Is this to be the decade, or at least the year, of the Mexicans? With Alfonso Cuaron's astounding "Children of Men," Alejandro Gonzalez Inarritu's "Babel," and now Guillermo Del Toro's "Pan's Labyrinth" getting notice and awards all over, it certainly looks like it. Although "Babel" was an example of a reach exceeding the grasp, both "Children of Men" and "Pan's Labyrinth" deserve every possible reward.

The year is 1944, in Franco's Spain, and Del Toro has created a world for his film in which the very worst reality of the twentieth century - a fascist despotism - comes up against the kind of fairy-tale magic that a child needs to create in order to preserve any kind of sanity. So he's given us 11-year-old Ofelia (Ivana Baquero), the daughter of a widow who has recently married an army officer, Capitán Vidal (Sergi Lopez), who commands a squad that's been sent to eliminate the last remnants of Republican guerrilla forces now hiding in the forest. Ofelia's mother is pregnant, and Vidal is interested only in the likelihood that he will have a son to carry on his name. He is both a brilliant soldier and an iron-fisted martinet to his wife and stepchild.

Ofelia escapes into a world of strange creatures who regard her as a lost princess. They are both loving and frightening; they include a gigantic toad whom she must defeat and a faun-like creature with his eyes in the palms of his hands. They set her tasks which she must fulfill, they challenge her, they are even sadistic in their rules. Del Toro's comfort working with magic realism lets him move the film back and forth with ease from the reality of life with Vidal to Ofelia's life within the labyrinth.

The film is also about Vidal's pursuit of the guerrillas, and their sympathisers within his own compound; it is vicious and no quarter is given by either side. We in the audience are in the camp of the guerrillas, but we already know how the war ended. Del Toro's film, you might say, takes no prisoners either. This is a sad film illuminated by flashes of warm light that are constantly snuffed out. But let that not keep you from seeing it. "Pan's Labyrinth" is a work that will stay with you, both haunting you and reminding you of its beauty, for a long time to come.