Lula and Chávez Building a Stronger Bond

For the third time this year, Brazilian president Luiz Inácio Lula da Silva and Venezuelan leader Hugo Chávez met Friday in southern Venezuela to review plans on future joint ventures between the two countries.

The pair discussed economic proposals which would benefit both countries that involved digital development and the relationship of an oil refinery in Recife, Brazil.

Brazil has been moving forward with the $12B refinery project, while the nationalized Petroleos de Venezuela (PDVSA) negotiates to garner a 40% stake in its output. Ultimately, experts forecast production of some 230,000 barrels per day. Estimated completion of the refinery has been estimated in 2011.

According to reports, Venezuela has become the world's fifth largest oil producer and is a key supplier to the US, while Brazil has recently discovered vast new offshore reserves with the potential to make it an energy superpower.

Lula and Chávez also signed a memorandum of understanding providing for the industrialization of digital TV. "Brazil and Venezuela will discuss together the production of millions of televisions and phones," said Chávez as reported.

Venezuela has been courting other South American countries to allow its entry into a trading coalition called Mercusor. In early 1991, the governments of Argentina, Brazil, Paraguay, and Uruguay signed the Treaty of Asuncion to form the Southern Common Market commonly called Mercusor.

Most hurdles have been cleared through Brazil’s legislature, executive and committees, but the Paraguayan government must also approve the inclusion. Resistance has been anticipated because of “an almost dictatorial" style, according to Brazilian opponents and his rhetoric causes "division and disintegration in South America."