The idea is that Spain and Portugal are part of the "West", but not Spanish or Portuguese colonial offshoots, which are mostly South American and haven't fared as well as the colonial offshoots from other nations of western Europe.

they are excluded because the term is descriptive, these countries are excluded by the west from many agreements and organizations, they are exploited by the west and its systems of imperialism. Culturally speaking they are similar but geopolitically speaking they have nothing in common.