said in Newfoundland that further charges could be laid against the Estai for using illegal fishing gear. Canada says the net, which the crew of the Estai cut loose as it was fleeing Canadian authorities, was smaller than allowed.

The net was recovered using satellite technology.

An inspection on Monday revealed that about 80 percent of the Greenland halibut, or turbot, caught by the Estai was undersized, immature fish, the government said. The EU says there is no minimum fish size limit.

The Canadian government's actions have been widely praised in Canada.

"If Canada's short, sharp intervention opens an avenue of negotiation, it will have been a useful catalyst for reform," the Globe and Mail newspaper in Toronto wrote on Thursday.