- The Washington Times - Friday, January 19, 2007

RIO DE JANEIRO (AP) — Venezuelan President Hugo Chavez called yesterday for South America’s governments to take greater control of their economies, while Brazil’s president urged respect for differences at a summit marked by sharply divergent visions for the Mercosur trade bloc.

As the two-day summit ended with 11 of South America’s 12 leaders on hand, the heads of state engaged in a rare bout of public squabbling at their final session, an exchange of nation-on-nation criticism that revealed deep divisions and raised questions about whether the fractured bloc can be revitalized and expanded.

In comments broadcast to reporters live on closed-circuit television, Bolivian President Evo Morales complained about the prices Brazil pays for Bolivian natural gas, then criticized Colombia’s conservative president, Alvaro Uribe, over U.S. anti-drug aid to Colombia.

A clearly irritated Mr. Uribe used his speech to defend himself. Meanwhile, the leaders of Paraguay and Uruguay — which have the smallest economies in the Mercosur bloc — complained that their nations are constantly patronized by Argentina and Brazil, which have the continent’s two largest economies.

Brazilian President Luiz Inacio Lula da Silva tried to smooth over the differences, saying the leaders must “respect the internal political differences that our countries adopt to confront the challenge of development.”

The leaders themselves, split politically by a continental drift to the left, are struggling to determine whether Mercosur should continue on the free market path it’s been on since it was founded in 1991 or veer toward Mr. Chavez’s vision of South American socialism.

“One of the proposals I will dare to make is that in each one of our countries the state have a greater presence in the economy,” Mr. Chavez said, adding he thought too much of the region’s economy was controlled by multinational corporations.

Mr. Silva, who was elected as a leftist but who embraces free market economics, said the bloc was essential for the region to advance and become a bigger player on the world stage.

The Southern Cone Common Market, or Mercosur, unites some 250 million people with an annual economic output of $1 trillion, or about 76 percent of the total for South America.

Despite its problems, Mr. Silva said, Mercosur trade has grown to $30 billion in 2006 from $4 billion in 1990.

“There has never been such a promising political climate for the integration of Mercosur,” he said.

However, the summit was overshadowed by Mr. Chavez, who accused the United States of using Venezuela’s largest phone company to spy on him and promised to “decontaminate” South America’s main trade bloc of its founding ideas: U.S.-supported free market policies and privatization of state industries.

A spokesman for the U.S. Embassy in Venezuela declined to comment on the spying charge.

Mr. Chavez’s recent moves to shut down an opposition television station and rule by decree seemed to place the country at odds with the group’s commitment to democracy.

Venezuela became a full Mercosur member last year, but the country has not met all the criteria in terms of the common tariff structure.

Mr. Silva also welcomed Bolivia, which has just requested full membership in the bloc, as well as any other nations that wanted to join.

But Argentine President Nestor Kirchner questioned the wisdom of granting Bolivia exemptions to the bloc’s common tariff and said he preferred to do more for Paraguay and Uruguay.

Paraguay and Uruguay are pondering trade deals with the United States out of frustration with Mercosur, and analysts say the bloc would be hurt if they left.

The inclusion of Bolivia and possibly Ecuador could tilt the trade bloc even further to the left.

Mercosur’s full members are Argentina, Brazil, Paraguay, Uruguay and Venezuela. Bolivia, Chile, Ecuador and Peru hold associate membership, meaning they don’t have voting rights and do not have to comply with Mercosur tariff rules on goods imported from outside the bloc.

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