January 3, 2006

Chavez promises Bolivian ally fuel, economic deals

By Patrick Markey

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo
Chavez on Tuesday promised Bolivian president-elect Evo Morales
fuel, economic cooperation and his backing for coca leaf
farmers to seal ties between the socialist allies.

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 Venezuela would supply 150,000 barrels a month
of diesel fuel in exchange for farm products, provide $30
million in financing for social programs and support Morales'
crusade to protect coca crops against U.S. eradication

"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 offered their support to 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.

Humala, visiting Caracas with his wife, is leading in some
polls before April's elections. He led a failed military
rebellion in 2000 against former president Alberto Fujimori.


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 long 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.

"It will be the beginning of a contact without submission
or subordination, without blackmail or conditions," he said.

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. But they accuse Chavez of eroding democracy at
home and backing subversive groups overseas.

(Additional reporting by Andrei Khalip)