Economy Was there a spanish "re-conquest" of Latin America?


^ lynx ^

Was There a Spanish Re-conquest of Latin America?

During the 1990s, Spain?s largest banks and companies decided to cross the Atlantic in order to invest in Latin America with a vigor that was unknown until then. Spain became the world?s largest foreign investor in Latin America during both 1999 and 2000, and the foremost European investor during the entire decade of the 1990s. These developments, which were a landmark in the economic history of Spain, drew some criticism from Latin America where, on occasion, the successful strategy of Spanish companies was viewed as a ?Spanish Re-conquest.?

The arrival of Spanish companies and banks on the South American continent has not been a walk in the park, even though they became leaders in four key sectors of the new regional economic landscape ? banking, electric utilities, energy and telecommunications ? and contributed in a positive way to the local economies. So much so, that from the years 1999-2000, ?criticism intensified regarding the massive and rapid establishment of Spanish companies in the main markets of Latin America,? notes Ram?n Casilda B?jar in his new book entitled, The Golden Decade: Economics and Spanish Investments in Latin America, 1990-2000. Casilda is a professor of the UniversityofAlcal? in Madrid and consultant to the Inter-American Development Bank (IBD).

In fact, more than half of Latin Americans believe that the privatizations have brought them no benefit at all, a figure that is growing, according to a survey carried out by Latinobar?metro. The survey shows that between 2000 and 2001 those who held that view grew from 57% to 64%.

According to the author, this attitude involves a certain component of nationalism and electoral opportunism, and is opposed to the ?permanent commitment? of Spanish banks and companies in these countries. This commitment has continued despite the latest crises in Brazil and Argentina which have been big disappointments for Spanish interests in the region. Everything seems to indicate that Spanish companies have come to Latin America to stay, ?unless something insuperable and unpredictable comes up that makes it impossible for them from an economic or financial point of view to stay in that region,? writes Casilda.

His book is a fundamental tool for getting to know and understand the recent past as well as the evolution of the Latin American economy up to the present time. The book, which took more than two years to prepare, can serve as a reference for students, journalists, teachers and business people. It also provides abundant and reliable data about what has been invested in Latin America and about the entrance strategies [used by Spanish companies] in this area. ?You can also learn about the problematic economic situation of the continent and the main competitors in each sector,? the author told Universia-Knowledge@Wharton.

Companies such as Telef?nica, Endesa, Iberdrola, Reposol, Gas Natural and Union FENOSA, as well as banks ? Santander Central Hispano (SCH) and Banco Bilbao Vizcaya Argentaria (BBVA) ? came to the [South American] continent drawn by a common culture and language, a favorable international situation and the privatization process that was taking place in most Latin American countries. In addition, having achieved a high level of maturity in their respective sectors [in Spain], these companies were looking for geographical diversification in those foreign markets that offered the best opportunities. During the 1990s, Spain invested more than $97 billion in the continent, mainly in the sectors of banking, energy, electricity and telecommunications, according to published data.

History of the Latin American Economy

Before getting around to analyzing the way Spanish banks and companies were internationalized, the first part of Casilda?s book takes us on a trip through the hidden history of Latin America ?s economic reality, from the beginnings of the century until the current age. In the course of this historical review, the reader learns, for example, about the first economies of the region ? those of Brazil and Mexico ? as well as about the Argentine crisis.

In regard to the most recent past, the author explains the keys of the region?s economic growth up until the 1970s, and how the exhaustion of the ?import substitution? model created a crisis in foreign debt during the 1980s, the so-called ?lost decade.? In this decade, according to data obtained by ECLAC [Economic Commission for Latin America and the Caribbean] and the World Bank, ?per capita production declined by 8%, and in the period from 1983 through 1990, this led to growth of zero per cent.?

After the crisis of the 1980s, a series of structural reforms ? the so-called Washington Consensus ? was carried out in the region with the goal of changing Latin America ?s economic direction. Almost at the same time, roughly the years from 1982 to 1990, ?about 15 countries managed to realize a political transition from dictatorship to democracy, all of them adopting a market economy as the economic model,? writes Casilda.

The Consensus consisted of a list of economic policy measures that served to guide new governments and multilateral institutions, such as the International Monetary Fund (IMF), the World Bank and the Inter-American Development Bank, ?toward appreciating the economic progress of the former [i.e., the governments] when they were asking for assistance from the latter [i.e., the multinational institutions],? writes Casilda. The end of the Consensus came when, among other things, the governments reached a stable and balanced economic standard; created an efficient public and private sector; reduced the size of the state; searched for more orientation toward foreign markets, and put into practice various policies for combating poverty.

With the implementation of these measures during the 1990s, most of the countries managed to obtain good macroeconomic results. Inflation rates dropped to single-digit numbers in all the countries, foreign public debt dropped from 50% of GDP to less than 20%, and tariffs were dramatically lowered. All this led to an increased level of capital into the region that was unprecedented ? expanding from $14 billion in 1990 to $86 billion in 1997.

Nevertheless, these advances did not translate into economic growth rates that were much higher than before. The annual growth of one percent was only slightly higher than what was achieved during the disastrous decade of the 1980s, and much less than the five percent figure reached during the 1960s and 1970s. Nor did the region manage to achieve a substantial improvement in social conditions or a reduction in poverty, the endemic problem of the continent. At the end of the decade, the local population was disappointed with the overall situation and wound up suffering what became known as ?reformist fatigue.?

Why did the Washington Consensus fail? ?It is important to note that the Consensus was not applied in every country with the same intensity; in some countries more, and in others, less. What is said to have failed is the policy as a whole. For example, [policymakers] wanted to eradicate poverty but it has grown. The Consensus did not focus on redistributing poverty, and this is a fundamental point that they will have to discuss if they revise the Consensus,? notes Casilda. In his book, the author maintains that, if it were not for the reforms, the situation would have been even worse. He cites the existence of a current of partisan opinion for implementing a second round of reforms that would incorporate such goals as the reduction of poverty and a greater emphasis on education in order to achieve growth that is sustainable and more equitable.

Latin America was in the process of applying structural reforms as well as integrating itself into the global economy when, in the middle of 1997, the Asian financial crisis shook markets throughout the world. As a result of this crisis, capital flows toward developing countries were interrupted and reforms remained incomplete. The great challenge of Latin America is to contemplate the transition that was interrupted by the Asian crisis ? ?harmonizing economic efficiency with greater social justice,? notes Casilda.

In the first part of his book, the author also analyzes Latin America ?s economic integration processes, from Pan Americanism to the Free Trade Agreement of the Americas (FTAA), which is set to go into effect on December 31, 2005 . However, at this time ?Latin America is not a priority on the American agenda. If the American agenda continues to ignore Latin America , negotiations [for the FTAA] will take place in a hasty way, almost in fits and starts,? the author told Universia-Knowledge@Wharton.

Spanish Companies Come on the Scene

In the second part of his book, Ram?n Casilda takes us to those years shortly after Spain entered the European Economic Community and after Spanish companies came to understand the need for expansion. At the time, they were beginning to invest beyond their borders with unprecedented speed and volume toward a great base of operations ? Latin America .

You have to remember that, at the time this strategy started, Spain couldn?t count on having enough international experience, nor was Spain treated as one of the major European economies. Its companies were not among the leaders on the continent and, to top things off, they competed against companies and groups that had a greater global presence.

In Casilda?s opinion, the Latin American investment strategy carried out by Spain?s banks and enterprises was not offensive but defensive. The author, using soccer slang, sums it up with the phrase: ?There is no better defense than a good offense,? referring to the attacks of the major business groups and European financial conglomerates [on Spanish companies].

What were the Spanish companies defending against? According to Casilda, it was the environment of growing globalization that requires companies to expand their size. With their arrival in Latin America , these [Spanish] companies managed to satisfy this goal and, moreover, become leaders in strategic markets in the respective national economies [of Latin America .]

The arrival of Spanish banks and companies coincided with privatization plans of Latin American countries that were the result of the Washington Consensus, which began to bear fruit during the 1990s. The privatization boom didn?t play itself out in precisely the same way in every country and sector. The book notes that 57% of all privatizations were in public services, and 11% were in companies engaged in banking and similar services. The remaining 32% of cases involved various other kinds of operations.

It?s not just that this situation favored Spanish interests. It?s also that American banks and companies were withdrawing from Latin America as a result of the bad results they obtained during the foreign-debt crisis of the 1980s. This made it easier to open a path for Spanish companies, allowing them to ?quickly seize important market share and, almost always, to become a leader in that sector at a reasonable price,? notes the author.

Spain?s investment strategy in the region was quite different from the strategy carried out by American companies, who were the leaders with respect to investment in the region. As Casilda notes, American investments focused on goods that were saleable, such as automobiles and the electronics industry. On the other hand, Spanish companies generally focused on the service sector, such as banking, electricity, energy and telecommunications. In most such cases, Spanish companies resorted to purchasing state enterprises and pre-existing assets when making their foreign investments.

Moreover, during the decade treated by the book, American and Spanish companies used a different focus to work out their strategies. On the one hand, Spanish companies opted to look at Latin America as an extension of their domestic markets, introducing the same products as in Spain but adapting them to the markets of each country. That is to say, according to Casilda, Spanish investments in the region tried ?to be global and local at the same time.? American companies used a different focus because they generally were not used to counting on local partners, and their goal [in the region] was to improve domestic [U.S.] productivity. They were used to ?locating production in those countries that are cheapest, with exportation as their final goal.?

An especially interesting chapter is dedicated to the Banca Espanola in Latin America . The author explains that its expansion in the continent was part of the globalization in the financial services sector. Spain did not want to remain an outsider in that regard. He describes, in detail, the causes of that expansion and the models chosen by the various financial institutions in the region. He also applies a vision, both global and country-by-country, to the main Spanish banks in Latin America , the SCH and BBVA. Also interesting is his analysis of those Spanish companies with the greatest involvement in the continent, such as Repsol YPF, Telefonica, Iberdrola and Union FENOSA, as well as Dragados, Compofrio and Gas Natural.

There is also a chapter on Latibex, the only international market in which Latin American shares are denominated exclusively in euros; it has been operating since 1999. Another chapter is dedicated exclusively to analyzing the country?s trademark as a competitive advantage ? as well as the value and perception of ?Made in Spain? in the Latin American context where it has eroded significantly in recent years. ?The great matter that is pending is the reconstruction of the image of the Spanish brand, which has gone through creating perceptions of better quality, confidence, innovation and good value, without losing its idiosyncratic value.?

In conclusion, Ram?n Casilda notes: ?As the new century begins, it is very probable that Spanish companies are getting to the most complex phrase in their strategy of expanding in Latin America . That is, achieving full acceptance and assimilation on the part of the markets, authorities, and customers in the region.?

As a result of the apprenticeship they have undergone during the past few years, Spanish managers and bankers will have to understand this challenge ?not in terms of mere economic perception, but in terms of fitting into the sensitivities of the entire cultural and social environment of the Latin American continent.?

A literary recommendation...

Spanish Direct Investment in Latin America: Challenges and Opportunities
William Chislett

Reviewed by By Kenneth Maxwell

Spanish investment in Latin America ranks second only to that of the United States. For a time, this investment brought large returns, especially during the lucrative privatization of utilities, telecommunications companies, and banks in the 1990s. But the onset of a regional economic downturn in 2001 meant massive losses for investors. In the year after the Argentine economic crisis, the worth of the 11 Spanish companies with the biggest operations in Argentina fell by 83 percent.

In this excellent book, Chislett provides a detailed and well-documented account of Spanish investors' infatuation and subsequent disillusionment with Latin America. Spanish banks, he argues, have come to believe that they concentrated too much attention on Latin America, to the detriment of domestic markets. Spanish investors on the whole are now looking at the region much more skeptically -- having discovered, as their ancestors did, that El Dorado is not all it was cracked up to be.

You said "re-conquest"?

Your choose of wording, compells me to be honest, and I can summarize with only one phrase:

"Whenever there was a corrupt, racist and anti-national Latin American government, Spain was there to collect the spoils".

Spanish banks were NOTHING until they come to Mexico. At some moment, Mexico made 40% of the revenues of Spanish banks WORLDWIDE, including Spain itself.

And most of it, was shady deals, corruption and money laundering. And I don't even know, if the situation has changed.

And still, Mexico floats!!!. No doubt that my country is incredibly resilent.

Even I am amazed.

And Spain today? There are discussions about if it should be kicked out of Europe, as I wrote this very words.

But you come with the history that "Spain get tired of Latinamerica... it is made for something bigger".

Great!! Why don't you pack your stuff and go to Asia!!

"Re-conquest of Latin America".

You will never change.
None of these words are mine. I just copied and pasted both articles (and the articles aren't even coming from Spain). :rolleyes:

Calm down, learn to read and take your pill.

Some people just believe whatever they want to believe. Alternative universes are being created as we speak.
The Chilean that made this video, deserves a price...
Fortunately in my country there were places relatively untouched by Spaniards or the indigenous right...
(This is my alternative Reality)
You can't be serious. :LOL: The first clip represents a gypsy encampment outside of of Seville. These types of people are found living in similarly disgraceful conditions in places like France, Germany, U.K., etc. Gypsies are outliers, many of whom are illegal and they choose not to integrate socially. Stop insulting people's intelligence.
Someone has PM syndrome today it seems.

Yes Sirious, yes, Spain is a Third-world corrupt country. Mexico and Chile are two world superpowers. Mexico is a transparent state in which drug dealers mafias and burocratic corruption have been organized and instigated by evil spanish businessmen.

Now please, stop ruining this thread with your 12-years-old reactions and oversensitiveness. Thanks.

Das Beispiel Spanien

Fluglotsenstreik bedroht marode Wirtschaft


Wilde Streiks sind illegal. Dies gilt in Spanien ebenso, wie in Deutschland auch, aber man fragt sich manchmal, wie sich Arbeitnehmer in der heutigen Zeit überhaupt noch angemessen wehren können, wenn es zum Beispiel um Lohnkürzungen und ähnliches geht. Natürlich muss man zum wilden Streik der spanischen Fluglotsen am letzten Wochenende einräumen, dass dieser Berufszweig zu den Topverdienern auf diesem Gebiet und in Europa zählt. Aber ob ihnen dies gleich auch das Recht auf Arbeitskampf bei Lohnkürzung entzieht? Das wohl interessanteste Detail sind die Auswirkungen dieses Streiks, der Spanien an einem Hauptreisewochenende mit zwei Feiertagen traf. Seit dem Ende der Franco-Diktatur wurde nämlich zum ersten Mal der Notstand ausgerufen. Dessen Androhungen halfen wohl dabei, dass dieser Streik auch ganz schnell wieder beendet war. Nun steht den Streikenden wohl noch einiges an Ärger bevor und man darf gespannt sein, wie sich all dies weiterentwickelt und zwar in Spanien aber auch im Rest Europas.

Ein Zukunftsmodell?

Spanien gilt als einer der Kandidaten, der den Euro und damit letztendlich auch die Europäische Union (EU) in den Abgrund stürzen könnte. Hier muss natürlich die Frage erlaubt sein, wie gut ein Staatensystem überhaupt aufgebaut wurde, welches eine solche Option plötzlich und angeblich recht überraschend überhaupt zulässt. Natürlich nennt man so etwas wieder eine pessimistische Einstellung, aber so nannte man die Einschätzungen auch im in Fall Irland, bevor es nach dem Rettungsschirm griff. Die Realität bewies auch hier wieder, dass es nicht um Pessimismus, sondern um Realismus handelte. Der spanische Fluglotsenstreik vom Wochenende schädigte die spanische Wirtschaft massiv, was in dieser Zeit Gift für Spanien ist. Deshalb aber nun gleich mit dem Militärgericht zu drohen, wirkt für eine Demokratie in der Mitte Europas eher befremdlich und erinnert an die Franco-Diktatur. Auch hier stellt sich die Frage, wie demokratisch und stabil ist Europa im Moment noch, dass man scheinbar zu solchen Mitteln greifen muss, um Probleme zu lösen.

Man sieht auch am Beispiel Spanien, dass immer mehr Staatshaushalte auf Grund marode gerechneter Unternehmen in die Pleite geraten können. Diese Pleiten sollen dann scheinbar nur durch Kürzung bei den Arbeitnehmer verhindert werden. Wehrt man sich dagegen, droht das Militärgericht. Wird dies nun ein Zukunftsmodell? Dann sollte man sich wohl auf harte Zeiten in Europa einstellen, denn auch jetzt ist schon klar, dass solch massive Einschüchterungsversuche nur kurzfristig Wirkung zeigen werden und der so aufkommende Zorn in der Mitte der Gesellschaft immer größer wird. Zum Teil kann man diesen dann mit gut gesteuerter PR-Arbeit von Politik und Wirtschaft in den Massenmedien versuchen in den Griff zu bekommen, aber auch hier begreifen die Menschen immer mehr, was ihnen vorgegaukelt wird. Dies macht es auch den etablierten Massenmedien immer schwerer ihre vermeintlichen News, die sie scheinbar direkt aus der Politik und der Wirtschaft geliefert bekommen und ungeprüft verbreiten, der breiten Masse zu übermitteln.

Was kommt nach Spanien?

Auch wenn man in deutschen Medien oft meint von fernen Problemen schreiben zu müssen, sollte man sich auf Grund des Haftungsrisikos Sorgen um Deutschland machen, denn hier haftet man für all das. Spätestens bei einer Staatspleite Spaniens dürfte es auch für unser Land richtig finster aussehen. Man darf dann gespannt sein, was die moderierende Bundeskanzlerin Angela Merkel (CDU) dazu sagt. Natürlich kann all dies dem Wunderaufschwung, in welchem wir uns laut Bundesregierung alle gerade befinden, kaum schaden, folgt man den Lobeshymnen zum vermeintlichen Ende der Krise. Demgegenüber steht die Sicherheit in der sich der keltische Tiger oder auch Spanien bis vor einigen Wochen oder Monaten auch noch befunden hat.

All dies kann man den Völkern in Europa nicht mehr verkaufen. Diese Vereinzelung von Problemen in einer globalisierten Welt funktioniert nicht mehr. In Großbritannien gehen die Massen auf die Strasse, in Frankreich gehört dies so oder so fast schon zum Alttag. Griechenland brennt schon länger und selbst im sonst so ruhigen Deutschland bewegen sich immer mehr Menschen und dies obwohl der groß angekündigte Gewerkschaftskampf in diesem Herbst bislang wieder einmal ausblieb. Aber selbst wenn die Gewerkschaften in Deutschland, die Kirchen und vor allem auch der deutsche Papst Benedikt XVI. es nicht für nötig halten, endlich einmal in einem der Situation angemessenen Maß zu reagieren, ist der Ruck der endlich auch durch die deutsche Gesellschaft geht nicht mehr aufzuhalten. Ein Fakt, der den vermeintlichen Eliten und Experten in Deutschland aber auch im Rest Europas wohl kaum schmecken dürfte. Letztendlich haben sie erst dafür gesorgt, dass es soweit kommen musste. Ob sich Szenen, wie aktuell in Spanien, in Europa ausweiten werden, hängt nun davon ab, ob endlich eine nachhaltige Veränderung eintritt oder nicht.
Spanish Firms Revive Latin America Conquest

By Anthony Faiola
Washington Post Foreign Service

SANTIAGO, Chile—Half a millennium ago, Spanish conquistadors swept
across a great southern swath of the New World, plundering, colonizing
and fattening royal coffers with native gold. Now, more than 100 years
after the last of their rebellious colonies won independence, Spain is back
in Latin America--doing with mergers and acquisitions what it once did
with swords and gunpowder.

To understand the depth of what's been dubbed the reconquista--or
reconquest--of Latin America, look no further than Humberto Illanes'
monthly bills. Spanish companies, including some still partially owned by
the Spanish government, now own Chile's largest telephone company,
power company and waterworks. In addition, Spanish banks control
roughly 40 percent of the Chilean market.

"Every time I turn on the lights, make a phone call, cash a check or drink a
glass of water, I'm putting money into pockets in Madrid," complained the
head of the union at Banco Santiago, which was taken over last year by a
Spanish financial group. "It's as if we're a colony again, paying taxes to the
Spanish crown."

Spain, which only 20 years ago was a minor economic presence in the
region, is now second to the United States in annual investment and is
challenging the United States for regional influence for the first time since
the Spanish-American War in 1898. In 1998, the last year complete
statistics are available from both governments, U.S. investment across
Latin America totaled $14.3 billion, while Spanish investment was $11.3
billion. Last year, Spaniards plunked down almost $20 billion, according to
Spanish government estimates.

But the reconquest, analysts say, is far more than economic. It underscores
the renewal of cultural and political bonds between Latin America and its
colonial master. Despite growing resentment like that of Illanes, much of
the region has embraced what Spain has been careful to cast as a new
golden era of mutual exchange rather than the birth of a new economic

Take, for example, the hot film "All About My Mother" that is generating
Oscar buzz: It pairs Spain's best-known director, Pedro Almodovar, with
one of Argentina's top actresses, Cecilia Roth. And as King Juan Carlos
and other members of the Spanish royal family periodically touch down in
the region on official visits, so Colombian rocker Shakira is holding court
as the toast of teens in Madrid and Barcelona.

Spain Resurgent Spain is also extending a promise that its own model
transition to democracy from the dictatorship of Francisco Franco can
become a guide for its former colonies, now charting a similar course after
the downfall of unelected regimes in all countries in the region except
Cuba. Implicit in that suggestion is a promise that Latin America will also
emerge from the shadow of the United States.

Only by "reinforcing [and] consolidating the Ibero-American community of
nations [through] our shared languages and cultures, and with our firm
conviction in genuine democracy . . . can our peoples successfully face up
to the challenges of the 21st century," Juan Carlos said on a recent visit to
Cuba for an Iberian-American summit meeting.

For the United States, Spain has reemerged as a challenge to the spirit of
the Monroe Doctrine, the principle of U.S. foreign policy that claimed the
region as a sphere of exclusive American influence.

As Spain's economic might has grown here, so has its political voice--and
some of its positions are polar opposites of Washington's. The decision to
hold the Iberian-American summit in Havana, for example, highlighted
widespread opposition shared by Spain and many Latin American
governments to the U.S. embargo against Fidel Castro's Cuba. Spanish
companies have helped lead investment in Cuba throughout the 1990s,
providing the island with desperately needed hard currency.

"Spain understands Latin America in a way that no other country outside of
Latin America possibly could," said Carlos Gasco, cabinet chief of Spain's
Economy Ministry in Madrid. "We have used that to our advantage to
build what we see as a long-term economic connection that is only going to
keep binding us closer to Latin America."

Even in giant Brazil, which as a former Portuguese colony differs in
language and culture from its neighbors, Spain is gaining economic
importance. Spanish investment in Brazil's economy, the largest in Latin
America, soared from $112 million in 1996 to $6 billion in 1998.
Telefonica de Espana became one of the largest players in the privatization
of Brazil's national telephone monopoly--winning the bid to buy Telesp, the
local phone company for Sao Paulo, the world's third-largest city. The
Spanish company now operates one of every four phone lines across Latin

But in a region where the historical image of colonial Spain is only
marginally better than that of a bullying Uncle Sam, the new bonds are
creating a measure of friction. Nowhere is that more evident than in Chile,
a country of 15 million where massive Spanish investment--symbolized by
the futuristic Telefonica tower, the tallest skyscraper in Santiago--has
mixed with Madrid's "meddling" into domestic politics.

Indeed, Spanish judge Baltasar Garzon's crusade to put Chile's aged
former dictator, Gen. Augusto Pinochet, on trial in Madrid for crimes
committed during his 17 years in power has fanned Chilean nationalism.
Then-President Eduardo Frei boycotted the Iberian-American summit last
year, and leading Chilean businessmen and right-wing politicians have
called for Santiago to break diplomatic ties with Madrid. Incoming Spanish
executives have been met with the cold shoulder--one was even denied
membership in an exclusive Santiago country club because he is Spanish.

"What gives the Spaniards the moral authority to be our judges and
masters?" said Cristian Labbe, a Pinochet supporter and mayor of
Providencia, an affluent neighborhood in Greater Santiago. The Spanish
Embassy in Chile is located in his bustling urban center, and Labbe lashed
out the only way he could: temporarily suspending the embassy's trash
pickup. "The last time I checked the history books, Latin America had
won its independence from Spain. But you wouldn't know it from their
haughty actions," he said.

The cultural memory of the ruthless Spanish conquest of Latin America
dies hard. Conquistadors fanned out over the New World in the early 16th
century, driven by a lust for gold. They found it in abundance, especially in
what are now Mexico and Peru, where Hernan Cortes decimated the
Aztecs and Francisco Pizarro did the same to the mighty Incas. The
Spanish campaign would end in the annihilation of millions of indigenous
people and leave their descendants on the margins of society.

"Especially now that they've come back, the Spanish should be made to
make reparations for the slaughter and robbery committed by them and
their descendants," said Maria Catrileo Airemilla, a leader of Chile's
Mapuche Indians, who successfully resisted the conquistadors, but
nevertheless endured loss of life, land and culture during the conquest and

In the first decades of the 1800s, the great Latin America liberators led
drives for independence from Spain. Although the descendants of wealthy
Spanish families went on to become Latin America's aristocracy, emotional
bonds to the motherland gradually eroded--especially in countries such as
Argentina, which experienced massive immigration from other European
nations, and Mexico and Peru, where racially mixed populations are now

Spain's reemergence as a power in the region dates to 1986, when it
gained entry to the European Union. A decade after the end of Franco's
dictatorship, Spain shed its image as Europe's rube cousin as financial
reforms ignited the economy. Spanish companies became flush with cash
and eager to enter the global economy. They looked first to their distant
cousins across the Atlantic.

Latin America was just then entering its own era of economic reform,
privatizing government-run enterprises and dropping investment barriers as
never before. There have been some stormy seas. Spain's Iberia airline
continues to lose millions on investments in the national airline of Argentina.
But other Spanish companies, aided by their own recent experiences at
rapid modernization, have largely met with extraordinary success. Today,
Telefonica, for instance, makes more money in Latin America than it does
in Spain.

The Cultural Connection "Culture has played a significant role," said Mateo
Budinich, general manager of Telefonica CTC in Chile. "We have a shared
language, but each nation is extremely different in Latin America. The
Spanish are sensitive to that, while at the same time capitalizing on the
similarities in our cultures to smooth the way in business deals."

A vital key for the Spanish has been their stronger stomachs for Latin
America's economic volatility. Even as U.S. investors panicked after the
devaluation of the Brazilian currency sparked a recession in Latin America
last year, Spanish investment reached a peak. Repsol, the Spanish oil giant,
gobbled up Argentina's largest private company, energy titan YPF, for
$13.5 billion, the largest Spanish investment in Latin American history.
Telefonica pumped billions more into a massive expansion into Brazil.

And as corporate Spain established a beachhead here, it has opened the
door for its subsidiaries and smaller Spanish firms. Many Latin Americans
today buy their clothes from Zara--Spain's cutting-edge version of The
Gap--and scoop up romance and science fiction novels from the massive
Spanish publishers who now virtually monopolize the markets in many
Latin countries. The Spanish have won lucrative contracts to build ports in
Chile and reconstruct colonial buildings in Havana. New firms are
launching Internet startups in a region considered to be the fastest-growing
high-technology market in the developing world.

"I think the difference between Spanish and U.S. companies in Latin
America is that the Spanish have been less afraid of the risk involved," said
Raimundo Monge, head of corporate strategy for Spain's Banco
Santander in Chile. The bank expanded dramatically in Chile last year--a
25 percent increase in profits over 1998--despite the country's worst
recession in 16 years. "During the bad times like last year or the Mexican
peso crisis [in 1995], we've continued to invest heavily while U.S. firms
like Citibank have decided to curb their commitments to the region."

"But we're in this for the long run. Remember, the Spanish have known for
a long time that Latin America is a gold mine."
Profiting from Spain's 'Neo-Colonialism' in LatAm
by: Charles Lewis Sizemore August 12, 2010 | about: EWP / STD / TEF

It might seem a little odd that I’m highlighting a large global bank given my cautious view of the sector, but Spain’s Banco Santander (NYSE: STD) is an interesting case study. The bank, the eurozone’s largest by assets, has adopted a growth strategy right out of the pages of the Sizemore Investment Letter. Looking to offset weakness in the home market, Santander has focused its growth strategy on the Emerging Market Consumer, particularly in Latin America. Already, the region accounts for 40% of Banco Santander’s profits, and the bank intends to pursue significant additional acquisitions.

Unlike in the United States and Europe, parts of Latin America are virgin territory for banks, as much of the region currently operates in a cash economy. This bringing of the “unbanked masses” into the mainstream financial system—bancarizaci?n in Spanish—offers the bank potential for growth while the banking sectors in the United States and Europe remain mired in a negative cycle of retrenchment and deleveraging.

Santander’s head of Latin American operations calls the region’s banking system the “best in the world,” as Latin banks grew strong by cutting their teeth during three decades of chronic instability and periodic hyperinflation. I might be reluctant to go that far, though I will admit to being impressed in my experiences with Latin banks. As far back as 2004, I was surprised at how quickly funds transferred and cleared in Brazil—they were available instantly. As my Brazilian friend explain it, “Remember, we were used to 1,000% per year inflation. In that environment, your funds had to clear instantly. Otherwise, the value of your money will erode while you’re waiting to access your funds.”

Call it a positive example of the Law of Unintended Consequences, but Latin America’s horrid governance over its history has created a conservative and efficient banking sector. And it’s playing a pivotal role in the development of the region.

The Financial Times writes, “With a young population, growing middle class and unprecedented political and economic stability, the next 10 years would compensate for the so-called ‘lost decade’ of the 1980s, when dictatorships and economic chaos were the natural order.” (See the FT article here.)

Much like the Germanic principalities of Medieval Europe, Latin American states have more often than not been run as a collection of petty fiefdoms more interested in keeping their neighbors in check than in achieving any real progress. (An old classmate from Mexico City once commented that Latin leaders were like crabs in a fisherman’s bucket; rather than help each other out of the bucket, they pull each other down into it.)

Perhaps more interesting is the possibility that the private sector will accomplish what Sim?n Bol?var failed to do during the Latin American wars of independence from Spain and what every caudillo of both the Left and Right has failed to do in the centuries that followed—unite the region and integrate its economies. The irony, of course, is that the private companies most responsible for this development are from the old colonial master, Spain. This includes, of course, our recommendation Telef?nica (NYSE: TEF).

Spain was not a benevolent ruler during its colonial period. In fact, the Spanish regime could only be described as a kleptocracy based on extracting as much gold and silver as possible from a demoralized population. But while the Spanish crown failed to materially improve the lives of New World subjects, modern Spain’s world-class companies are most certainly succeeding. And we as investors can profit.
I guess that the current crisis in Spain is giving some Spaniards a fair share of the "humble pie".

To use the word "Neocolonialism" with a twist of pride, is foolish because:

(1.) Obviously it creates resentment on the addressee... but also reflect a mentality on the user that is not moraly acceptable, nor does it addecuate to the realities of a very concious and very mature mentality of Latin Americans of the XXI century.

(2.) It does not reflect reality. Latin Americans control perfectly what kind of foreign investment they want and what role do they want it to play in their economies, and even, in their geopolitical goals.

Anyway, we Mexicans and other Latin Americans are always open to work with Spaniards and Europeans in general in a win-win relationship, based on understanding an cooperation. Let's take the example of German investments in Mexico. Currently, for example, Volkswagen A.G. is winning a very sizable percentage of auto sales in the USA, and not in a small degree, it is due to heavy investment in its plant of Puebla, Mexico, which produce a lot of models. And particularily, all the Beetles in the world are being produced there, with excelent quality control...

This was posted by @lynx in 20120....

A literary recommendation...

Spanish Direct Investment in Latin America: Challenges and Opportunities
William Chislett

Reviewed by By Kenneth Maxwell

Spanish investment in Latin America ranks second only to that of the United States. For a time, this investment brought large returns, especially during the lucrative privatization of utilities, telecommunications companies, and banks in the 1990s. But the onset of a regional economic downturn in 2001 meant massive losses for investors. In the year after the Argentine economic crisis, the worth of the 11 Spanish companies with the biggest operations in Argentina fell by 83 percent.

In this excellent book, Chislett provides a detailed and well-documented account of Spanish investors' infatuation and subsequent disillusionment with Latin America. Spanish banks, he argues, have come to believe that they concentrated too much attention on Latin America, to the detriment of domestic markets. Spanish investors on the whole are now looking at the region much more skeptically -- having discovered, as their ancestors did, that El Dorado is not all it was cracked up to be.


This is the reality "now", 2012...

[h=1]Spain Seeks Economic Future with Former Colonies[/h]

Nov 20, 2012

Spain's king, Juan Carlos, did not tell anyone to shut up at this year's Ibero-American summit, knowing that Latin America's economic growth could be the answer to his country's economic crisis.
Leaders from Latin America, Spain and Portugal, gathered in Cadiz, Spain – the port city where riches extracted from the former colonies were once brought – to discuss commercial and investment cooperation during this event.
Latin America is expected to grow 4.4 percent in 2012. The Organization for Economic Cooperation and Development predicts that region will grow 3.2 percent in 2013 and 4 percent in 2014.
"Spain and Portugal have in the Ibero-American relationship an essential point for stimulating growth," Ibero-American Secretary-General Enrique Iglesias said in his opening remarks. "International cooperation can speed up recovery and reduce the social cost, above all unemployment."
Unemployment in Spain is at 25 percent and growing. The rate for those under 25 is above 50 percent.
For a decade, Spanish companies have expanded their investments to Latin America, and that region's strong growth has helped the country weather its economic storm.
Telefonica, a Spanish telecommunications company, reported a recent profit thanks to half of its revenues coming from Latin America. And banking giant Santander says 50 percent of its profits come from the region, according to Reuters.
The summit also focused on how to bring Latin America's nearly 600 million customers to small businesses in Spain and Portugal.

Just today I heard that the first "Audi" car factory in the Americas will go to Mexico, with an initial investment of 1300 million dollars...

... and so on, and so on...

Mexico is on the way of being a big partner of Europe.
Why are you angry at Spain? Pretty much the only Spaniards that benefited from colonizing South/Central America were the elites/nobles. By demonizing all of Spain you are falling for the age-long "divide and conquer" trap. You should be fighting against corruption in your own country, rather than insulting an entire nation. Plus Spain brought Christianity to the region (which is by far the most common religion in Latin America), the language you speak (Spanish), and most of your ancestry is likely Spaniard as well.

Everyone should unite against oligarchies and corruption, rather than fighting other powerless people.
Templar, you should wonder what happened to Spain/Castille when lots of present day countries got independence from it. The picture is not that wonderful, and I'm telling this as a Catalan who wants independence and knows by first hand experience what's going on. Note that any of those countries wants to know anything about Spain, and some of them are doing a very good progression...while Spain is getting worse.

To point some things is not insulting the Spaniards, but rather a critisism to their government or the elites as you said. So when refering to "Spain", that's what you should keep in mind.
Why are you angry at Spain? Pretty much the only Spaniards that benefited from colonizing South/Central America were the elites/nobles. By demonizing all of Spain you are falling for the age-long "divide and conquer" trap. You should be fighting against corruption in your own country, rather than insulting an entire nation. Plus Spain brought Christianity to the region (which is by far the most common religion in Latin America), the language you speak (Spanish), and most of your ancestry is likely Spaniard as well.

Everyone should unite against oligarchies and corruption, rather than fighting other powerless people.

I am not "demonizing" Spain by far. To be honest, I am the kind of Mexican that never had much contact with Spaniards through my life. As a matter of fact, the first Spaniards with which I interacted to some length, were those in this very forum, people like @Lynx, @CambriaRed, @Wilhelm and @Carlos (the only one with which I emphatized from the begining).

But I have to say, that latter I have gone to other forums devoted to other themes (Science, News, Art, Pron, ... ) and I have to say that I met a number of good Spanish people, even formidable people. The clashes that I had with some Spaniards in this forum, are only a part (one of the negatives) of those experiences. By the way, this thread did not started that bad, it was the history with @Lynx that made the topic derive to its current form.


By the way, @Templar, you write from B.H.... we Mexicans have always had good relationships with people from former Yugoslavia, and we consider good people Serbs, Croats or Muslims. Some people have migrated here, and we like you all.

Speaking about the Spanish speaking world, I am not a divisionist. On the contrary, we Mexicans give our hand to every one. What is more, I recently began to think in Filipinos, confused and alone far away in the South Pacific as they are currently... I believe Latin American & Spaniards have to make and effort to help them economically and strenghten our cultural ties.

Hello, @Knovas...

Currently, you know, Spain is expecting and seeking help from its former colonies to help them overcome the current economic crisis. Be it investments, more trade, or the possibility of sending a significant part of those 50% Spanish youths currently unemployed.

I admire the intelligence of the Catalonian people in all realms of human endevour, and specially your renowned Economists like Xavier Sala-i-Martin or Vicenç Navarro. Being independent or as part of Spain, you will always benefit for such great people.

I am not "demonizing" Spain by far. To be honest, I am the kind of Mexican that never had much contact with Spaniards through my life. As a matter of fact, the first Spaniards with which I interacted to some length, were those in this very forum, people like @Lynx, @CambriaRed, @Wilhelm and @Carlos (the only one with which I emphatized from the begining).

Oh, my comment wasn't directed towards you, but rather towards Sirius2b. But I just noticed that he is banned *facepalm* so there was no point even addressing him. Yeah I know that Mexicans are usually a friendly people. My point was to say that we should avoid grouping any people/countries into a uniform stereotype (like all Spaniards being blood-thirsty conquistadors).

Hey considering that you are a Mexican, I have a question that you might have an answer for. Is the whole 2012 end of the world thing boosting tourism to Mexico? I wonder if a lot of people will travel to the Yucatan peninsula for it (to visit Mayan ruins and shamans).

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