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Chavez brings oil diplomacy to neighbors

August 08, 2007|Patrick J. McDonnell | Times Staff Writer

BUENOS AIRES — Venezuelan President Hugo Chavez heralded new economic and energy ties to Argentina on Tuesday as part of a renewed petro-diplomacy initiative highlighting his bid for regional leadership.

Opening a four-nation South American swing, Chavez signaled his oil-rich nation's willingness to purchase up to $1 billion in Argentine bonds and help fund a $400-million gas plant designed to meet this country's growing energy needs.

Venezuela's oil-funded largess is expected to be on display during planned stops in Uruguay, Ecuador and Bolivia, all of which are expected to forge new energy deals with the government in Caracas.

The trip underscores Chavez's strategy of doling out funds and fuel to an energy-starved region to win or bolster friendships, even as he remains a divisive and controversial figure in much of Latin America.

Opposition leaders here in Buenos Aires immediately assailed President Nestor Kirchner's economic reliance on Caracas, which has purchased more than $4 billion in Argentine bonds in recent years and has bailed out a financially ailing dairy industry.

"Since Kirchner couldn't fill the financial pothole, now he's asking his usurious Uncle Hugo to help him," said Ricardo Lopez Murphy, a right-wing candidate in October's presidential election.

Kirchner, a moderate leftist, has welcomed Chavez's aid as a key to Argentina's continuing recovery from its 2001-02 financial crisis. Much to the chagrin of the Bush administration, Kirchner has remained a steadfast Chavez ally. "Venezuelan [natural] gas is going to have a direct importance in the Argentine economy," said Kirchner, referring to a deal for a new liquefied natural gas plant here.

Venezuela's latest aid package comes at an important time, analysts said, because Argentina has been suffering energy shortages during a cold Southern Hemisphere winter and has been hard hit by volatile financial markets.

Though Chavez's visit to Argentina was generally low-key amid the presidential campaign here, Chavez stressed one of his favorite themes: Latin American unity.

"We need to unite, and the North American empire doesn't want us to unite," he told reporters. "It is a battle of interests, but we will win this battle."

The Bush administration has labeled Chavez the biggest impediment to Latin American economic integration. President Bush's visit to the region in March was widely viewed as an effort to counter Caracas' spreading influence, which has been amplified by the high price of oil.

But Chavez's vision of leading a united Latin America has suffered setbacks in recent months, notably the fierce protests about Caracas' controversial decision to shut down the broadcast network RCTV, a frequent Chavez critic. A miffed Chavez told lawmakers from Brazil, Chile and elsewhere who criticized his actions to mind their own business.

In addition, the Venezuelan president has recently sent what amounted to an ultimatum to member nations of the South American trading bloc known as Mercosur, saying his government would withdraw support if not granted full membership status. Some critics see a thwarted Chavez seeking allies in Iran and elsewhere as the regional leadership role falls to Brazilian President Luiz Inacio Lula da Silva, who is currently on a swing through Mexico and Central America, cementing biofuel agreements and other deals.

"There's a growing isolation of Chavez in South America and in the world context," said Jorge Castro, a political analyst here. "That is linked to the parallel political and economic strengthening of Brazil."

After leaving Argentina, the Venezuelan president arrived in Uruguay on Tuesday evening for a stop meant in part to mend strained ties with President Tabare Vazquez. Vazquez, another moderate leftist, didn't appreciate Chavez's anti-Bush tirade in Buenos Aires in March, just as Bush was heading to Uruguay.

But Uruguay is reported to be in line for discount purchases of about 40,000 barrels a day of Venezuelan crude.


Andrés D'Alessandro of The Times' Buenos Aires Bureau contributed to this report.

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