In an historic role reversal, recession-hit Spain and Portugal on Friday courted the Latin American leaders of their former colonies, countries that now enjoy some of the strongest economic growth in the world.
Spain's King Juan Carlos 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 the former colonies, economic forecasters confirmed that 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 shrink slightly from 4.4 percent this year to a still robust 3.2 percent in 2013, accelerating to 4 percent the following year.
Spain and Portugal, meanwhile, are in deep recessions expected to last into next year and hit by frequent protests over government cutbacks and higher taxes aimed at keeping the countries economically afloat. 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 Prime Minister Mariano Rajoy's attempts to rein in the budget. 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 slowed traffic in Cadiz for about an hour, and the leaders greeted each other in the evening at the historic San Felipe Neri Oratory church where Spain's first constitution was signed in 1812. After an elegant dinner hosted by the king, participants were to talk Saturday about the financial crisis.
Before the ceremony, European Commission President Jose Manuel Barroso met with Rajoy to discuss the upcoming EU budget for 2014-2020 which, if passed at an EU meeting next week, would see Spain lose €20 billion ($25.5 billion) in subsidies and become for the first time a net contributor to EU funds.
While the Iberoamerican summit was traditionally a place for Spain to showcase its privileged role as a "big brother" for Latin American countries, it has seen that power diminished because of the four-year financial crisis, said Vincent Forest, an economist with the Economist Intelligence Unit.
Highly educated Spaniards and Portuguese are increasingly leaving to seek 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 organization (the summit) 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, will be the cheapest of the four Iberoamerican events that the country has hosted - although no specific cost has been released yet.
Clendenning reported from Madrid and Harold Heckle contributed from Madrid.