By Guillermo Parra-Bernal

Recife, Brazil, April 26 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil, through its state development bank, will lend $1 billion to Venezuela in a bid to boost bilateral trade, O Estado de S. Paulo reported, citing a presidential accord.

The money will be lent by the National State Development Bank, or BNDES, Estado said. BNDES will pay for Brazilian-made goods, equipment and services exported to Venezuela, which will use oil as a guarantee, the paper said.

The loan covers this year and 2004, the paper said. The 25- point accord was signed between Brazil President Luiz Inacio Lula da Silva and Venezuela President Hugo Chavez yesterday. Calls put to the Brazil Foreign Affairs Ministry seeking further details weren't answered.

Brazil previously financed other trade, despite being the most indebted nation in the developing world with about $300 billion of debt. Brazil lent $3.3 billion to Poland in the 1970s, with the money being repaid in 2001.

(Estado 4-26, A8)

For Estado's Web site, click on {ESDO } Last Updated: April 26, 2003 11:42 EDT

By Boston.com-Reuters, 4/25/2003

RECIFE, Brazil (Reuters) - Brazilian President Luiz Inacio Lula da Silva said he and his Venezuelan counterpart, Hugo Chavez, agreed Friday to create an ''integrated South American economic area'' by the end of 2003.

Hosting Venezuela's leader in his home state in the northeast of Brazil, Lula said it was ''urgent'' to reach a free trade deal between the Mercosur trade group and the Andean countries of Venezuela, Colombia, Peru, Bolivia and Ecuador.

''We agree on giving the highest priority to the integration of South America,'' Lula said after meeting Chavez. ''We are in full agreement about ... a free trade zone between the Andean Community and Mercosur.''

The statement by Brazil's new center-left president signaled his ambition to continue his predecessor's drive to unite South America's main trade groups before the creation of a Free Trade Area of the Americas (FTAA), including the United States and Canada.

Mercosur includes Brazil, Argentina, Uruguay and Paraguay, as well as associate members Chile and Bolivia. Brazil is South America's largest economy.

Brazil's former President, Fernando Henrique Cardoso, sought to unite the region with an eye to giving it greater clout in comparison with the United States in FTAA negotiations. FTAA would be the world's largest free trade area, running south from the Canadian Arctic to Patagonia in South America. Trade is expected to begin in 2006.

Lula said that FTAA talks needed to ''keep in mind the different levels of economic development of the hemisphere's countries and the grave social needs in many of them.''

Lula hosted U.S. Treasury Secretary John Snow this week, who hinted during his trip that Washington could address Brazil's long-held grievance that the U.S. is doing too little to get rid of subsidies Brazil says hinders its farm goods from reaching U.S. markets.

''In spite of many promises and declarations, markets in developed countries remain closed to many of our products, especially those that have clear comparative advantages,'' Lula said in reference to farm exports.

Despite Lula's ambition to strengthen Brazil's negotiating clout by working with other South American states, his agriculture minister said in Washington Friday that Brazil could consider bilateral trade talks with Washington if it gained greater access to U.S. markets.

Reuters, 04.25.03, 5:58 PM ET  

RIO DE JANEIRO, Brazil, April 25 (Reuters) - Brazilian state oil company Petroleo Brasileiro (Petrobras) <PETR4.SA>(nyse: PBR - news - people) said on Friday it lowered its 2005 production target due to delays in the construction of exploration platforms.

Production in 2005 should reach 1.82 million barrels of oil a day, not the previously targeted 1.9 million bpd, said Petrobras Finance Director Luis Sergio Gabrielli. He added that output should reach 2.22 million bpd in 2007.

"The events of the last years have caused us to draw a more conservative scenario," said Gabrielli, who explained that some oil exploration platforms would not be ready as soon as previously expected.

The firm's projections were based on forecasts for 3.1 percent annual economic growth and 2.8 percent yearly growth in consumption until 2007. Petrobras plans to invest $34.3 billion from 2003 to 2007, slightly higher than the $32 billion previously forecast.

Gabrielli also said Petrobras decided to construct a heavy crude refinery in northeast Brazil with a capacity of 150,000 bpd in partnership with Venezuela's PDVSA state oil company, which would supply some of the refinery's crude oil.

Rogerio Manso, director of supply for Petrobras, said the new refinery would help meet increased demand for diesel oil in the country.

Forbes.com-Reuters, 04.23.03, 1:59 PM ETBy Susan Schneider NEW YORK, April 23 (Reuters) - Brazilian sovereign bonds crept higher on Wednesday as investors, while still optimistic about the prospects for Latin America's largest economy under its four-month-old government, kept their eyes peeled for progress on promised pension and tax reforms. Brazil's share of the benchmark J.P. Morgan Emerging Market Bond Index Plus, or EMBI-Plus, added 0.45 percent at midday, with spreads -- the premium investors demand to compensate for perceived risk -- at 8.53 percent over comparable U.S. Treasuries. Brazil's C bond <BRAZILC=RR> was flat at 86.0 bid. Wall Street greeted the Brazilian Central Bank's widely expected decision to maintain the benchmark interest rate at 26.5 percent with a cursory nod, as worries about inflation persisted. Investors focused instead on the tax and social security reforms that President Luiz Inacio Lula da Silva is expected to submit to Congress this month. The overhauls are viewed as critical for Brazil to nourish its financial health. "One of the things that could give an additional boost to the market is when the government finally presents the final proposal for the tax and social security reforms to the Congress," said Ricardo Amorim, head of Latin American research at Wall Street research firm IDEAGlobal. "But, basically, the optimism toward Brazil remains the same," he added. "We can see that also in the (foreign exchange) rate -- the real has been very strong over the last weeks." Brazil's bonds and the currency, the real , have soared as investors warmed to the idea of a Lula presidency. The former union boss spooked markets in 2002 because of his talk in previous campaigns of debt renegotiations, but his constant pledges for fiscal austerity and reforms have lured Wall Street to his corner. Brazil's bonds have gained more than 30 percent since the turn of the year, according to the EMBI-Plus. Argentina's bonds, meanwhile, trekked higher on investor hopes that a market-friendly candidate will eventually pull out a victory in the upcoming presidential race. Argentines go to the polls on Sunday to pick from a field of five candidates, a race that is widely expected to move to a second round. The country's share of the EMBI-Plus added 3.07 percent on the day, extending a 17.2 percent rally this year. "We're still seeing a lot of buying interest across the board," said an emerging debt trader. "Most of the interest has been in Argentina. With the election coming up, the expectation is that one of two or both market candidates are going to move on (to the next round)." Among the candidates, investors would cheer the re-election of Carlos Menem, a favorite of the business community because of his free-market reforms during two presidential terms in the 1990s. While Menem has gained support -- a poll last week showed him leading the race with 18.3 percent of voting intentions -- he remains a controversial figure. Many Argentines blame him for laying the groundwork for the nation's December 2001 fiscal meltdown. Increased support for candidate Ricardo Lopez Murphy has also left investors feeling sanguine. The center-right Lopez Murphy gained five points in the poll to 16.3 percent, or third place after Menem and Gov. Nestor Kirchner. If no candidate wins 45 percent of the vote on Sunday, a second round will be held on May 18 between the top two contenders. VENEZUELA FALTERS Venezuela was a dark spot in an otherwise rosy day in emerging markets as its share of the EMBI-Plus fell 0.74 percent. The country's benchmark DCB bond <VENDCB=RR> slid 0.375 points to 75.5 bid. The decline came one day after Venezuelan President Hugo Chavez brought back a leftist academic as his Planning Minister. Chavez named Jorge Giordani, who served in the same post during the first three years of his rule, to the position after he fired the previous minister for disagreements over economic policies. For investors, the move underscored Chavez's firm hold on power despite his foes' bid to oust him this year with a two-month general strike. Chavez has few friends on Wall Street because of his antagonism toward free markets. "The fact that Chavez appears to be stronger is negative. That's the bottom line," said Amorim of IDEAGlobal.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, April 17, 2003 By: Patrick J. O'Donoghue

Veteran political analyst, Domingo Alberto Rangel says he has reached the conclusion that Venezuelan President Hugo Chavez Frias and Brazilian President Lula da Silva represent sectors of the Venezuelan and Brazilian oligarchy respectively because neither has declared an intention to abolish private property and taken any definite steps in that direction. 

"There is a big difference between the two." 

The oligarchy that surrounds Lula is " coherent, lucid and a really dominant strata" with two outstanding intellectuals: Alencar and Meirelles, whereas Chavez Frias'  oligarchy is "uncouth, social climber and predatory. "We are seeing a replay of the old relationship between a messianic warlord and an oligarchy with its own ambitions." 

Tackling Brazilian-Venezuelan bilateral relations, Rangel states that the recent treaty with Brazil shows the superiority of Lula and his team. 

Rangel forecasts that in twenty years South America will be a concentric continent with everything turning around the axis of Brazil.  "To ignore this fact is stupid but to surrender to it, will be suicide."  

"The Brazilians won this particular battle with the treaty and we must remember that Brazilian interests and not ours are top priority for them."

The treaty grants Brazil the right to use eastern Venezuelan port facilities and allows their vehicles to travel overland between the two countries. There is no doubt it will benefit our deprived eastern zones. 

Rangel points out somewhat bitterly that it is exactly the same concession that Chavez Frias' stupid foreign policy withdrew from Colombia in 1999, showing the inferiority complex our military officers feel towards their Colombian counterparts ... "the more trucks that crisscross our highways whether from Brazil or Colombia, the better for our economy." 

"Venezuela should demand equality of conditions or at least compensations for allowing other nations to use our highways." 

Rangel comments that the principle has been forgotten in Brazil's case ... " I think it didn't even cross the mind of the Venezuelan negotiators (I don't know them)."

It is not a question  of asking for permission for Venezuelan trucks to reach Manaus. 

Venezuela should have wrenched a concession from Brazil for the right of Petroleos de Venezuela (PDVSA) and subsidiaries to lay a pipeline between Anaco or El Tigre and Manaus. ... the right to build a refinery in Manaus and a network of gasoline station through the North Brazil.

Wrapping up his argument, Rangel points out that the 60-days oil stoppage in Venezuela demonstrated that the USA and Europe can rescind of Venezuelan oil supplies completely and once oil wells in the Caspian Sea and Mediterranean start operating, Venezuela will be even weaker. 

"We must seek new markets and diversify clients ... the only strong emerging market is Brazil which will soon become the second or third economic power in the world. Manaus has been an economic center before and will be again. Venezuela could provide it with oil."

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