Brazil Defends Ethanol Deal at South American Energy Summit

In this photo released by Miraflores Press Office, Paraguay's President Nicanor Duarte, first left, Brazil's President Luiz Inacio Lula da Silva, second, Venezuela's President Hugo Chavez, third, and Bolivia's President Evo Morales shake hands after attending a ground breaking ceremony where a new petrochemical plant will be built in Barcelona, Venezuela, Monday, April 16, 2007. The four presidents will attend a two-day regional energetic summit in Margarita Island. (AP Photo/Miraflores Press Office/Marcelo Garcia)

By FABIOLA SANCHEZ

PORLAMAR, Venezuela Apr 17, 2007 (AP)— Brazil is defending its ethanol agreement with the United States, despite efforts by Venezuelan President Hugo Chavez to undermine the deal using his country's vast reserves of oil and natural gas.

Chavez did not publicly discuss his dispute over ethanol with Brazilian President Luiz Inacio Lula da Silva at the start of a two-day energy summit Monday, but the Venezuelan leader has pledged to explain his objections to last month's U.S.-Brazil ethanol agreement.

Chavez, a staunch critic of U.S. President George W. Bush, has warned that Brazil's deal with Washington would monopolize arable lands and starve the poor concerns shared by his Cuban ally Fidel Castro.

But Marco Aurelio Garcia, an adviser to Silva, denied that Brazil's plan would cause food prices to skyrocket and defended it as a way of creating jobs.

"Nobody stops eating due to shortage of food. People stop eating due to lack of income. That's the fundamental issue," Garcia said.

The U.S. and Brazil are the world's two biggest producers of ethanol the alcohol-based fuel made from crops such as sugarcane or corn. They signed an "alliance" last month to promote its production in the region and create international quality standards to allow it to be traded as a commodity like oil.

Chavez has not said what he would do to oppose that plan, other than allude to his lobbying efforts against other U.S.-proposed trade agreements.

Officials from a dozen South American countries were attending the two-day summit on Margarita Island, where Chavez was expected to seek support for projects including a regional "Bank of the South," a natural gas pipeline and a proposed gas alliance modeled after the Organization of Petroleum Exporting Countries.

On ethanol, Brazil's interests appear to lie in its agreement with the U.S., despite Chavez's disapproval.

Silva said before leaving Brazil on Monday that he hopes to discuss the ethanol concerns, especially "the technical or scientific basis of the criticisms."