My family have a Basque exchange student staying with us at the moment, and he identifies as and speaks Basque as does his family and everyone around him. He's from Pamplona, so upon initial research, I was confused, because it's not in the Basque Country (autonomous community), but rather in Navarre.
I already knew that the Basque Country extended up into France, so I realised that while Navarre isn't in the Basque Country (autonomous community), it's in the wider Basque Country region.
Why is this the case? Even geographically, it's sandwiched in between the two Basque countries. Is it because the lower half of Navarre doesn't have a high enough % of Basque speakers?
It's the result, mainly, of political decisions during the 20th Century. However, you have to take into consideration that Navarre as a political entity probably precedes the notion of what constitutes the modern (not historical) Basque Country.
First things first, the Spanish autonomous communities are a fairly recent creation; they were established mainly during the very late 70s early 80s. Before these communities came into existence there already were some notions of natural or historical regions within Spain, as Castile (the Old and the New), Andalusia, Asturias, and the rest. In the case of the Basque Country, there was a territory simply called "the Basque provinces", which included Biscay, Guipuscoa, Alava (the three that today form the autonomous community of the Basque Country) and sometimes Navarre. Because of their special laws, up until the 19th Century, they were generally grouped aside the rest of Spain under the name "Foral Spain", "Kingdom of Navarre" or again "Basque provinces".
Navarre was (and still is) a rather special case. The Higher Navarre (the Navarre that lies in Spain, different from the Lower Navarre that is part of France and part of the French Basque Country) is larger than the other provinces combined and has a greater variety of populations and cultures. The flatlands in the central regions and the Ebro riverside in the south were early Romanized and have since lost the Basque language and culture for the most part. In present day, most people south of Pamplona do not identify themselves as Basque nor speak the language. The northeners though, feel every inch Basque and of course, just like your friend, speak the language. The boundaries of the community of Navarre follow the borders of Navarre at the moment of its conquest by the Kingdoms of Castile and Aragon in 1512, which are not ethnic or linguistic borders.
Navarre became "officially" differentiated from the other three provinces during the Second Spanish Republic (1931-1939), when the Navarrese officials rejected the plan of creating a single autonomous community along Biscay, Guipuscoa and Alava; the reasons for this rejection are not very clear, but the weight of the non-Basque population probably had something to do with it. No community was created because of the Francoist dictatorship (1939-1975), but when democracy returned they once again rejected being part of the newly created Basque County community and formed their own, based on the 1512 borders. However, and this is a unique case, the Spanish Constitution includes a special clause (Disposición transitoria cuarta) that would allow Navarre to join the autonomous community of the Basque Country if requested by the Navarrese. This has not yet happened.
As a curiosity, the coat of arms of the autonomous community of the Basque Country (different from the coat of arms of the Greater Basque Country) includes a fourth arm, all in red, saved for the hypothetical inclusion of Navarre in the future.
