Brazil Plans to Fund Investments in South American Countries

Sao Paulo, May 16 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's government said it will finance infrastructure projects in neighboring nations in its biggest push to date to boost regional economies and increase its influence.

Brazil, South Americas' biggest economy, is close to signing agreements with Venezuela to finance the petrochemical sector and with Peru, Trade and Industry Minister Luiz Fernando Furlan told business executives in Germany, according to a statement provided by his office. This month, the government said it will create a $1 billion fund to finance bilateral trade with Argentina through BNDES, the development bank, and finance $600 million in roads and other projects in Bolivia.

The plan, which will use Brazilian taxpayers' money to spur their neighbors' economies, underscores the importance President Luiz Inacio Lula da Silva places on increasing Brazil's regional influence to better negotiate trade accords with the U.S. and Europe, analysts said. Even as Lula crafts tax and budget policies to win the confidence of international investors, the former trade union organizer hasn't abandoned his often-stated goal of making Latin America more independent.

If Brazil really wants to exercise a role of leadership in the region, it will have to pay a price,'' said Luciano Dias, a political scientist at Brasilia-based Goes & Consultores. Their line of thought is `if I make my neighbor grow, get richer, he will buy more in my country, he will be a better market for my goods and if he is poor I have to help him grow.' This is the same logic for the Marshall plan.''

Brazil, whose $500 billion economy is bigger than all other countries in South America combined, has had similar projects in the past, with plans to fund road and bridge construction with Argentina. Some proposals by former President Fernando Henrique Cardoso never got off the ground, Dias said. Last Updated: May 16, 2003 16:47 EDT