Venezuela playing increasing economic role in Bolivia

Venezuelan President Hugo Chavez donned a red poncho and a wooly hat, taking on the look of a Bolivian Indian as he prepared to sign deals that would secure his country's role in Bolivia's recently nationalized energy industry.

Photo: Venezuela playing increasing economic role in Bolivia

Standing next to similarly clad Bolivian leader Evo Morales and Cuba's Cuban Vice President Carlos Lage, Chavez gave a rousing speech celebrating his oil-rich nation's increasing influence in the poor Andean nation.

"Bolivia and Venezuela are embracing forever, taking the path of equality and justice," Chavez told crowds standing in the tropical heat in Shinahota, a town in Bolivia's coca-growing Chapare region where Morales came to power.

The two leftist leaders are creating a joint mining company called Minesur and a fertilizer company called Fertisur, and Venezuela is pledging more university scholarships, asphalt to pave Bolivian roads, credit for businesses and trees for reforestation. Venezuela also will help run state-owned gasoline stations in a venture to be called Petroandina.

But Bolivia's huge natural gas reserves are the real prize, and Morales clearly needs outside help. Negotiations with a half-dozen foreign energy firms have been slow going since Morales nationalized the industry earlier this month, sending in troops to guard their energy installations.

Enter Venezuela, which will sink US$500 million (Ђ390 million) in the short term and up to US$1.5 billion (Ђ1.2 billion) long term into Bolivia's gas industry. Rich with petro-dollars and eager to expand Venezuela's economic reach throughout Latin America, Chavez has already pledged more than US$140 million (Ђ110 million) in donations and loans to Bolivia. Venezuelans are helping provide national identity cards for those who don't have one and will pay for 109 rural radio stations.

"Like never before in history, a foreign country is here visiting, orchestrating and deciding on issues that belong to Bolivians," said Fernando Messmer, a former foreign minister and opposition congressman.

Now Chavez is pledging even more support, promising to make Venezuela's state-owned energy firm, PDVSA, a minority partner with Bolivia to explore for gas and certify Bolivia's reserves, as well as build a gas processing plant and three asphalt factories.

In exchange for all this largesse, Bolivia will send Venezuela soy beans, as well as pay some cash for diesel shipments and fertilizer.

The deal is so lopsided that critics suspect Chavez is seeking other advantages at the expense of Bolivia and other South American countries, using his largesse to exert influence over Morales and strengthen his role as a regional energy player.

Chavez and Morales have said that's nonsense, and that both countries will gain plenty, reports AP.

O.Ch.