Brazil and Venezuela Strengthen Bilateral and Regional Integration

Mérida, July 1, 2008 (venezuelanalysis.com)– The President of Brazil, Luiz Inacio “Lula” da Silva, and Venezuelan President Hugo Chávez met in Caracas last Friday to discuss the progress of bilateral accords regarding the production and distribution of energy and food, Venezuela’s bid to become a member of the South American free trade bloc MERCOSUR, educational exchange, border relations, and the nascent South American Defense Council.

“We are showing that progress can be made toward actual integration among our peoples,” Lula declared after the meeting, which was the fourth of its kind since Chávez and Lula agreed to meet every three months to manage bilateral cooperation. “These quarterly meetings are more positive each time,” Lula added.

Relations between Venezuela and Brazil “are now at their peak, like never before in history,” Chávez commented after the 5-hour meeting. “Our countries are set to become driving forces in the South American, Latin American, and Caribbean integration process,” he said.

In the area of energy, the two presidents signed a cooperation accord to commercialize liquid natural gas from Venezuela in a refinery in northern Brazil.

The presidents also discussed how to further connect the electricity grids between the southeastern Venezuelan state of Bolívar, where mainly dams produce more than 70% of Venezuela’s electricity, and northern Brazil.

Another item on the agenda Friday was to work out the details of the mixed enterprise formed by Venezuela’s state oil company PDVSA and Brazil’s PETROBRAS for the construction of the Abreu e Lima oil refinery in northern Brazil.

PETROBRAS, which owns a 60% controlling share in the Abreu e Lima refinery, initiated construction in 2005. PDVSA came on board as a minority partner during the last bilateral meeting between Lula and Chávez late March. Chávez pledged to invest $4 billion in the refinery, which is projected to produce 200,000 barrel per day by 2010.

The two state oil companies have also formed a mixed enterprise for the exploitation of a section of Venezuela’s Orinoco Oil Belt.

“I think this will be something extraordinary…we are going to be much more sovereign,” stated Lula regarding the oil accords. “The more petroleum we find in Venezuela and Brazil, the more powerful PDVSA and PETROBRAS will be,” Lula added.

Lula and Chávez also signed food cooperation accords by which Venezuela will import 12,000 tons of soy oil and 20,000 tons of chicken meat from Brazil.

This agreement is in addition to the $51 million technological cooperation agreement the two presidents signed in late March, which is aimed at bolstering Venezuela’s agricultural sector and promoting food sovereignty, a major goal of the Chávez administration, with the help of the Brazilian Pesquisa Agropecuaria company.

Lula said he is “convinced that [Venezuela] is recuperating the time lost when all anyone thought about was selling oil and not developing a participatory model.”

Lula predicted after meeting with Chávez that “it is only a matter of time” until Venezuela receives approval from the Brazilian congress to become a full member of MERCOSUR, whose current members are Argentina, Brazil, Uruguay, and Paraguay.

With Lula’s support, Venezuela stepped up its campaign to become a member of MERCOSUR over the past year, and now needs congressional approval from Paraguay and Brazil in order to enter the economic integration initiative.

“I am sure the Brazilian National Congress is going to approve the entrance of Venezuela in MERCOSUR,” Lula said Friday.

Chávez spoke confidently about Venezuela’s future membership, declaring, “from the heart, we already feel we are part of MERCOSUR, it is the path of integration and strengthening of the South, the great South American bloc.”

Lula said that the wariness of the Brazilian private sector after a series of nationalizations by the Chávez administration, including the Argentine-controlled steel plant SIDOR, had been an obstacle to Venezuela’s admission to the trade bloc.

Now, this obstacle has been overcome, and “no more mistrust exists with relation to the possibility of integration,” Lula said Friday. “I am convinced that the majority of Brazil’s interests are inclined toward Venezuela becoming part of MERCOSUR.”

Trade between Venezuela and Brazil reached $5 billion in 2007, a 22% increase over 2006, according to the BBC World Service.

The two heads of state also discussed their plans to streamline border control and customs laws in order to facilitate the transit of people and merchandise between the two countries.

Moving forward on educational exchange accords signed three months ago, Lula and Chávez signed an agreement to allow 2,000 Venezuelan students to study in Brazilian universities.

Strategies to resolve the lingering diplomatic crisis in the Andes region, which was sparked by Colombia’s raid on an insurgent camp in Ecuador last March, were also discussed Friday.

Regarding the conflict between the Colombian Government and the Armed Revolutionary Forces of Colombia (FARC), Brazilian presidential spokesperson Marcelo Baumbach assured that his country “has always made it clear that this is an internal issue of Colombia, and any solution depends on Colombia’s agreement.”

Chávez and Lula spoke of the need to “mature” Brazil’s proposal for a South American Defense Council, which gained support after Colombia’s raid. During last month’s UNASUR summit, South American leaders confirmed their intention to hold a meeting about the defense council within 90 days.

The council is meant to be a tool for coordinating defense and resolving conflicts rather than a classic military alliance, and could be formed within a year, according to Brazilian Defense Minister Nelson Jobim.