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The Spanish Empire effectively came to an end with the American defeat in 1898. Spain lost extensive territories, including the Philippines, Cuba, Puerto Rico and assorted Pacific Islands. The country was no longer an Imperial power. The ‘disaster’ added to the political instability of the country but it also offered an opportunity for political reform which was not taken by the political elite, who were too partisan and ineffective. The end of the Imperial pretensions of the country forced many in Spain to seek to regenerate the country. The business class invested in their own country instead of the colonies and this led to the partial industrialization of Spain. This helped to modernize the nations, but many parts of the peninsula remained mired in poverty. The defeat by the US forced the nation to reconsider its identity and many increasingly saw Spain as a European country which should become more integrated with the continent. In the aftermath of the 1898 defeat the culture of Spain changed and was no longer preoccupied with the past but urged people to engage with the modern world and to embrace change. In this sense, the war of 1898 liberated Spain from the shackles of the past and initiated the process whereby it became a modern, democratic state.