January 3, 2006

Chavez hails Bolivian ally with energy, aid deals

By Patrick Markey

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo
Chavez offered Bolivian president-elect Evo Morales energy and
economic cooperation on Tuesday to seal ties between socialist
allies united in their opposition to Washington.

The Venezuelan leader and Morales, a former coca leaf
farmer, have antagonized the U.S. government with their
alliance with Cuba and promotion of leftist integration to
counter U.S. free-market policies in Latin America.

Chavez said the world's No. 5 oil exporter would supply
Bolivia with diesel fuel in exchange for farm products, help
finance social programs and support Morales' crusade to protect
coca crops against U.S. eradication campaigns.

"We can't lose a day in supporting Bolivia in any way we
can," Chavez said at a media conference where he presented
Morales with a replica of the sword used by Venezuelan
liberation hero Simon Bolivar.

Morales is the latest leftist to sweep to power on the back
of regional discontent with U.S.-backed economic policies. He
stopped in Venezuela as part of a world tour that includes
Spain, France, Brazil, China and South Africa before taking
office on January 22.

The Bolivian leader has rejected charges from foes that he
received financing from Chavez, who Washington accuses of
destabilizing the region by using Venezuela's oil wealth to
spread his socialist revolution to neighboring countries.

"This is not about Evo Morales. This is about the people
who are reclaiming their rights," the Bolivian leader said.

Chavez and Morales also greeted retired Peruvian army
commander Ollanta Humala, a nationalist candidate for his
country's presidency who has worried investors with his call to
roll back pro-market policies.


Morales is the first Indian president of South America's
poorest country. But he faces a nation deeply divided between a
poor Indian majority in the Altiplano mountains and wealthy
eastern areas demanding more independence.

Morales, who herded llamas as a boy in his poor mountain
home, calls his socialist movement a "nightmare" for
Washington, criticizes U.S. anti-drug policies and promises to
nationalize Bolivia's gas resources.

He has campaigned for coca leaf production by Indians who
celebrate the plant as part of their culture. But U.S.
officials fear increased coca production will led to growing
output of illegal cocaine.

The Bolivian leader said he was open to dialogue after
meeting on Monday with the U.S. envoy to La Paz, David
Greenlee, to discuss the region's democracy and the fight
against drugs.

"Yesterday I had my first meeting with the U.S. ambassador
in La Paz at the ambassador's invitation," he said. "It will be
the beginning of a contact without submission or subordination,
without blackmail or conditions."

Chavez, a nationalist whose government has extended state
control over the energy sector, said Venezuela would share its
petroleum expertise with Bolivia, and state oil firm PDVSA
would open an office in the Andean nation.

A former soldier who was elected in 1998, Chavez has
promised to use Venezuela's vast energy resources to foster a
revolution for the poor. He has spent billions of dollars in
oil cash on social and health programs.

The Venezuelan leader, who accuses U.S. officials of
working to overthrow him, has become one of Washington's most
vocal critics and has signed energy and trade deals with South
American partners to counter U.S. influence in the region.

U.S. officials dismiss his charges of assassination plots
as rhetoric aimed at stirring nationalist sentiment among his
poor supporters. But they accuse Chavez of eroding democracy at
home and backing subversive groups overseas.