May 12, 2006

S.America’s leftist duo hail end of “neoliberalism”

By William Schomberg and Boris Groendahl

VIENNA (Reuters) - The leftist presidents of Venezuela and
Bolivia resisted calls by European and fellow Latin American
leaders on Friday to soften their hard-line policies on foreign
investment, energy and trade.

Venezuela's Hugo Chavez and his new ally Evo Morales of
Bolivia, both running countries with increasingly important
energy supplies, dominated the summit of about 60 heads of
state which should have focused on new trade and investment

Chavez, a combative former paratrooper, condemned the
pro-market policies many Latin American countries have adopted
in the last 20 years but which have fallen out of favor with
many voters for failing to make a big impact on poverty.

"Neoliberalism has begun its decline and has come to an
end," Chavez told reporters. "Now a new era has begun in Latin
America. Some call it populism, trying to disfigure our beauty.
But it is the ... voice of the people that is being heard."

European Commission President Jose Manuel Barroso declined
to talk about specific states but said populism was a threat.
"We are a Europe against populist tendencies," he said.

Bolivia and Venezuela have increasingly riled governments
on both sides of the Atlantic.

Morales nationalized Bolivia's oil and gas sector on May 1,
shortly after taking power, and has promised further tough
action with foreign investors.

Venezuela has angered the United States by allying himself
with Cuba's Communist government and worried Europeans too by
extending state control further over the oil industry.

British Prime Minister Tony Blair urged the two countries
not to act irresponsibly.

"What countries do in their energy policy when they are
energy producers like Bolivia and Venezuela matters enormously
to all of us," he told reporters. "My only plea is that people
exercise the power they have got in this regard responsibly for
the whole of the international community."

United Nations Secretary General Kofi Annan said investors
needed to be sure of long-term stability: "Without that
assurance you may be disrupting all economic activities."

But Chavez did not seem under pressure, joking instead with
reporters about a scantily clad Argentine carnival queen who
burst past police to protest about a planned pulp mill in
Uruguay, another cross-border row in Latin America.

"It was one of the best things that have happened at this
summit," said Chavez as the woman was ejected by police.


The summit was planned as a chance to take ties between the
EU and several regions of Latin America to a new level.

But with several Latin American nations mired in disputes,
only a deal for the launch of trade, investment and aid talks
between the EU and Central American countries was planned.

Peru was demanding a timetable for similar negotiations
with the Andean countries but Brussels could not do that
because Bolivia will not commit itself to the talks, officials

Venezuela recently quit the Andean Community in protest at
trade deals planned by neighboring countries with the United
States, whose influence Chavez is challenging.

Morales, a former coca farmer making his first presidential
trip to Europe, has relished the chance to confront his
country's former colonial powers and Bolivia's present
heavyweight neighbor Brazil for "pillaging" his country.

Brazil on Thursday reacted angrily to comments by Morales
that state-controlled oil company Petrobras had acted illegally
in Bolivia.

Brazilian Foreign Minister Celso Amorim said on Friday a
dispute over compensation for Petrobras as a result of
Bolivia's energy nationalization could end up being resolved in

Spain is also concerned about potential losses for Spanish
energy group Repsol, which is the second-biggest foreign
investor in Bolivia's energy sector after Petrobras.

(Additional reporting by Jason Webb, Guido Nejamkis and
Inae Riveras)