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Tuesday, January 03, 2006

Chavez hails Bolivian ally with energy, aid deals

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez offered Bolivian president-elect Evo Morales energy and economic cooperation on Tuesday to seal ties between socialist allies united in their opposition to Washington.

The Venezuelan leader and Morales, a former coca leaf farmer, have antagonized the U.S. government with their alliance with Cuba and promotion of leftist integration to counter U.S. free-market policies in Latin America.

Chavez said the world's No. 5 oil exporter would supply Bolivia with diesel fuel in exchange for farm products, help finance social programs and support Morales' crusade to protect coca crops against U.S. eradication campaigns.

"We can't lose a day in supporting Bolivia in any way we can," Chavez said at a media conference where he presented Morales with a replica of the sword used by Venezuelan liberation hero Simon Bolivar.

Morales is the latest leftist to sweep to power on the back of regional discontent with U.S.-backed economic policies. He stopped in Venezuela as part of a world tour that includes Spain, France, Brazil, China and South Africa before taking office on January 22.

The Bolivian leader has rejected charges from foes that he received financing from Chavez, who Washington accuses of destabilizing the region by using Venezuela's oil wealth to spread his socialist revolution to neighboring countries.

"This is not about Evo Morales. This is about the people who are reclaiming their rights," the Bolivian leader said.

Chavez and Morales also greeted retired Peruvian army commander Ollanta Humala, a nationalist candidate for his country's presidency who has worried investors with his call to roll back pro-market policies.

ENERGY, ECONOMIC REFORMS

Morales is the first Indian president of South America's poorest country. But he faces a nation deeply divided between a poor Indian majority in the Altiplano mountains and wealthy eastern areas demanding more independence.

Morales, who herded llamas as a boy in his poor mountain home, calls his socialist movement a "nightmare" for Washington, criticizes U.S. anti-drug policies and promises to nationalize Bolivia's gas resources.

He has campaigned for coca leaf production by Indians who celebrate the plant as part of their culture. But U.S. officials fear increased coca production will led to growing output of illegal cocaine.

The Bolivian leader said he was open to dialogue after meeting on Monday with the U.S. envoy to La Paz, David Greenlee, to discuss the region's democracy and the fight against drugs.

"Yesterday I had my first meeting with the U.S. ambassador in La Paz at the ambassador's invitation," he said. "It will be the beginning of a contact without submission or subordination, without blackmail or conditions."

Chavez, a nationalist whose government has extended state control over the energy sector, said Venezuela would share its petroleum expertise with Bolivia, and state oil firm PDVSA would open an office in the Andean nation.

A former soldier who was elected in 1998, Chavez has promised to use Venezuela's vast energy resources to foster a revolution for the poor. He has spent billions of dollars in oil cash on social and health programs.

The Venezuelan leader, who accuses U.S. officials of working to overthrow him, has become one of Washington's most vocal critics and has signed energy and trade deals with South American partners to counter U.S. influence in the region.

U.S. officials dismiss his charges of assassination plots as rhetoric aimed at stirring nationalist sentiment among his poor supporters. But they accuse Chavez of eroding democracy at home and backing subversive groups overseas.
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