Post date: Nov 17, 2012 7:22:10 PM
Troubled Spain and Portugal seek help from former colonies to overcome economy crisis.
CADIZ, SPAIN (NOVEMBER 16, 2012) (REUTERS) - Spain and Portugal sought help on Friday (November 16) from their former Latin American colonies to rescue them from economic crisis, looking for a new wave of trade and investment across the Atlantic Ocean.
With their economies in deep recession and people demonstrating against job losses and public spending cuts, the two European countries hope the Ibero-American Summit in Spain's historic port city of Cadiz can open up desperately needed new opportunities.Figures released by the Organisation for Economic Cooperation and Development(OECD) on Friday highlighted their contrasting fortunes, forecasting growth in Latin America of 3.2 percent in 2012 and 4 percent in 2013.
"We have analysed the global crisis, we have analysed the possibilities to overcome the global crisis and we have all concluded that austerity is necessary to get out of this crisis but it isn't enough. They key to overcome the crisis is growth and subsequently the recovery of confidence and the recovery of international relations with Ibero-Americarepresents an important part of the solution," Spanish Foreign Minister Jose Manuel Garcia-Margallo said at a news conference on the summit's first day.
The plight of the former imperial powers has lent purpose to a summit that in recent years has looked like a redundant, ceremony-laden event dominated by the antics of populist leaders such as Venezuelan President Hugo Chavez.
Chavez is not attending this meeting, taking place in a city that prospered in the centuries of Spanish rule in the Americas.
Although the official host is Spain's King Juan Carlos, the most important figure in real terms is Dilma Rousseff, president of economic powerhouse Brazil.
Spain has made clear it sees Portuguese-speaking Brazil as vital to its salvation. Spanish Prime Minister Mariano Rajoy and King Juan Carlos of Spain held bilateral meetings at midday on Friday with outgoing Mexican President Felipe Calderon,Colombia's Juan Manuel Santos and Ecuadorian Rafael Correa. All encounters were expected to focus on economy.
Big Spanish companies such as Telefonica and banking giant Santander now rely on their Latin American operations, and Brazil in particular, for a chunk of their profits as local markets decline.
However, the summit is also focused on finding ways to get small and medium-sized companies from Spain and Portugal into Latin America and its market of nearly 600 million people.
Spanish banks, crippled by the collapse in 2008 of a 10-year building boom, have severely curtailed lending to focus on recapitalising to compensate for hundreds of billions of euros in bad loans.
OECD Secretary-General Angel Gurria, a Mexican, said that Latin America still needed professional expertise, infrastructure, education and technology.
"If we don't change this trend we will all be working for the Koreans," he said.
Portugal is also keen to attract Brazilian investment for the privatisations it has been forced to carry out under the terms of its eurozone bailout. It has also turned to China for the sale of a stake in utility Energias de Portugal (EDP) last year, rejecting Brazil's Eletrobras despite heavy lobbying.
In the privatisation of airport operator ANA, a Colombian construction company, Odinsa, is involved in a bidding consortium, as is an Argentine and Brazilian firm. Colombian-Brazilian tycoon German Efromovich is also vying to buy Portuguese flag carrier TAP.
Big Portuguese companies still have large stakes in Brazil, including EDP and PortugalTelecom, which have helped their earnings that have slumped at home with the recession.
While the summit reaffirms historic ties and is making much of solidarity in troubled times, there are cracks in some relationships, especially involving left-leaning governments.
Spain and Argentina are still in dispute over the nationalization of Spanish oil major Repsol's YPF unit in April. Argentine President Cristina Fernandez is not attending the summit, citing health reasons.