Guillermo del Toro's The Devil's Backbone is an excellent addtion to a strange but compelling sub-genre: Spanish rural/isolated locale Gothic mood-pieces--with children. This goes back at least as far as The Spirit of the Beehive in 1973--although no overt supernatural elements are present in this one, unlike The Orphanage (2007) or del Toro's own Pan's Labyrinth (2006). It may be a mini-genre, but its potency hasn't waned--and The Devil's Backbone may be the best of its type.
Like Pan's Labyrinth, The Devil's Backbone is set during Spain's civil war in the late 1930s. Looming fascism in both films serves as a kind of specter haunting this corner of Europe, its brutal will always ready to exert itself even on children. But the orphanage of The Devil's Backbone withdraws for a time from the larger world and literally goes underground--and under water, to achieve effects that are at once chilling and beautiful. It's a ghost story, but one that rises to affect the political and personal worlds of the orphans, the left-wing Republicans (the side that Bogart fought with in his backstory in Casablanca--the losing side, as Louis noted) who run the orphanage, and the fascist Nationalists whose unexploded bomb in the orphanage's courtyard serves as a threat that cannot be withdrawn.
There's mystery and mysticism, politics and poetry, all of it mixed in without apologies. The Devil's Backbone may not be as aggressive as Pan's Labyrinth, but its subtleties make it the better Gothic, a world of secrets and regrets, with the strange justice ghosts so often require.