Morales, Chavez rile at Euro summit

Bolivian President Evo Morales addresses a news conference in Vienna. Picture / Reuters

VIENNA - Tensions between Latin America's leaders flared ahead of a summit with Europe as Bolivia's new leader raged against colonial "pillaging" and Mexico told left wingers to talk more trade and less ideology.

Bolivia's Evo Morales, a former coca grower and labor leader, began his first visit to Europe as president by ruling out compensation for foreign oil and gas companies whose subsidiaries he nationalized on May 1.

"For more than 500 years our natural resources have been pillaged and our primary goods exported. This has to be ended now," Morales, who won December elections promising to use the country's natural resources to help the poor majority, told a news conference in Vienna.

Morales and fellow left winger Venezuelan President Hugo Chavez make up the awkward squad at the European Union-Latin American summit on trade, investment and other issues.

The EU is the biggest investor in Latin America with major interests worth more than US$300 billion in sectors from energy and telecommunications to banking.

Other Latin American leaders showed irritation at what Mexico's President Vicente Fox called a "sterile discussion, or ideological discussion" - a clear reference to the anti-imperialist line of Morales and Chavez.

"Mexico's position is totally clear, we will strive for greater integration at all levels - for opening of markets, fair trade, stronger consumer potential that at the same time creates new jobs," said Fox, a former executive of Coca-Cola.

Peru's Alejandro Toledo also weighed in, saying attempts to boost relations between Andean countries and the EU could not be taken hostage by Venezuela.

Chavez has set back trade talks planned between Europe and five South American nations by saying he would pull his country out of the Andean Community.

The former paratrooper is angry at trade deals between fellow Andeans Peru, Colombia and Ecuador with the United States - whose influence in the region he is trying to challenge.

Without agreement among the Andeans, talks will not take place, said the EU's external relations commissioner, Benita Ferrero-Waldner.

"It's up to them to really then come up with a common position. But we would certainly not go for bilateral negotiations," she told a news conference.

No compensation

Stressing his native Indian Aymara descent, Morales began the Vienna news conference by telling mainly European reporters that they must be shocked to see someone like him in power.

He sparred angrily with Brazilian reporters who challenged him about the effect of the nationalization on Brazil's state oil company Petrobras, which he accused of operating in an illegal and unconstitutional way in Bolivia.

Morales has refused to bow to pressure to compensate firms including Spain's Repsol, Britain's BG Group and France's Total. "There is no reason why we should think about compensation," he said.

Brazil reacted coolly to his Petrobras comments.

"It's part of the diplomatic ritual to raise and lower the tone without interrupting the dialogue," Tarso Genro, a top adviser to Brazilian President Luiz Inacio Lula da Silva, told reporters in Brasilia.

Brazilian Foreign Minister Celso Amorim said in Vienna that Petrobras had acted legally in Bolivia.

Venezuela's Chavez, who arrived at his Vienna hotel to a rock star's reception from a crowd of red-clad, chanting supporters, said moderate leftist Lula was under pressure from upper class Brazilians to act tough with Bolivia.

"Some of them want Lula to send a tank division into Bolivia. Some of them want him to declare war," said Chavez.

In Madrid, Repsol said it might ultimately resort to international courts if it cannot reach a deal with Bolivia.

Morales, who also plans mining nationalization and land redistribution, said energy companies should only be compensated for assets, but not for loss of operating concessions so long as they have recouped their investments via profits.

On Wednesday, Bolivia's state oil company YPFB said Bolivia would compensate Petrobras for the partial expropriation of two oil refineries, preferably paying with natural gas.

Morales rejected suggestions he should have consulted with investors or neighboring governments.

"There is no reason why I should have to ask and consult about a country's sovereign policies," he said.

Morales also hopes to persuade the EU to decriminalize coca leaf, grown traditionally in the Andes as a stimulant for thousands of years but also the raw ingredient of cocaine.

- REUTERS