MADRID — Short on marquee names, the Spanish cinema needs sleeper hits. It now has one: action-thriller “El Lobo,” a true-life tale charting how small-time felon Mikel Lejarza, code-name “Lobo,” infiltrated Basque terrorist org ETA in the ’70s.

The brain-child of El Mundo TV’s Melchor Miralles, “Lobo” was rejected by co-producers until Filmax and Estudios Picasso entered. Directed by little-known French helmer Miguel Courtois, its mix of ’70s footage and music doesn’t sound like a surefire attention-getter among young filmgoers.

Spaniards are used to getting their action from Hollywood’s big-budget actioners, and terrorist subjects are often taboo. Yet, with e7.4 million ($9.7 million), “Lobo” was the second highest-grossing Spanish release of 2004.

Sales to 15 foreign territories, including Germany, suggest even a wider resonance.

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“The subject appeals, the film has stars, and (broadcaster) Telecinco pushed it hard,” says Jose Maria Lara, a Basque producer.

Miralles says, “Spain’s recent past interests Spaniards of all ages. ‘El Lobo’ also offers intrigue, action, sex, entertainment.”

Pic indeed has the nervy tension of mob dramas. Hollywood backburnered terrorist pics after Sept 11.

“Lobo,” which bowed in November, was shot before Madrid’s March 11 train bombings. It suggests how terrorist films can deliver catharsis and auds in Europe at least are keen on a different take on the subject. “Lobo’s” ETA militants aren’t simply hairy and heinous — some even push for a farewell to arms. Played by Eduardo Noriega, Lobo loses nearly everything: his family, his girlfriend, his identity and very nearly his life.

The film’s vision rings true with Spaniards. They threw out one government for running an illegal anti-ETA hit squad, and another last March for supporting action in Iraq, encouraging brutal counter-reaction. Arguably freedom fighters under Franco, ETA has degenerated. “Lobo’s” chink of hope is that with democracy, Spain’s state may have finally found some principles.