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No film industry in Europe has been harder hit by crisis than Spain’s, yet the level of creativity from local filmmakers and producers is often firing on all cylinders.

Sixteen Spanish films will have their world premieres at San Sebastian, at least one local shingle is forming a joint venture with a Euro counterpart, and directors, though often working on far-reduced budgets, are aiming for a wider audience.

To put the Spanish woes in perspective, a couple of facts: Spain’s central government subsidy fund fell 56% from 2011 to 2014’s €33.7 million ($44.3 million), while average film budgets have plunged 50% to $2 million over the 2009-14 span, per producers’ association FAPAE.

Yet, says San Sebastian Festival director Jose Luis Rebordinos, despite the crisis, the industry is “spectacular in creative terms.”

Spain’s surviving producers are also making some bold moves abroad.

Take, for example, Morena Films, one of Spain’s biggest and best-financed shops, which last year opened up offices in Los Angeles and just recently launched a Paris-based production joint venture, Mare Nostrum Prods.

“We want go be a truly independent international producer. The crisis has accelerated this transformation,” says Morena producer Alvaro Longoria. Its upcoming pics, family adventure “Altamira” and U.S.-set, English-lingo genre pic “The Warning,” will rely far less on Spanish subsidy money than ever before, says Morena managing director Pilar Benito.

Like Morena, other Spanish filmmakers are plunging into English-language productions: Fernando Leon has “A Perfect Day” with Benicio del Toro, Tim Robbins and Olga Kurylenko, while Miguel Angel Vivas has zombie pic “Welcome to Harmony” with Matthew Fox.

As Hollywood blockbusters often dismally underperform at the Spanish box office, Spain, despite its straitend financing on new productions, has a good chance of placing a group of films, led by “Spanish Affair” ($73.8 million B.O.) and “El Nino” ($9.2 million through Sept. 7) among the country’s 2014 top 10.

A new generation of directors and producers is breaking through, bringing different production models to the table, Rebordinos says.

San Sebastian competition title “Magical Girl,” by Carlos Vermut, was financed via investment from high-net-worth individuals, plus sales to paybox Canal Plus and pubcaster RTVE, says producer Pedro Hernandez. The Basque government, pubcaster EITB and RTVE backed Spanish competition pic “Flowers,” from Jon Garano and Jose Mari Goenaga. Post-production houses Irusoin and Moriarti not only produced the film, they also did post, says producer Xabi Berzosa.

Only two Spanish preems at San Sebastian are budgeted over €2 million ($2.6 million).

But lower budgets may be fostering creative liberty, partly explaining the variety in the fest’s Spanish lineup, ranging from Roberto Caston’s film-within-a-film “The Silly Ones and the Stupid Ones,” to Iciar Bollain’s immigration doc “En tierra extrana,” toon pic “Mummy, I’m a Zombie,” aging couple drama “It’s Not Vigil” and Gorka Gamarra’s “Lantanda,” about Guinea Bissau creole musicians.

Some of the festival’s Spanish pics push the political envelope, such as Borja Cobeaga’s “The Negotiator,” a comedy about Basque nationalist group ETA, and “Lasa and Zabala,” based on the real-life story of the torture and assassination of two ETA suspects by a government-backed death squad.

Of bigger-budget local fare at the fest, “Marshland,” (pictured) a noir police thriller set in 1980, deals with the country’s emergence from the Franco dictatorship; “Flowers” is the first Basque-language movie competing at San Sebastian; and robot sci-fi drama “Automata,” starring Antonio Banderas, is set in a near-apocalyptic future.

Despite a variety of subject matter, Rebordinos points out that all the Spanish competition films have genre elements, even “Flowers,” an intimate drama about loss and memory, where one suspense element kicks in after just a few minutes. “Two generations of directors, from Alex de la Iglesia, whose touchstone is ’80s American genre, to Juan Antonio Bayona, love genre cinema,” Rebordinos says.

Despite the country’s economic crisis, Spain’s industry is fighting back with imagination, sacrifice and sheer sweat.