South American Leaders Focus on Poor

From left, Ecuador's President Rafael Correa, Bolivia's President Evo Morales,Venezuela's President Hugo Chavez,and Brazil's President Luiz Inacio Lula da Silva, look at samba dancers in a ceremony during the Mercosur Summit in Rio de Janeiro, Thursday

RIO DE JANEIRO, Brazil

Lifting South America's poor masses from misery is a top priority for the Mercosur trade bloc, leaders said during a summit that ends Friday. But how to cut poverty - through aggressive socialism that rejects U.S. economic models or a more cautious approach - is disputed.

Venezuelan President Hugo Chavez, who is using his nation's oil riches to dole out profits to his nation's poor as well as needy people across the Americas, said that his version of "21st century socialism" is the solution.

Mercosur must "change in its structure, in its objectives, the social emphasis of Mercosur and the fair treatment of inequalities between countries," Chavez said Thursday.

The avowed socialist also said now is the time to "decontaminate" South America's main trade bloc of its founding pillars: U.S.-supported free market policies and privatization of state industries that swept the region during the last decade.

But Brazilian President Luiz Inacio Lula da Silva, hosting the two-day summit attended by all of the continent's leaders except Peru's Alan Garcia, urged a more cautious approach for resolving South America's wide divide between rich and poor.

The moderate leftist who embraces free market economic policy insisted the five-nation bloc - which could grow to six with the addition of Bolivia - must move carefully to promote regional economic integration in a way that also accommodates each nation's political differences.

If Mercosur does not now craft a mutually acceptable economic integration plan, he said, it would never be approved by its member countries that unite some 250 million people with a gross domestic product of $1 trillion, or about 76 percent of the total for South America.

"We would all head home frustrated because nothing will have happened," he said.

Mercosur, formally known as the Southern Cone Common Market, was born 16 years ago when Brazil, Argentina, Uruguay and Paraguay pledged to seek economic integration and free trade - goals that have been largely frustrated by bickering between member nations and a failure to synchronize policies.

Venezuela joined the block last year. The addition of Bolivia could deepen the bloc's ideological divide, analysts said: Bolivian President Evo Morales is a leftist and a close friend of Chavez. Ecuador may also seek admission, shifting Mercosur's political makeup left as well because newly elected President Rafael Correa has been critical of privatization and other free market reform.

Though Chavez is exerting greater state control over key sectors of Venezuela's economy, he insisted he was not trying to antagonize other South American leaders who do not share his contempt of President Bush and Washington's economic model.

Brazilian Foreign Minister Celso Amorim acknowledged Chavez's concerns about Mercosur, saying it's time for the bloc to adapt, to be "closer to the people. ... It's not just for businessmen."

On the sidelines of the summit, Silva and Chavez signed a memo of intent for the state-run oil companies of Brazil and Venezuela to launch a major technical study on a proposed natural gas pipeline stretching 3,100 miles from Venezuela to the northeastern Brazilian city of Recife.

A decision on whether to build the pipeline will be made only after the study is completed in 2007. It would be part of a much larger pipeline system Chavez is promoting that could eventually link Venezuela's vast natural gas fields to Argentina, Paraguay and Uruguay.

Earlier, Mercosur ministers signed an agreement to pursue a trade accord with the Gulf Cooperation Council, which includes Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman. No deal is expected for at least six months.

But the biggest issue facing Mercosur is how it can meet the needs of the tens of millions of impoverished people on this continent with a yawning gap between rich and poor.

Silva said Brazil and Argentina share responsibility to help eliminate inequality on much of the continent because the two nations have the largest economies in South America.

"The stronger countries have to be more generous," he said.