Venezuela and Brazil Strengthen Economic Ties

The Venezuelan President and his Brazilian counterpart signed nine cooperative agreements last week in Caracas. Both countries agreed to strengthen ties in the areas of health and agriculture, as well as the joint construction of an oil refinery, a bilateral development fund, and cooperation in the petrochemical sector.

By Chris Carlson - Venezuelanalysis.com

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Venezuelan President Hugo Chavez and Brazilian President Luis Inacio Lula da Silva during a meeting in Caracas last week (Miraflores)
Venezuelan President Hugo Chavez and Brazilian President Luis Inacio Lula da Silva during a meeting in Caracas last week (Miraflores)
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Paraguaná, December 17, 2007,
(venezuelanalysis.com)
Venezuelan President Hugo Chavez and his Brazilian counterpart Luis Inacio Lula da Silva signed nine cooperative agreements last week in Caracas. Both countries agreed to strengthen ties in the areas of health and agriculture, as well as the joint construction of an oil refinery, a bilateral development fund, and cooperation in the petrochemical sector.

Both leaders described it as their most important meeting to date when they met for a few hours in Caracas last week. Lula and Chavez agreed to meet four times per year starting in 2008 and the two countries plan to create a joint development fund to finance future joint projects.

President Chavez emphasized the importance of the agricultural agreements between Brazil and Venezuela. The two countries agreed to work together in the production of coffee in Venezuela, as well as the development of technology for processing citrus fruits.

"With the power that Brazil is in the agricultural sector, we can acquire that technology and advance. They have the experience that we need in order to increase our production in Venezuela," he said.

The two countries plan to increase the integration of the energy sector as well. Chavez said Venezuela will provide 100,000 barrels of crude oil per day to a refinery being built in Brazil by PDVSA, Venezuela's state-owned oil company, and its Brazilian counterpart Petrobras. Petrobras will have a 60 percent stake in the refinery in the state of Pernambuco, with PDVSA holding 40 percent under an agreement signed last Thursday.

"This has been a short visit but it has been enough to achieve the goals we established," said Chavez. "Above all in the energy sector between PDVSA and Petrobras to work together for energy integration and in education, health, credits, among others."

Both governments plan to create a joint company to work in the petrochemicals sector as well. The two presidents signed an agreement for cooperation between Venezuelan and Brazilian petrochemical industries for the production of ethanol, propylene, polypropylene and other plastic resins.

The two countries also plan for greater industrial cooperation and the development of joint industries. An agreement was signed for the construction of a joint hydroelectric complex. Lula praised the increasing ties between the countries and assured that their relationship would continue to solidify.

"This is the best time in decades for this continent," he said, emphasizing that the countries of the region are more democratic than before.

"The poor now have access to food, possibilities for credit. Its something new, and it's extraordinary because in our continent, for a long time the reality was that the government was for 30 percent of the population, but not for everyone."

Brazil is Venezuela's third largest trading partner and trade has increased between the two nations in recent years. Brazilian exports to Venezuela grew to US$ 3.8 billion in the first ten months of 2007, an increase of almost 30 percent over the same period last year. Venezuela's exports to Brazil, on the other hand, reached only US$ 296 million, a decrease of nearly 45 percent over the previous year.

Chavez assured that trade between the two countries would reach US$ 10 billion within a few years, and assured that the balance of trade would level off "as Venezuela gets stronger."

Lula promised to help Venezuela improve its productive capacity, and assured that possibilities for private Brazilian investment in Venezuela would be encouraged. A delegation of Brazilian businessmen accompanied the Brazilian president during his visit in Caracas to assess the possibilities.

"My government and my ministers will be committed to helping you," Chavez said to the Brazilian businessmen. "You can count on our support to increase Venezuela's productive capacity. It is a definite necessity for us to advance quickly in the transformation of Venezuela's economy away from the oil model.”

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