Glum Spain hosts summit for booming Latam nations

CADIZ, Spain (AP) ? In an historic role reversal, recession-hit Spain and Portugal will be courting at a summit the leaders of Latin American countries they once used to rule as colonial powers but which now enjoy some of the strongest economic growth in the world.

Spanish Prime Minister Mariano Rajoy on Friday opened the annual Iberoamerican summit, which brings together the heads of Spain and Portugal and the leaders of Latin America to discuss political issues and arrange business deals.

As heads of state from Mexico to Chile arrived in the Spanish port city of Cadiz, where conquistadores centuries ago unloaded riches taken from former colonies, economic forecasters confirmed Latin America will continue to grow at a fast clip despite the global economic slowdown.

The Organization for Economic Cooperation and Development predicts that the Latin American economy will expand by 4 percent in 2013, accelerating up from a still robust 3.2 percent this year.

Spain and Portugal, meanwhile, are in deep recessions expected to last into next year and hit by frequent anti-austerity protests over government cutbacks and higher taxes aimed at keeping them afloat economically. Portugal has needed a bailout for its public finances and Spain one for its banks.

The summit started two days after hundreds of thousands of Spaniards protested against Rajoy's budget savings policies. On Friday afternoon, police in Cadiz fired rubber bullets at shipyard workers trying to disrupt the summit with a demonstration against mass layoffs.

The incident only managed to slow traffic in Cadiz for about an hour, and the leaders headed Friday evening to the historic San Felipe Neri Oratory church where Spain's first constitution was signed in 1812. After that, the summit will officially start with an elegant dinner hosted by Spanish King Juan Carlos ahead of talks Saturday about the financial crisis.

While the Iberoamerican summit was traditionally a place for Spain to showcase its privileged role as a "big brother or father" for Latin American countries, the country has seen that power diminished because of the four-year financial crisis and its lasting economic impact, said Vincent Forest, an economist with the Economist Intelligence Unit.

Highly educated Spaniards and Portuguese are increasingly emigrating for work in the countries' former Latin American colonies. And although Cadiz is more than anything a symbol of Spain's powerful colonial past ? it now has one of the highest unemployment rates in the country.

"The very place and (the Iberoamerican summit) organization where you will have Rajoy trying to cling to a past that is over will be a very interesting picture," Forest said.

While Spain helped Latin American economies that were imploding more than a decade ago, investments by Spanish companies in Latin America that paid off in the banking and telecommunications sectors are now helping their home offices stem huge losses in Spain.

The relationship between Spain and Latin America has become "clearly inverted" from what it once was, Forest said. "Spain is still richer than many of these countries and it has the potential to grow again in a sustainable path, but I doubt it will come to the point where it is the big brother again."

Instead, Spain has been forced to comply with demands by the 17-nation eurozone to bring down its bloated deficit through extremely painful cuts, choking economic growth and any hopes Spain might have of returning to boom times it experienced for a decade before the financial crisis began in 2008.

The main decision the heads of state aim to take at the summit is whether the event should be held every other year instead of annually. Spain bankrolls 65 percent of the cost for the 22 countries that participate, and Spanish officials have said they have no plans on cutting back because the gathering gives Spanish business leaders a good opportunity to make deals with their Latin American counterparts.

The Cadiz summit, Spanish officials say, is the cheapest of the four Iberoamerican events that the country has hosted ? though no specific cost has been released yet.

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Clendenning reported from Madrid.

Source: http://news.yahoo.com/glum-spain-hosts-summit-booming-latam-nations-144624789--finance.html

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