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Aug 07 2007

Chavez woos neighbours with deals

Global

By Agencies

Chavez reinforced Venezuela's ties with Argentina in a meeting with Kirchner [AFP]

Venezuela's president is to meet his Uruguayan counterpart as he continues his four-nation tour to promote Caracas' entry into a regional trade bloc.

Hugo Chavez is due to meet Tabare Vazquez on Tuesday as part of his drive to offer energy and finance deals to key allies and boost Venezuela's standing in the region.

Chavez met Nestor Kirchner, Argentina's president, on Monday evening, after signalling that Venezuela plans to acquire up to $1bn in Argentine bonds in instalments.

"This is an important deal, highly important for our political and geopolitical ties," Chavez said.

In a later ceremony in Buenos Aires, the leader agreed to a "treaty on energy security", which calls for "ample and sustained co-operation" on energy initiatives.

The proposals include the supply and distribution of natural gas through pipelines, joint oil refining projects and efforts on distributing power and alternative fuels.

Gas facility

Chavez said his government would invest in a regasification plant for liquid natural gas for Argentina, adding the facility could be completed within two years.

Local reports said at least $400m would need to be invested into the plant.

Kirchner said Argentina's sporadic energy shortages were due to unexpected economic growth after the country recovered from an economic crisis in 2002.

"Argentina is growing and it therefore requires more energy," he said.

Kirchner also said he strongly supports Chavez's bid to make Venezuela a full member of the Mercosur, the South American trade bloc.

Argentina, Brazil, Paraguay and Uruguay are already members of the body.

Mercosur impasse

Argentine and Uruguayan legislators have approved Venezuela's entry into Mercosur, but Paraguayan and Brazilian politicians have yet to agree.

Several Brazilian politicians have argued that Caracas does not comply with Mercosur's commitment to democracy because of Chavez's decision in May not to renew the terrestrial broadcast licence of Radio Caracas Television (RCTV).

Venezuela's government alleges that RCTV played a role in a coup which briefly forced Chavez from power in 2002.

Petro-diplomacy

Chavez will tour Bolivia and Ecuador after leaving Uruguay, in what analysts see as a trip to assert Venezuela's regional influence.

"Chavez's frenetic petro-diplomacy is back in full swing," said Michael Shifter at the Inter-American Dialogue think-tank in Washington.

"His purchase of Argentine bonds makes sense for both him and the Kirchner government right now.

"Chavez wants to keep inflationary pressures in Venezuela in check and try to further extend his political influence in South America."