Brazil, Venezuela agree food and defense, not oil

The presidents of Brazil and Venezuela signed farm and industry accords on Wednesday and agreed to form a regional defense council but failed to reach final agreement on a key oil project.

Brazil, Venezuela agree food and defense, not oil
Brazil's President Luiz Inacio Lula da Silva and his Venezuelan counterpart, Hugo Chavez, met in the northeastern city of Recife and reiterated their intention to build a joint $4 billion oil refinery there. But they could not reach a definitive agreement.

Both leaders already visited the site in Recife three times and repeatedly celebrated the project being discussed since 2003. Brazil's state-controlled oil giant Petrobras began construction last year but cannot agree with the Venezuelan state oil company PDVSA on commercial terms.

"A small part remains (to be discussed)," Paulo Roberto Costa, Petrobras supply director, said before the meeting between Lula and Chavez.

The two left-wing leaders favor South American integration to contain U.S. interests but also vie for leadership in smaller countries.

It was their first meeting after Colombia's attack on a rebel camp in Ecuador on March 1 had led to a regional crisis, in which Venezuela and Ecuador mobilized troops and broke diplomatic relations with Bogota.

Chavez backed Brazil's proposal on Wednesday to create a regional defense council to help avoid conflicts and reduce reliance on U.S. weapons.

"That was (Simon) Bolivar's dream ... to form an alliance, not only economic and political but also military," Chavez said in reference to the South American independence hero.

"We are again creating a great South America," Chavez told reporters upon his arrival in Recife on Wednesday.

Both leaders also agreed that Brazil will offer Venezuela technical assistance in food production and industrial development.

Venezuelan shoppers have for months faced shortages of staple products, such as such as meat, milk and flour.

Trade between both countries totaled $5 billion in 2007, up 26 percent from the year before.

Chavez was to dine with Lula Wednesday night and both are to give a news conference on Thursday morning.

Last Mod: 27 Mart 2008, 14:41
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