Causal inference in spatial domains faces two intertwined challenges: (1) unmeasured spatial factors, such as weather, air pollution, or mobility, that confound treatment and outcome, and (2) interference from nearby treatments that violate standard no-interference assumptions. While existing methods typically address one by assuming away the other, we show they are deeply connected: interference reveals structure in the latent confounder. Leveraging this insight, we propose the Spatial Deconfounder, a two-stage method that reconstructs a substitute confounder from local treatment vectors using a conditional variational autoencoder (C-VAE) with a spatial prior, then estimates causal effects with a flexible outcome model. We show that this enables nonparametric identification of direct and spillover effects under weak assumptions--without multiple treatment types or a known latent-field model. Empirically, we extend SpaCE, a benchmark suite for spatial confounding, to include treatment interference, and show that the Spatial Deconfounder consistently improves effect estimation across real-world environmental health and social science datasets. By turning local interference into a multi-cause proxy for latent spatial confounding, our framework advances robust causal inference for spatial data.

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