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This paper analyzes two imperial policies, the dynastic strategy of Charles V and the nationalist agenda of the Castilian clerical elite. The Protestant Reformation forced Charles to assess his priorities according to his conviction of religious unity and his dynastic claim of universal monarchy. Charles' ambitions compromised Spain's entrepreneurial agenda, which consisted of the defense of the Mediterranean against the Ottomans. Seeking to protect the coalescing transatlantic system and established commercial networks of Spanish businessmen, the Spanish administration under President Tavera (1524-1539) failed to convince Charles to focus on the Muslim enemy and to allow the German people to decide their own religious destinies. Instead, Charles sought to contain his universal monarchy in Europe, and his decision to restore religious unity in the empire resulted in the overextension of Spanish resources and the eventual decline of Spain.

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