MercoPress. South Atlantic News Agency

Brazil-Bolivia tone down energy dispute

The presidents of Brazil and Bolivia toned down Saturday in Vienna a row over Bolivia's nationalization of its energy sector which exposed deep divisions in Latinamerica over economic policies and how to address much needed foreign investment.

"There was a lot of smoke and not very much fire," said Brazilian President Luiz Inacio Lula da Silva after a breakfast meeting with Bolivia's Evo Morales at a Vienna hotel to patch relations after the May 1 nationalization.

Although there were not many indications how the dispute is to be solved, Morales said the meeting was "cordial" and that planned increases in the price of Bolivian gas vital to Brazil's industry would be negotiated "rationally". He said he looked forward to visiting Brazil, "I'm keen to watch some football with the Brazilian president".

"We are great allies, as countries, as presidents, as governments, and given that, no one can ever pit us against each other" added Evo Morales after the two hours meeting.

"I told Evo Morales that Brazil needs Bolivian gas and that Bolivia needs to sell its gas to Brazil," said President Lula da Silva adding that the two sides must find "the right point of balance so that Brazil is satisfied and Bolivia is satisfied." A crucial instance for President Lula and his re-election plans next October.

However President Lula was also critical of Morales and Chavez, "Latin American presidents have to stop blaming the rest of the world for poverty" he emphasized.

The dispute, together with other fights between Latin American nations which have long spoken of the need for more integration, overshadowed a summit between the region's leaders and their 25 European Union counterparts in Vienna.

Brazil was enraged by Bolivia's decision to nationalize its energy sector -- including local operations of Brazilian state energy company Petrobras -- and to raise prices for Bolivian gas exports to Brazil and Argentina. Petrobras and Repsol-YPF are the leading companies in exploiting Bolivia's natural gas resources, South America's second largest behind Venezuela.

Venezuela's nationalist president Hugo Chavez was another area of concern in the EU/Latinamerica summit. Just two weeks ago Venezuela stormed out of an Andean community of countries because Peru, Colombia and Ecuador had angered Chavez by signing trade deals with his ideological rival, the United States.

That row, which sucked in Bolivia as Venezuela's ally, almost wrecked planned trade talks with the EU which the other Andean nations had hoped to set on course in Vienna. But Peru's President Alejandro Toledo said on Friday talks would go ahead even if Bolivia opted out.

Toledo said Chavez was taking his region's relations with Europe "hostage" and the Venezuelan, a self-declared revolutionary, has called Toledo a lackey of the United States.

The discord seems very distant from the high hopes for closer Latin American integration under Brazilian leadership three years ago in the early days of Lula's presidency. At the time, the former metalworker was hailed as the hope of the moderate left in the region where freer markets have failed to make a big improvement in most people's lives.

Furthermore Bolivia's actions particularly hurt because Lula da Silva was portrayed in the Brazilian media as a looser with the president of Bolivia, a country historically under the influence of Brazilian diplomacy.

The dispute was embittered by Morales' accusations that Petrobras had acted illegally and that foreign firms had "pillaged" natural resources belonging to Bolivians.

Morales said the media had created the impression of tension between the two countries and said Bolivia actually wanted to increase gas exports to Brazil and elsewhere.