Although some stability was created after the line of demarcation was created by the Treaty of Torsidellas, Spain and Portugal continued on their self-destructive path.

Decline of Spain1. Ferdinand and Isabella expelled the Jews and Muslims who had been the foundation of the growing industrial base in Spain. When they left, they took their expertise and their money .

2. Philip's Harsh Treatment of the People in the Netherlands Led to Guerilla Warfare and Eventual Independence for the Netherlands

3. Had to Borrow Money to Wage Wars;

• New Coins Drove up Prices in Spain

4. Had an Imbalance of Trade Because They Did Not Develop Their Industries like the Other Countries of Europe

5. Built Large Warships Instead of Smaller Commercial Ships

6. Inefficient Government

Decline of Portugal

1. Could Not Control its Officials at Home or in the Colonies Because it Had a Weak an Unorganized Government

2. Weakened by a Drastically Reduced Population, Portugal Was Annexed by Spain in 1580