Last Updated: Thursday, 19 June, 2003, 04:58 GMT 05:58 UK
By Tom Gibb BBC South America correspondent

South American leaders have ended a summit in the Paraguayan capital, Asuncion, with a promise to revitalise and expand the trading bloc, Mercosur, which has been seriously damaged by years of economic crisis in the region.

Recent recoveries in the two largest economies, Argentina and Brazil, are now creating much better prospects for closer integration.

There are plans to expand the trading bloc

The move to rebuild Mercosur is being led by the presidents of the two countries, who both took office this year.

They want to aim for a South American alliance based on the model of the European Union.

But that is still a long way off.

Brazil's President, Luiz Inacio Lula da Silva, known as Lula, promised to work every minute to consolidate the dream of Latin American unity.

But he and his colleagues will be starting almost from scratch.

Mercosur members Brazil, Argentina, Uruguay, Paraguay

First they have to eliminate tariff differences which have become more acute within South America over the last few years.

Lula said that recovery in Brazil and Argentina would now make that possible.

There are plans to expand the bloc to include Chile, Bolivia and Venezuela, and there is talk of creating a Mercosur parliament and a joint currency. But, again, as yet there are no concrete proposals.

In the short term, Lula wants to get a joint strategy to give greater strength in trade negotiations with the United States.

He will now travel to Washington to meet President George W Bush.

Miami-<a href=www.wane.com>News Channel 15-AP -- Two radio show hosts who tricked Venezuela's president into thinking he was talking to Cuba's Fidel Castro now claim they've pulled the same prank -- in reverse. The two D-J's at Miami's W-X-D-J F-M say they tricked Castro into thinking he was talking to Venezuela's Hugo Chavez.

Joe Ferrero and Enrique Santos say they were able to do so by playing disjointed parts of a conversation Chavez had with them earlier this year.

After a few moments of pleasantries between Chavez on tape and the man identified as Castro, one of the announcers comes back on the phone line.

The man on the other end catches on to the prank after he is called an assassin and the conversation disintegrates into him denouncing the caller with a stream of obscenities.

Cuban officials had no comment while a Venezuelan spokesman calls the act "irresponsible and unethical."

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, June 18, 2003 By: David Coleman

News reports from El Callao in southeastern Venezuela say that violence broke out with protest demonstrations against US Idaho-based Hecla Mining Co, at their La Camorra gold mine in Sifontes municipality ... a police report claims that mine manager Mark Hout's vehicle was damaged by at least seven Hecla workers and the windscreen smashed before security personnel arrived on the scene to restore order and clear the way over a key bridge across the Rio Yuruari.

The dispute arose after the seven were fired recently ... their employment status is currently being reviewed by a parliamentary committee and an administrative arbitration procedure is underway pending a ruling from the Labor Ministry in Caracas on the legality of Hecla's allegedly unilateral reduction in payroll.

Hecla employs some 450 workers, technical staff and administrators at the La Camorra mine close to El Dorado where it has recently been involved in community welfare and training programs as well as water supply improvements, education and health services close to the Chile mine in El Callao.

Hecla managers claim that "vandals" have attempted to damage buses and executive transport as a means of focusing attention on the protest.  The company says the workers should channel their complaints through proper legal employment procedures since "aggression against the integrity of both personnel and property is not the most sensible approach to their problem ... they should try to bring some rationality to this labor dispute instead."

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, June 18, 2003 By: David Coleman

Foreign Minister (MRE) Roy Chaderton Matos has held talks with his Colombian counterpart Carolina Barco on bilateral relations, especially economic cooperation agreements achieved by Presidents Chavez Frias and Colombia's Alvaro Uribe Velaz recently in Puerto Ordaz.

Talks also included Venezuelan currency control approval of some $300 million to cover Venezuelan merchant outstandings to Colombian suppliers ... "we have now made good progress; some payments have been made but it is necessary that Venezuelan merchants who require foreign currency to pay their debts should register and fill out the necessary forms for approval ... and nobody in the Venezuelan government knows if the debts really exist until they are satisfactorily verified."

Meanwhile in Caracas, the Currency Control Committee (CADIVI) has asked the Director of Public Prosecutions to open investigations into some 80 businesses who have sought to obtain foreign currency with forged documents claimed to be from the Adult Training Program (INCE) and Social Security as well as IRS/Seniat.

Authorities had been on the alert since foreign exchange controls were first introduced in February that there would be subversive efforts to obtain currency by fraudulent means.  CADIVI officials had appealed to companies to make sure their documentation was in order and to avoid using traditional go-betweens who have in many cases been seen to specialize in using forged documents and attempting to corrupt approvals staff.

Under current legislation anyone found to have contravened currency laws will risk a prison term of 18 months to 5 years, a total ban from all further currency transactions and confiscation of all funds that may be deemed to have been illegally used.

Posted on Wed, Jun. 18, 2003 By Kevin G. Hall Knight Ridder Newspapers

RIO DE JANEIRO, Brazil - Brazil's central bank slightly lowered its overnight basic lending rate Wednesday for the first time in 11 months and the first time since leftist President Luiz Inacio Lula da Silva took office Jan. 1.

In a sign that the Brazilian government is regaining investors' confidence, the bank's monetary policy committee reduced the interest rate, called the Selic, by half a percentage point, to 26 percent. Brazil's overnight lending rate remains the third highest in the world, trailing only Turkey and Venezuela.

Brazil had raised interest rates five times since October, the month da Silva was elected, the final time in February under his presidency. The higher rates were aimed at inducing foreign investors to keep their money in Brazil despite fears that da Silva, a critic of U.S.-backed economic policies, would abandon the free-market reforms his predecessor had adopted.

Wednesday's action is unlikely to quiet what has become the first major controversy of da Silva's government. An avowed leftist, da Silva spooked financial markets after his victory. Since taking office, he has been ultra-orthodox in managing the economy.

Economic analysts in Brazil think interest rates should fall further, given that the currency has been stable for months against the dollar.

"It is very clear there was enough space to cut up to 2 points on interest rates," said Daniel Tha, an analyst with economic consultant Global Invest in Curitiba.

High interest rates are slowing South America's largest economy, which isn't expected to grow by more than 2 percent this year.

Da Silva took office promising a "confidence shock." But Tha and other analysts complain that the high interest rates stifle consumer spending and hurt the stock market, because investors won't gamble on stocks if they can earn 26 percent on government bonds and other debt instruments.

"They are forgetting to look at the real economy, where people are hurting," Tha said.

Former President Fernando Henrique Cardoso criticized da Silva on Monday for an "exaggerated dosage" of financial austerity. Even Jose Alencar, da Silva's vice president and a textiles tycoon, called the high interest rates "absurd."

In a speech Tuesday, da Silva asked Brazilians to be patient about the economy and his promise of new jobs.

"We have spent six months fixing the house, conquering the confidence (of investors) that was needed," da Silva said.

Inflation in May was at a 17.2 percent annual rate, the highest since 1996. The central bank predicts 7.76 percent inflation over the next 12 months.

Earlier this month, Brazil sold international investors $1.25 billion in 10-year bonds. The government said it was a clear sign that Wall Street saw healthy long-term prospects for Brazil.