TALK to Bob Palmer for a few minutes and you'll be in no doubt that the arts in Glasgow are flourishing. That's in spite of recession and in spite of fact that 1990, when Glasgow was designated "Cultural capital of Europe," is now well gone.Of course Mr. Palmer, the Glasgow Council's director of performing arts, is still operating and still planning. Indeed, he is looking forward to the the next century. Having learned "one very hard lesson" with the failure of this summer's visiting production of "West Side Story," which he energetically promulgated, he is now urging Glasgow to think about its lack of facilities for large-scale productions such as popular musicals, opera, and dance. "In the preparations for 1990 we turned down eight in every 10 proposals because the Theatre Royal [the home of the Scottish Opera] is not large enough," Palmer points out. But he also points to permanent successes, many the direct result of the push in 1990, including a new major concert hall and a major public gallery for temporary exhibitions, the McLellan Galleries. And the Tramway. A great 98-year-old shed, it is "a great industrial cathedral," Palmer says. It was where streetcars used to be repaired and housed. After seeing service as the Museum of Transport (itself now in grand, new quarters), the Tramway was saved from destruction and has become a highly adaptable space for art and theater. WHEN theater legend Peter Brook staged his epic "Mahabharata" here in 1988, the Tramway's new career took off. In an ironic observation on the ways of Edinburgh and Glasgow, Palmer says more people came to see that production from distant London than from nearby Edinburgh. The Tramway is the envy of other cities and continues to put Glasgow on the international arts map. At the same time, the number of music festivals in the city grows: jazz, international early music, and choral music. The latest notion is for an international blues festival. But it is grass-roots cultural events, Palmer says, that make Glasgow particularly exciting. For the 1990 festivities, he says, hundreds of "groups of local activists" mounted "gala days, neighborhood festivals, displays in libraries, theater pageants and projects, photography competitions." Today, "most of these projects are still in place," he adds. As for cooperation with Edinburgh, Palmer hopes that this might develop more under a new director for the Edinburgh Festival: "A real powerhouse could exist if the two cities worked together. "The cities are so different," he explains. "I don't think that they are competing for the same marketplace." Although Glasgow has established its own annual "Mayfest" of the arts, Palmer says firmly that he doesn't believe Glasgow should ever try to emulate the Edinburgh Festival.