Venezuela and Argentina Sign Accords for Closer Cooperation

The presidents of Venezuela and of Argentina, Hugo Chavez and Nestor Kirchner, signed a series of 17 agreements yesterday, which will bring the two countries even closer together than they already are.

Caracas, February 22, 2007 (— The presidents of Venezuela and of Argentina, Hugo Chavez and Nestor Kirchner, signed a series of 17 agreements yesterday, which will bring the two countries even closer together than they already are. Both presidents reaffirmed the need for Latin America to become more unified and Kirchner publicly rebuffed Washington’s efforts to “contain” Chavez, offering him full support.

This was Kirchner’s fourth visit to Venezuela. He arrived on Tuesday, a few hours earlier than previously planned, so that he would have more time to meet with his Venezuelan counterpart.

The agreements the two presidents signed covered a wide variety of issues, such as the commitment to create “Bank of the South,” trade deals in the areas of agriculture, health, and technology, and cooperation in energy, communications, and construction.

The perhaps most important agreement was the commitment to launch the Bank of the South within the next four months. Chavez explained that Latin American countries have plenty of financial resources for such a bank, which would provide a regional alternative to the IMF and the World Bank. Argentina and Brazil, for example, have over $150 billion in foreign currency reserves, a portion of which could be used for this bank, said Chavez.

In a related financial agreement, the two countries jointly issued, for the second time, a “Bond of the South,” this time for $1.5 billion. Last year they had already issued $1 billion worth of this bond. Venezuela is hoping that this bond will absorb excess liquidity in its economy and thereby help restrain inflation.

With regard to trade, the two presidents committed their countries to a variety of oil for food deals. For example, Argentina will provide Venezuela with 10,000 tons of beef and 5,000 tons of chicken

Another agreement involves Venezuela’s commitment to loan $135 million to an Argentinean milk production cooperative, Sancor, which will, in return, supply Venezuela with 15 million tons of milk over the next 12 years.

Also, Argentina agreed to help Venezuela set up factories for the production of agricultural machinery and of gas powered busses.

These trade-related agreements are bound to further increase trade between the two countries, which is expected to grow by a factor of ten by the end of 2007, relative to 2003.

These agreements were signed by Chavez and Kirchner and various ministers of theirs shortly after the two presidents had inaugurated the first oil well that is the result of a Venezuelan-Argentinean-Uruguayan joint venture in the Orinoco Oil Belt. Venezuela is in the process of certifying the reserves of extra-heavy oil in the Orinoco River basin, which, if certified, would make Venezuela the country with the world’s largest oil reserves.

Kirchner: U.S. in “absolute error“

Without directly referring to the U.S., Kirchner said it is an “absolute error” to believe that Argentina would cooperate in any effort to “contain” Chavez, as officials from the Bush administration have proposed. “We [Brazilian President Lula and he] will construct with President Chavez the south American space,” said Kirchner

Kirchner added, “It cannot be that there are some who are bothered because our peoples are integrating. They should put an end to these paternalistic theories according to which we or Lula need to contain other presidents.”

Various Bush administration officials have in recent years suggested that Chavez should be isolated by other countries in the Americas. It is generally assumed that Bush’s upcoming tour of Latin America, where he will visit Brazil, Uruguay, Colombia, Guatemala and Mexico, is meant precisely for this purpose.

Chavez joined Kirchner in saying that Bush’s efforts would go no where. “They have failed and will fail – the travelers from the North who are coming to the South to try to divide us, to sow discord,” said Chavez.

Instead, Chavez emphasized that Latin America is in the process of uniting. “It is necessary to see ourselves as a single nation,” he added.