Clearly, with King Juan Carlos and Queen Sofía as its official patrons, ARCO has been given a significant role in official Spanish culture. The 2006 edition of ARCO, the International Contemporary Art Fair, opened under chilly but clear blue skies on Feb. 9-13, 2006, filling two pavilions at the modern Parque Ferial on the outskirts of Madrid. Now celebrating its 25th anniversary, ARCO features no less than 278 galleries from 33 countries for 2006, with 85 of the galleries hailing from Spain itself.

Top foreign galleries at ARCO include Charles Cowles and Van de Weghe Fine Art (U.S.), Louis Carré & Cie., Thaddaeus Ropac and Yvon Lambert (France), Haunch of Venison, Annely Juda and Lisson (U.K.), Karsten Greve, and Jan Krugier, Ditesheim & Cie (Switzerland), Hans Mayer and Heinz Holtmann (Germany), Enrique Guerrero and OMR (Mexico), Filmena Soares (Portugal), Ruth Benzacar (Argentina), Christopher Cutts (Canada) and Brito Cimino (Brazil).

Austria is the special guest country, in a program organized by Franz Morak, Austria’s state secretary for the arts. Among the 22 galleries on hand are Engholm Engelhorn, Hilger Contemporary, Grita Insam, Krinzinger, Meyer Kainer, Elisabeth & Klaus Thoman and Lisi Hämerlie. One highlight of this section was the booth designed by abstract painter Gerwald Rockenschaub and sponsored by Georg Kargl gallery from Vienna -- a working espresso café with walls colored in broad blue, yellow and ocher stripes.

Organized by the Institución Ferial de Madrid (IFEMA) -- whose ubiquitous young staffers are costumed in dashing white jumpsuits -- ARCO booth rentals begin at around €5,000 for the smallest invitational spaces (about 24 square meters) and range up to €30,000 for a 150-square-meter booth (€1 = ca. $1.25). It goes without saying that more ambitious dealers can spend more than €100,000 for travel, shipping, lodging and fees. General admission to ARCO for 2006 is a hefty €30, a rise in price from previous years that prompted a certain amount of local debate. Students get a discount. In 2005, ARCO drew approximately 180,000 visitors.

What's more, the fair flies in art collectors from everywhere, all-expenses-paid. The ploy pays off. Though ARCO is not the flashiest fair in terms of the art market, sales were very good, according to all accounts.

The 2006 installment is the farewell edition of ARCO’s longtime director, Rosina Gómez-Baeza. Her successor is Lourdes Fernández, who hails from Donostia-San Sebastián in Spain’s Basque region. Fernández, 44, is an art historian at the University of Barcelona who directed the European Manifesta biennial in 2003-04; she has also been director of the Galería de Arte DV de San Sebastián (1994-2003) and director of Galería Marlborough de Madrid (1989-1994).

Under Gómez-Baeza’s leadership, ARCO has constantly varied and improved its many offerings. No art fair boasts a grander variety of onsite events and exhibits, thanks to broad government and institutional participation -- sponsorship that has been estimated to total at least $4 million a year. The Spanish ministry of housing, for example, sponsored a competition among architectural students to design a special "cool down" area at one end of the fair. "We wanted to make something that you could feel rather than see," said winning architect Luis Arredondo Alegret.

ARCO is marked by a range of institutional acquisitions -- the ARCO Foundation has a budget of €174,000 for art purchases for 2006, while other museum and corporate buyers (and their acquisition budgets) include MUSAC in León (€1 million), the Galician Centre for Contemporary Art (€90,000), the Province of Malaga (€40,000, for works by Andalusian artists) and the Mapfre Cultural Foundation (€240,000).

Regional museums and private foundations also sponsor their own high-tech booths at the fair. The large space for the 2007 International Biennial of Contemporary Art of Seville, to be organized by globetrotting curator Okwui Enwezor (now dean of the San Francisco Art Institute), for instance, is a pristine enclosure of white plastic inset with video displays -- no brochures or other promotional material was in evidence.

For the fourth year, ARCO hosted an impressive series of panel discussions in conjunction with the fair. While dealers and collectors conducted their business in the art-fair aisles, top critics, curators and academics, plus no small number of artists, retired to a mezzanine conference area for a series of panels with titles like "Art Criticism: Centers and Peripheries, Hegemonies and Counter-Hegemonies," "Art and Feminism" and "New Markets for Art in the Era of Cultural Marketing." Simultaneous translation at the multilingual panels was provided via radio headsets. The more than 250 participants, who ranged from Artforum editor Jack Bankowsky and Museum Fridericianum director Rene Block to Swiss collector Uli Sigg and the artist Orlan, each received an honorarium of $400 (or more) plus hotel and airfare.

For 2006, ARCO even boasts its own daily newspaper, dubbed ABCDARCO, a collaboration between the fair management and the ABC daily newspaper. Though not quite as lively a read as the pioneering tabloid published by the Art Newspaper for the occasion of the 2005 Art Basel Miami Beach, the ARCO daily paper is bilingual, with stories in English as well as Spanish.

No art fair would be complete without a wacky art performance, and indeed, ARCO featured an art-and-fashion manifestation by Gianni Molaro -- see www.molaroart.com -- with a row of fashion models dressed (or half-dressed, as it so happened) in garishly hand-painted outfits of exotic cut, marching up and down the aisle to the sound of a tinkling bell.

One top gallery at the fair is Edward Tyler Nahem Fine Art from New York, whose booth is filled with an impressive selection of modern and contemporary works, ranging from an Edgar Degas pastel of a femme de coiffant and a 1955 Vertical Composition by Jackson Pollock to a Gerhard Richter gray abstraction from 1976 and a large 2002 spin painting by Damien Hirst. Overall, the value of the works is about $26 million, and the Pollock can be yours for around $2.5 million. "We came for the first time last year," said Nahem, "and were really thrilled. After Art Basel, ARCO is the best art fair in Europe."

The art market is healthy and growing, Nahem said, with a diverse collector base -- not just hedge-fund millionaires -- and an unprecedented geographic reach. "2005 was our best year ever," he said, "and 2006 is starting off to be better still." After more than 25 years in the business, largely in the secondary market, Nahem is moving his gallery to 37 W. 57th Street in Manhattan, where he plans to begin working with contemporary artists. Who might they be? We’ll have to wait and see.

Probably the most valuable artwork at the fair is a classic Cubist painting by Pablo Picasso, part of the Marina Picasso collection on view at the booth of Jan Krugier Ditesheim & Cie. from Geneva. Titled Femme à la mandoline (Mademoiselle Léonie assise) (1911) and featuring a model about whom little is known, the severe Analytic Cubist masterwork has also been published as Femme à la Guitare and dated 1915. After noting that "This is a very rare painting" and that it might not in fact be for sale, François Ditesheim said that its price is €20 million.

Another especially notable booth was provided by Galerie 1900-2000 from Paris, with a dense installation of historical gems, including many smaller works on paper, by greater and lesser-known Surrealists, Dadaists, Cubists and photographers, an incredible 189 works in all. The selection ranges from a ca. 1950 papier decoupé by Andre Breton and a 1936 decalomania by Salvador Dalí to a 1935 Ballet d’insectes oil by Andre Masson and a 10 x 12 inch Faux Picasso (ca. 1945) by Oscar Domínguez.

Due to the privations of World War II, Picasso gave Domínguez special license to make fakes of his work, according to dealer Marcel Fleiss, who operates the gallery with his son David Fleiss. Several Domínguez fakes -- he also copied de Chirico, Ernst and Tanguy -- are said to hang unnoticed in U.S. museums. In any case, the Faux Picasso here, which is priced at €80,000, serves as a reminder that even the avant-garde sometimes repeats itself.

Like many overlooked modernists, Domínguez is currently hot at auction -- a new world record for the artist was set at Christie’s London earlier this week when a painted palette box containing a tableaux of a miniature grand piano and bull sold for £344,000, well over the high estimate of £70,000. A museum devoted to Domínguez’ work is slated to open soon in Tenerife, the artist’s birthplace.

"I’m never going back to New York," proclaimed émigré New York dealer Kenny Schachter, perhaps mindful of the profile of his luxurious London townhouse (where he lives with his artist-wife, Ilona Rich, and their four children) in the New York Times "style section" that very day. Once a devotee of young artists, Schachter now does land-office business with contemporary blue chips. His ARCO booth includes a Robert Smithson 1966 steel construction (€85,000) and a 1989 John Baldessari photo diptych (€170,000).

But the star of Kenny Schachter Rove, as the gallery is called, is the London-based deconstructivist architect Zaha Hadid. The gallery booth is largely occupied by an untitled "seating element," a huge fin-shaped biomorphic structure of wood and white Styrofoam. "She’s never done anything like this," Schachter said. The price is $250,000, and it’s on hold, according to the dealer. Also on view is a prototype model for Hadid’s Z-Car (€40,000, in an edition of six) that Schachter expects will be included in the architect’s retrospective, which opens at the Guggenheim Museum, June 2-Aug. 23, 2006.

At Pack Galería d’Arte from Milan are new photographs from a recent performance in Rome by Zhang Huan, the Chinese artist who is perhaps best known for 12m2, a grueling endurance test for which he covered himself in honey and sat in a Shanghai latrine, drawing a remarkable number of flies to his body. In Rome, Zhang did an action at the famous Marforio statue in Rome’s Piazza del Campidoglio (designed by Michelangelo), in which he tried to "catch" the reclining giant figure with blown soap bubbles. The performance, called My Rome (2005), is documented in a series of large photographs that are priced at €14,400 in editions of eight (with two artists’ proofs). According to Giampolo Abbonidio, a fund manager who opened his gallery in 2001 (and named it after a work by Alighiero Boetti in which a slab of concrete is broken into pieces with hammers), Zhang has recently relocated in China so that his children can grow up speaking Chinese.

One of the most popular contemporary artists in Spain is Susy Gómez, whose fashion-related photocollages and sculptural installations can be found at several booths in the fair, including those of Soledad Lorenzo and Toni Tàpies. At the booth of Horrach Moyà from Palma de Mallorca, Gómez has taken over the entire space with an installation of a large pink Styrofoam heart, surrounded by oversized steel sculptures of flowers that lie on the floor. At the entrance to the booth is a cotton candy machine, and visitors are encouraged to take a stick of the pink spun sugar and implant it into the heart like some kind of Pop wishing tree. Titled A Place to Repair Desire, the participatory sculpture is for sale for €40,000. Gómez’ drawings -- a silhouette of a unicorn done in glitter, for example -- can be had for €1,800.

ARCO specializes in Spanish art, of course, and a particularly focused group of sculptural installations and DVD projections by young Spanish artists can be found in a special section of 16 works selected by María de Corral. One notable projection is a 4½-minute loop by the avant-garde group El Perro called Democracia (Saking Carabanchel) (2005), an invigorating tape of skateboarders speeding and rocking their way through the abandoned Spanish prison. The DVD is €10,000 in an edition of five (two have been sold at this writing) from Galería Salvador Diáz in Madrid.

Another booth features a large, sheet-steel reproduction of a Post-It note with the handwritten adviso, "las cosas más importantes no son cosas" (the most important things are not things), a project by the New York-based artist Ester Partegás. The installation is a Spanish version of a similar work she made for P.S.1 in Long Island City. It’s priced at $4,200; apply to Galería Helga de Alvear.

The organizers of ARCO are smart -- they know that a contemporary art fair needs plenty of cutting-edge art to retain its appeal. To this end, ARCO has lined the larger of its two exhibition halls with small booths featuring artists selected by independent curators and sponsored by younger dealers from around the world, in sections called "cityscapes," "on youthculture" and "project rooms."

At one such booth, the Portuguese artist Carla Cruz sits on a stool, wearing a T-shirt with a hand-lettered slogan that reads, "I am an artist. What can I do for you?" Cruz, who is clearly concerned with art’s social function in a very concrete way, has been doing such public actions for a decade. On the wall behind her -- in the booth of Plumba Contemporary Art, opened a year ago by Nuno Pereira to work with young artists -- is a blue North African tapestry, slightly altered so that the words "European Dream" are legible in block letters. The work is a reference to African people in Morocco who seek to enter Europe -- the two continents are only 17 kilometers apart, Cruz says -- an aspiration that Portugal should identify with, since in the ‘70s one-third of the country’s population fled the poverty of the Salazar regime.

Another one of the "fringe" booths is occupied by Aidan Gallery from Moscow, which features a series of futuristic "scrolls" by Moscow artist Maxim Ksuta (b. 1971), clear plastic objects covered with script and held in lighted glass cases. Called Celestial Calligraphy (2005-06), the works are the result of a careful examination by the artist of overlapping texts until he discovers, miraculously, a humanoid image emerging from the letters. Ksuta is included in the forthcoming exhibition of contemporary Russian art to be held at Sotheby’s New York in April 2006 in conjunction with its Russian auction. The scrolls are €6,000 each (in an edition of three).

Aidan, who started her eponymous gallery in 1993, is herself a painter and installation artist. A survey of her work goes on view at the Museum of Contemporary Art in Moscow on May 16 -- a date that she notes coincides with the 2006 Art Moscow art fair.

An art fair like ARCO that draws such a large audience is bound to have some particularly theatrical works with broad appeal -- a favorite of your correspondent as well. At the booth of Madrid’s Galería Raquel Ponce, for instance, is the ten-foot-tall Breathing Baby (2005), a sewn white nylon construction by the 40-something artist Max Streicher. The sculpture is equipped with a fan, and shifts slightly in position as it "breathes" (the vent is located in the baby’s navel). Streicher has also made an inflatable unicorn and a prone man. This baby is one-of-a-kind, and priced at €24,000.

Over at the booth of Perugi Artcontemporanea from Padua is a life-size model of a 1950s hot rod, made entirely out of cardboard by the 32-year-old British artist Chris Gilmour. "Collectors like his work very much, and normal people, too," said dealer Anna Perugi, who is participating in ARCO for the first time. Titled Model A Ford (2006), the artist made the cardboard construction especially for the fair -- and finished it only last week. It’s priced at €17,000.

The Gana Art Gallery from Seoul, which opened in 1983, features a life-size shark constructed of shredded automobile tires in its booth, a work by Yong Ho Ji (b. 1980), an artist who has recently moved to New York. Titled Mutant (2004), the shark sculpture is a bargain at €6,000.

And last but not least -- really, I’ve got to finish this so I can visit the Prado! -- is Pilar Albarracín’s comic and kinetic Layinghen (2006) at Galeria Filomena Soares. A lifesized animated taxidermy hen sitting on boxes containing cartons of golden eggs, the bird moves and clucks, then the clucking turns to hysterical laughter as the bird rotates and moons the viewer, revealing a golden egg about to emerge from its body. A metaphor for the art market? Stay tuned.

WALTER ROBINSON is editor of Artnet Magazine.