That's true they do get smashed, but if they where to maybe develop the idea of the "Super Ibérica de Rugby" then they could become more competitive. A professional league divided into regions that involve teams from Portugal and Gibraltar with the winners, or the highest ranked teams winning a place in the Amlin, like the Magners. This competitive environment would soon raise the standard. Its one think to grow a strong competition within your peninsular but to help your national team you need a cross bored contest and for the emerging rugby nations the Amlin, with some form of professionalism within there leagues, is that stepping stone.

The information I found on Super Ibérica de Rugby was on Wiki, but run the references through google translate and you got some good reading.

http://en.wikipedia.org/wiki/Superibérica_de_Rugby