They probably will require a subtler strategy than for example OTL Southern Spain.
I think the policies used in Andalusia wouldn't work in North Africa if anything due to geography alone. Even so, the Spanish enjoy an advantage in the form of institutional knowledge dealing with assimilation. States that had centuries of knowledge and lived next to the target group were always more proficient in assimilation and spreading of their own religion. I think such examples are the Ottomans and the Russians.
To use the ottoman and russian experience, one of the most productive strategies are simply taxes and politics. The best tool of the islamization of Balkans and the christianization of much of Russia was taxing the different religions. Another strategy is co-opting local elites. If a local lord realized that he will have more influence in politics at his region if he adopts christianity and becomes a spanish speaker, then chances are that he will convert along with his family. This happened to the Tatar muslim aristocracy and to a great part of the Greek/Bulgarian/ Albanian aristocracy in the Balkans. Come 18th century, one couldn't tell that the Princes of the House of Yusupov were Nogai royalty,
In contrast to Russians and Ottomans, the Spanish had an almost millenarian ideology of proselytization. Therefore, I think that their efforts will be continuous (in contrast to e.g. the Ottomans when only periodically tried to mass proselytize populations) and realities on the ground will force them to use both the carrot and the whip. So, I think they will be at least as successful as the Russians and probably more.
It should also be highlighted that unless the fertility rate of Spanish populations increases dramatically higher than OTL, which is unlikely, people moving to North Africa will likely suppress the growth of the American colonies.
I am not so sure about it. In OTL the Castillians were the responsible kingdom for developing the american colonies. A spanish North Africa will attract settlers mostly from Aragon, the Balearic Islands, Sardinia, Naples and Sicily. These kingdoms had a total population many times bigger than the desired region in North Africa. By desired region, I mean the area that was
climate-wise familiar to them. In any case, that would be a trend that will last centuries, not mere decades.
Moreover, I guess that the atlantic coast of Morocco would be a destination of mostly Portuguese settlers.
In order for Spain to be on a path for long term growth they need to be more flexible. North America is a sensible place to allow the English, French and Dutch to fight it out for the beaver fur trade whilst the Caribbean and South and Central America can be largely exploited by the Spanish. Though if the Spanish have to give up some land here temporarily, that isn't necessarily the final word here so long as Spain remains competitive both militarily and economically. In other words, these things can be won back. Furthermore, it is highly unlikely that Spain will be holding onto all this territory forever, much of it probably will ultimately be lost to independence movements. I suspect the Caribbean may prove to be the easiest territory to hold onto in the long term.
Other trading posts will be set up and I'd expect similar zones in India
I think I believe the opposite would be more probable: it is easier for English/Dutch/French to project power in the Caribbean than the Indian Ocean. At the Carribean I think the Spanish will burn down rival settlements regularly and inhibit them for as long as they can. But other Europeans will want their own tropical goods from West Indies (sugar first and foremost). After some time, I think the Spanish may give up control of minor Carribean islands, but not the Greater Antilles, if the perceived cost is higher than the perceived advantages.
In contrast, I think it is very difficult for other Powers to effectively project power in the Indian Ocean if the Spanish are entrenched there. There is a communication lag of 2 years between Europe and the East Indies. In OTL the Portuguese tried to do too much with too few resources. For example, they attempted to essentially run a protection racket over Asian merchants in the routes they controlled. But they didn't have the ships and men to enforce it. The great contrast to OTL is that the TTL Estado da India has a
much greater income. After the shock of the initial portuguese foray in the Indian Ocean and the failure to capture Aden, the Aceh-Venetian trade axis managed not only to survive but to export perhaps greater quantities of spices to Europe than the Portuguese (source: A Splendind Exchange: How Trade Shaped the World). In TTL Spain controls not just all the spice trade towards Europe, but all the global supply of mace, cloves and nutmeg.
As I see it, TTL trade wealth is many times greater than the OTL portuguese one. I dare say that it is greater than the VOC income during its golden era. The nature of that wealth, means that in contrast to extracted wealth (Potosi silver), a great part of it will go to a positive reinforcement cycle of more ships, more forts, more mercenaries, greater political control. For example, the author indicated that the next target of spanish expansion will be Ceylon and total control of the cinnamon trade.
Therefore, when the first english/dutch/french ships arrive in the Indian Ocean, they won't find the OTL Estado da India, but a semi-autonomous political entity that will be vastly more powerful and much better entrenched than in OTL. Not to mention that the Estado da India will be backed by a south african settler colony with climate suitable for Europeans.
Even more importantly, the OTL Dutch and English were able to entrench themselves in the East Indies by freely trading in the Spice Islands and producing huge returns that funded their initial empire-building. Now the Spice Islands will be Portuguese. They can limit themselves to pepper trading from India, but it would be an uphill battle to survive with just a
slice of the peppercorn trade. And that doesn't take into account the responce of a
much more powerful Estado da India.
Last but not least, due to butterflies it will be difficult to see a VOC like the OTL one. The feudal overlords of the Netherlands won't allow the VOC shareholders the level of autonomy they enjoyed in OTL when they were the actual decision makers in Holland. That would lead to something like the english EIC that was initially less well governed (they had each year to return the profits to shareholders instead of using the profits and just pay dividend).
In West Africa, Spain will not be able to stop other nations trading and engaging with the native populations.
I think so as well. But West Africa trade will be really valuable only after hostile Powers snatch some carribean islands for sugar production. So, I think mostly it will be about slave trading unfortunately.
North America is a sensible place to allow the English, French and Dutch to fight it out for the beaver fur trade
I most certainly agree! Beaver fur will not be worth it from a spanish POV. The only commodities of strategic importance for Spain would be cod and naval supplies. A Spain that is a greater naval power needs more naval supplies (pitch, masts etc) than the OTL one. And hostile powers in the North Sea can stop that trade. The only solution would be to get the naval supplies they need from an area they already had major interests in: the Maritimes and São Lourenço.