Lula: Alliance needed to aid Venezuela

www.upi.com By Bradley Brooks UPI Business Correspondent From the Business & Economics Desk Published 1/9/2003 10:36 AM

RIO DE JANEIRO, Brazil, Jan. 9 (UPI) -- Brazil's new president will quickly use his position as leader of Latin America's largest country to try and mediate crises on the continent, namely the civil unrest engulfing Venezuela.

Luiz Inacio Lula da Silva will travel to Ecuador Wednesday -- his first international trip since taking power on Jan. 1 -- and will huddle with other South American leaders in an attempt to form what aides call a "group of friends" to augment the work of the Organization of the American States in advising countries in times of crisis.

"The group could be formed by countries like Colombia, Brazil and Mexico, and Latin nations in Europe, such as Portugal, Spain and France," said Marco Aurelio Garcia, a top adviser to Lula, as he is known.

Brazil's Foreign Minister Celso Amorim was careful to point out that the OAS won't be superceded by any such alliance.

"This group wouldn't take the place of the OAS, but would help facilitate the dialogue between two sides," Amorim said.

The idea for the group largely came from Venezuelan President Hugo Chavez himself.

At Lula's inauguration, Chavez made an off-the-cuff invitation to Lula to join an "axis of good" in Latin America -- a little jab at U.S. President George Bush and his famous "axis of evil" speech.

Chavez was speaking of an alliance among Brazil, Cuba and Venezuela.

The more-moderate-by-the-day Lula grabbed onto the idea, twisted it a bit, and came up with his version, which, incidentally, fits in nicely with his loud calls for stronger pan-Latin American ties to take on the First World when it comes to trade.

Latin American leaders will be gathering in Ecuador next week for the inauguration of that country's President-elect, Lucio Gutierrez.

Most of the talk of such alliances will be informal, analysts say, but it will certainly be a hot topic.

The general strike in Venezuela is sure to be the focus, as it threatens the nascent stability on the continent after a 13-month period that has seen Argentina default on its debt and Brazil's economy just squeak by after a tumultuous presidential election.

The strike in Venezuela is in its second month. Protesters are demanding the ouster of Chavez, who they say has sorely mishandled the economy. Chavez and his supporters say that as a democratically elected leader, he has every right to retain power.

International despair over the crisis in Venezuela is building as the country's oil industry is producing at a fraction of its maximum output of 2.5 million barrels daily. Venezuela is the world's fifth-largest producer of oil.

The general strike, coupled with the threat of war in the Middle East, has combined in the past month to drive up oil prices.

For emerging economies such as Brazil and Argentina, just beginning to see signs of recovery in their limp economies, the scenario of a prolonged period of high oil prices would be doubly deadly on their attempts to reverse their fortunes.

Latin American leaders -- and especially Lula, who is on friendly terms with Chavez -- will work hard to see a peaceful, negotiated settlement through in Venezuela.

The U.S. government has sniffed at the idea of an "axis of good" in Latin America, though the Bush administration backs Lula's efforts at mediating a peaceful end to the Venezuelan crisis, as that country is a key source of U.S. oil imports.

On Wednesday, the U.S. Energy Information Agency said the trouble in Venezuela, coupled with the threat of war with Iraq, could mean oil price volatility for several months.

Adding to the pressure, the agency noted, is the fact that the level of U.S. oil stocks is edging near its "lower operational inventory level" -- which is 270 million barrels.