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.