Spain, Portugal Seek Help From Former Latin America Colonies

Leaders of Spain and Portugal over the weekend appealed to their former Latin Americans colonies, such as Mexico and Brazil, for investments and economic help – in a historic role reversal, highlighting the gradual shift of power from the developed to developing world.

Leaders of Spain and Portugal over the weekend appealed to their former Latin Americans colonies, such as Mexico and Brazil, for investments and economic help – in a historic role reversal, highlighting the gradual shift of power from the developed to developing world.

At the annual Ibero-American summit held in the Spanish port city of Cadiz last week, the heads of Spain and Portugal urged their Latin American counterparts to use them as an “entry point” for investments into the rest of Europe, promising that “your companies will find fertile ground for the creation of wealth that will benefit us all.”

Spain’s King Juan Carlos himself admitted that the two former colonists were facing “difficult situations” with their economic crisis, formally opening the summit with a plea to his ex-subjects.

[quote]”We turn and look towards you (Latin America),” the monarch said.[/quote]

Yet even as some Latin American states pledged “hope and solidarity” for their former masters, others chastised Spain and Portugal for pursuing severe austerity programs that could present a drag risk on the entire global economy.

“An exaggerated and simultaneous fiscal consolidation in Europe isn’t the best answer to the world crisis and could even lead to a worsening recession,” said Brazilian President Dilma Rousseff on Saturday, as cited by the Wall Street Journal.

[quote]”Without growth it will be very difficult for countries to succeed with their fiscal consolidation,” she added.[/quote]

Ecuadorean President Rafael Correa echoed Rousseff’s comments, citing Latin America’s own history with austerity.

[quote]“Don’t commit the same errors we did,” Correa said, according to Reuters.[/quote]

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The annual Iberoamerican summit, beginning in 1991, has traditionally been a platform for Spain and Portugal to showcase their privileged role as a “big brother” for Latin American countries. However with the two economies expected to contract by 1.5 and 3 percent respectively this year, in contrast to 3.2 percent growth for Latin America, Spain and Portugal have had to adopt a humbler tone – in 2007, King Juan Carlos infamously told Venezuelan President Hugo Chávez: “Why don’t you be quiet?” in a moment, which came to represent Spain’s arrogance and Latin American muscle flexing.

“I don’t need to tell you that Latin American investment is welcomed with open arms,” said Spanish Prime Minister Mariano Rajoy. “More Latin America in Europe and Spain is a recipe to confront the present challenges.”

According to WSJ, Latin American companies have, so far this year, announced purchases of European assets valued at more than 10 billion euros ($12.7 billion). On the other hand, investments from Spanish companies to Latin America have shrunk from 32 billion euros in 1999 to just 9 billion euros last year.

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“I think Latin America now has a lot more to show Spain and others in Europe than the other way round,” said Heraldo Muñoz, a former member of the Chilean government who is now assistant secretary general at the United Nations Development Program, to the New York Times.

[quote]“I’m very concerned by the tendency now in Europe to dismantle the welfare state and the social gains that have been achieved,” Muñoz said.[/quote]