Impoverished Iberians, booming Latin America eye new relations

* Iberian, Latin American leaders hold summit in Cadiz

* All sides seek more investment

* Changing relationship amid differing economic fortunes

CADIZ, Spain, Nov 15 (Reuters) - In past centuries, the

Atlantic port of Cadiz played a central role in trade between

Spain and its Latin American colonies, with merchants and

adventurers bringing treasure back to the mother country from

the mines and plantations of the empire.

In recent decades, Spanish and Portuguese businessmen

roamed the continent in a wave of investment known as the

"Reconquest".

But leaders meeting here for the Ibero-American Summit on

Friday and Saturday face a relationship that has changed

profoundly in the past few years. The former colonies may hold

the keys to their ex-masters' salvation.

Spain and Portugal's economies are just about shipwrecked

amid the euro zone crisis. Both have needed outside support to

keep afloat and their people have taken to the streets to

protest against austerity measures and job losses.

Latin America is for the most part prospering, with average

growth at more than 4 percent last year. It is no longer a weak

partner.

Plotting a new economic course and exploring new

opportunities in trade and investment in these troubled times

will be one of the main purposes of the Cadiz gathering.

"Before, Spain and Portugal could set the agenda," said

Ramon Pacheco Pardo, a Spanish, Portuguese and Latin American

Studies associate at King's College, London.

"Now the relationship is much more about the economy, about

necessity. Spain and Portugal really need those markets. It's

also an opportunity to sit down with countries that understand

what it's like to go through economic crisis."

The depths of despair for ordinary Spaniards and Portuguese

were evident in recent days. Millions of people took to the

streets in both countries and elsewhere in Europe on Wednesday

angry over cuts in welfare, pensions and public service jobs.

A woman in Bilbao last week committed suicide as she was

about to be thrown out of her house, shocking the nation and

prompting banks to reassess their policies.

One in four Spanish workers is now jobless in a crisis

driven by a property collapse in 2008. In Portugal, unemployment

is nearing 16 percent. Repeating a historical pattern, about

20,000 Spaniards moved to Latin America last year.

The Spanish chamber of commerce in Brazil said it had

received nearly 1,300 resumes in the past year from

professionals interested in working there.

"They are looking for opportunities that don't exist in

Spain at the moment," said Maria Luisa Castelo Marin, the

chamber's executive director.

Spanish companies also rely heavily on profits from their

Latin American operations to compensate for weakness at home.

Telecommunications company Telefonica said last

week it moved from loss to profit as a Latin American

contribution of 49 percent of revenues offset its troubles in

Europe. Banking giant Santander also takes more than 50

percent of its profits from the continent, a hefty chunk of that

in Brazil.

"This summit is taking place at a time of great problems for

Spain and Portugal," Ibero-American Secretary General Enrique

Iglesias told El Pais newspaper. "The central theme is that we

are looking for a new relationship with Spain and Portugal."

He noted the frenzied activity by Iberian investors in Latin

America in the past 20 years and said more opportunities were

there to explore, including in energy, infrastructure and

communications.

"It is a very fertile field for Spanish firms," the veteran

Uruguayan diplomat said.

Iglesias cautioned, however, that Latin America was also

feeling the effects of the world crisis because of reductions in

exports to Europe and a slowing of growth in China.

BRAZIL ON THE RISE

Previous summits have often been dominated by strongmen such

as Cuba's Fidel Castro and Venezuela's Hugo Chavez, which

provided entertainment if little else. Neither will be present

this time and arguably the most important figure will be Dilma

Rousseff, the president of emerging powerhouse Brazil.

Spanish investment in Brazil stands at about 55 billion

euros. But any Spanish hopes of reciprocal investment - Brazil's

economy has overtaken Spain's in size - might be premature.

Rousseff is known to be worried about a possible Spanish and

Portuguese collapse. S he will stay in Spain after the summit for

meetings with Prime Minister Mariano Rajoy in Madrid.

Brazil's Embraer, the world's third largest

aircraft-maker, did open a factory in Evora, Portugal, last June

and steelmaker CSN acquired Spanish steelmaker Grupo Alfonso

this year. But these moves may not herald a new trend.

Latin Americans are also keen on winning more investment -

Peruvian President Ollanta Humala will also stay on after the

summit and drop by Portugal to tout Peru's attractions.

RISK

Spanish companies have run into their fair share of risk in

Latin America, with leftist leaders in Argentina and Venezuela

seizing assets as they nationalise sectors of their economy.

Spanish oil major Repsol lost half of its production after

Argentina nationalised its YPF unit in April.

In Venezuela, Telefonica had $3 billion in profits last year

that it has been unable to repatriate because of strict exchange

rules. There is also Spanish concern that Banco Provincial,

which is owned by owned by BBVA, could be in Chavez's

sights for nationalisation.

Argentine President Cristina Fernandez will not attend the

summit, sending her vice president in her place. Madrid worked

hard to get other leaders to show up following a poor turnout

last year that led to questions over its value.

Still, at least one Latin American held out hope to the

impoverished Iberians of calmer seas ahead.

"We have to enter into a bigger relationship with certain

economies because of their commercial power" said senator

Gabriela Cuevas, head of Mexico's foreign affairs committee.

"If right now Europe doesn't look so attractive, sooner or

later it's going to recover. So now is the time to prepare."

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