“It was not a casual decision to pick Argentina as my first foreign destination,” said President Rousseff who added, “I’m here to promote our nations’ relationship and make it stronger than ever in both their commercial, political and cultural ties.”

Rousseff underlined the roles that Brazil and Argentina must play for the transformation of Latin America in the current century, “we are the two countries with the largest GDP in the region and we have a great potential that Latin America must take advantage off.” She mentioned specifically agriculture, energy and industry.

The Brazilian president, who was sworn in only a month ago, also talked during her five hours visit about joint undertakings with Argentina and mentioned the bi-national Garabí hydroelectric dam.

She also recalled former Argentine president Nestor Kirchner’s commitment to Unasur and the consolidation of regional integration through Mercosur, and mentioned the fact Argentina and Brazil, as members of the powerful G 20 are involved in the defense of the interests of Latin America.

Cristina Fernandez de Kirchner described the summit as a continuation of the commitment from their predecessors (Nestor Kirchner and Lula da Silva) “which marked an end to the existing differences between our countries and built for the first time a bilateral relation that has prospered and must be deepened.”

Further on she called for “greater productive integration” between Argentina and Brazil underlining that “our destiny and that of the region are indissolubly united to that of Brazil and vice versa, and from now even more.”

Mrs. Kirchner said that the current century is signaled by three different issues: food, energy to sustain economic growth and scientific development and the partnership with Brazil in the three areas is strategically crucial for both countries. “The world changed completely in 2008, and this offers the region a unique opportunity.”

Finally, the two presidents participated of the signing ceremony of several agreements referred to nuclear energy and biofuels, trade and called on the private sectors of both countries to have a more active role in promoting bilateral contacts and business.

The agreements include the construction of two hydroelectric dams and cooperation in the development of nuclear research reactors. The two dams are expected to generate 2.200 MW and will demand an investment of US$ 5.4 billion. There are also plans to further integrate the power grids and construct a bridge between the two neighboring countries.

President Rousseff in a special gesture towards Argentina’s human rights policy and her own government’s incipient approach to Brazil’s dictatorial past which remains locked to any revision by an amnesty law dictated by the military in 1979, met with members of the Mothers and Grandmothers of Plaza de Mayo associations.

More specifically on the agreements signed according to Buenos Aires sources, Argentina asked the Brazilian delegation to keep on the “mutual trade loyalty system,” which was agreed and signed back in 2005 by then presidents Luiz Inácio Lula da Silva and the late Néstor Kirchner.

Thanks to the system agreed, all those imports that might affect certain sector of the importer’s industry will be automatically limited by the exporter side in order to soften the impact.

Brazil is Argentina’s leading trade partner and main market for most of the country’s manufacturing exports. Bilateral trade in 2010 was over 30 billion US dollars with Argentina holding a trade deficit of 4 billion US dollars.

Brazil and Argentina, South America’s two largest economies, have vast areas of mutual cooperation . In 2000, there were around 50 Brazilian companies doing business in Argentina; today there are 250.

And in 2010, Brazilian direct investments in Argentina totaled US$ 5.3 billion, the largest of any country – even more than the US$ 5 billion that Chinese companies invested there.

Argentina will have presidential elections in October, with Cristina running for reelection but without the support of her husband who passed away at the end of last year. Argentina faces turbulence in its economy with energy supply problems and a lack of some goods on supermarket shelves. The government has been accused of falsifying inflation index numbers.

With the visit to Argentina, Dilma began her official travels as president – travels that will certainly take her to the other country-members of the Mercosur economic block (Paraguay and Uruguay).

Interview of Argentine Ambassador

According to the Argentine ambassador in Brazil, Juan Pablo Lohlé, 62, the fact that Dilma Rousseff decided to make Argentina the destination of her first international trip is “a significant political signal.”

Asked about the historical coincidence of both Brazil and Argentina being led by women at the moment, the ambassador said, speaking from his own experience, that being “commanded” by a man or a woman did not make a lot of difference.

Argentina does have more experience in this area than Brazil: Cristina Kirchner is the second woman to occupy the presidency. The first woman president of Argentina was Juan Perón’s third wife, Maria Isabel.

As his vice president, she succeeded him when he died in 1973; known as Isabelita, she was overthrown by the military in 1976. And, of course, there was also Perón’s second wife, Evita, who had been a powerful though controversial figure in the country until her death in 1952. 

Ambassador Lohlé spoke of the importance of the Mercosur economic block and the need to “institutionalize” it further. He noted that Brazil and Argentina had an extensive area of cooperation in energy – nuclear reactors and hydroelectric power plants. And he made a point of emphasizing the difference between nuclear cooperation with Brazil and the controversial Iranian nuclear program.

The ambassador said it was possible that the two countries would work together on social assistance programs for low-income families. A low-cost housing program underway in Brazil, “Minha Casa, Minha Vida,” was a possibility in Argentina, said the ambassador.

As for the pre-salt oil fields, Lohlé said it was possible for both countries to build ships and oil rigs as Argentina had vast experience in naval construction . “We can form joint teams,” he declared.

As for trade, the ambassador stressed the quest for a “calm” relationship where disputes are negotiated. He said he believed bilateral trade could rise to US$ 40 billion annually (it is now at US$ 32 billion), and that there could be a greater integration of the two markets.

One problem, he said, was that at the moment goods from Argentina do not reach the Brazilian northeast – a huge area. “We can get there through cooperation in energy and food,” said Lohlé.

As for the automobile sector where progress has been slow, the ambassador called it a dynamic sector with its own rules. He pointed out that Argentina and Brazil could work together to reduce the importation of parts and substitute them with items made in Argentina and Brazil. “We can make more auto parts in Argentina, that is a fact,” said Lohlé.

MP/ABr

“This March, I will travel to Brazil, Chile, and El Salvador to forge new alliances across the Americas,” the president said Tuesday night.

It will be his first visit to South America and his third visit to Latin America. In 2009 he traveled twice to Mexico and participated in the Summit of the Americas in Trinidad and Tobago.

The journey will be “an important opportunity to strengthen our alliances in the Americas,” National Security Council spokesman Mike Hammer said.

In Brazil, Obama will meet with new President Dilma Rousseff to discuss areas of mutual interest and contribute to developing the “excellent relationship” between the two countries, Hammer said.

Among the areas where US-Brazilian ties are strong, he cited clean energy, global growth, assistance to Haiti and development efforts.

In Chile, Obama will meet for the first time with President Sebastian Piñera to discuss greater bilateral and regional cooperation.

Chile, Hammer emphasized, “is one of our closest partners in Latin America” and has quickly become a regional leader in the area of nuclear security, clean energy and crisis management.

The third phase of the trip, El Salvador, will enable Obama to meet with President Mauricio Funes and to emphasize the “tight links” between the two countries, which are cemented by the large number of Salvadorans in the United States and the economic activity that they contribute to creating, Hammer said

In his speech, Obama also touted his efforts to revitalize NATO, reset relationship with Russia, and build new partnerships with nations like India.

Upset Argentina

Obama’s forthcoming visit to Latin America has cause upset in Argentina, because he will not be visiting the country. In March Obama will embark on his first trip to South America and Central America, visiting Chile, Brazil and El Salvador as he tries to shore up security and economic ties with the emerging economies.
 
In Argentina the fact that Obama will not visit, is seen as a blow to the country and current administration. A White House spokesperson said Obama will visit “key leaders of the continent.”

Both Argentina and the US have said that their relationship is satisfactory but recently disclosed WikiLeaks documents have shown that President Cristina Fernandez de Kirchner has shown her upset, on several occasions, because she feels Argentina has not been receiving the attention it deserves from the United States.

Kirchner and Obama have only held, one, short meeting together at a multinational summit, which is not the case of other countries such as Brazil, Colombia, Chile, Peru, Mexico, Panama and El Salvador.

US Assistant State Secretary Arturo Valenzuela has visited Argentine twice and on neither visit was he able to meet President Kirchner. During his first visit in December 2009 he made remarks about US companies complaints about the judiciary system in Argentina, which led to a formal protest by the Argentine foreign minister.

On his second visit, less than two weeks ago, which was practically unnoticed, Valenzuela released a communiqué in which he emphasized Argentina’s valuable role in Union of South American Nations (UNASUR) and regional cooperation.

Brazil’s strides in renewable clean energy and its new leader were factors in Obama’s decision to travel to the country, White House Press Secretary Robert Gibbs said. Dilma Rousseff was sworn in recently as Brazil’s new president, replacing Luiz Inácio Lula da Silva.

“I think the president believes that it is important for him to get to South America and Central America personally … and strengthen, as we have in Asia and in Europe, strengthen our ties to that very important region of the world,” Gibbs said while traveling with Obama to Wisconsin.

Obama won’t be the first US president to travel to Latin America. Dwight Eisenhower traveled to Chile, Argentina, Uruguay and Brazil in 1960, and George H.W. Bush traveled to the same countries in 1990. Bill Clinton and George W. Bush also made official visits to Chile on the sidelines of regional summits, according to Chile’s foreign ministry.

Obama’s visit will fall during the 50th anniversary of President John F. Kennedy’s Alliance for Progress, which was aimed at accelerating economic and social development in Latin America.

It’s unclear why the president won’t be making stops in Panama or Colombia, where the president has vowed to pursue trade deals.

Chilean officials welcomed Obama’s pending visit. “This is an event that isn’t repeated very often, and we hope to make the most of it,” Foreign Affairs Minister Alfredo Moreno told reporters in Chile. “We think that it’s a recognition, just as he mentioned in his State of the Union speech, that we are a country that does things responsibly and that shares common values, ideas and ways to improve development.”

Among the topics on the table for discussion are renewable energy and global economic stability, Moreno said. Regional democratic development and participation in regional multilateral organizations will also likely be on the agenda, Moreno added.

Energy will be one of the biggest issues on the agenda for Chile and the US, Moreno said. The two countries are working on nuclear energy cooperation. Chile hasn’t yet decided to give commercial nuclear reactors the go-ahead. It has, however, been talking to the U.S. about cooperation so it will have the know-how and the regulatory framework in place.

“We have to make up for lost time on the nuclear issue, and in that sense the US can provide assistance,” he said.

Even though Argentina is a member of the G-20 and is currently presiding over the so called group of 77 at the United Nations, it is not enough for Obama to visit the country.

Mercopress

In Buenos Aires, Rousseff will hold talks with her Argentine counterpart, Cristina Fernandez de Kirchner, to discuss expanding cooperation in the fields of electricity, nuclear energy, social development projects, digital technology and mining.

Dilma Rousseff, described as “strategic” the relationship with Argentina and stated that she will look for establishing an “extremely close” ties with her counterpart de Kirchner.

“The Brazilian government assumes, once again, a true commitment with the Argentine government as well a joint policy intended to promote a development strategy for the region. For me the main idea is that of a strategic relationship with Argentina, which should shine itself in all areas of interest of both countries,” said Rousseff in conversations with local newspapers before arriving in Buenos Aires.

In this context, Rousseff remarked that Brazil is aiming to “have a very strong policy in terms of creating and developing suppliers for the exploration and exploitation of oil within the region.”

“I’d like to have an extremely close relationship with President Kirchner,” said the successor to Luiz Inácio Lula da Silva and then explained: “I would firstly because Brazil and Argentina are countries that have major responsibilities before the whole of Latin America in terms to provide our region with an increasingly international stage presence.”

Antonio Simões, Brazil’s general undersecretary for South and Central America, said the Rousseff visit would represent a third stage of the Brazil-Argentina relationship since the two countries emerged from military regimes more than two decades ago.

“In early phases we worked on strategic political questions and economic integration through Mercosur,” Simões said in a briefing on the visit. “In this phase we’ll begin more work on social questions such as cross-border integration.”

Simões said, meanwhile, that key economic matters would also be on the agenda, in an effort to keep stimulating growing trade between the countries.

Among those, he said, were accords on developing experimental nuclear research reactors in both countries, the joint construction of a hydroelectric facility on the country’s common border, and cooperation in housing development programs and biofuels.

In addition to those accords, Simões said the countries planned to sign an agreement for joint promotion of their exports in third-party countries.

But while trade between the neighboring countries has grown tenfold in the last two decades to US$ 33 billion last year, the two Mercosur trade bloc leaders may face some friction on the matter of bilateral commerce.

A particularly thorny issue could be the current US$ 4 billion annual trade surplus that Brazil runs with Argentina. That figure widened from only $250 million the previous year.

Simões, however, discarded the possibility that trade disputes would arise from the imbalance.

“This is a matter that we need to address through the highest common denominators,” he said. “We need to generate more bilateral trade, which is in everybody’s interest.”

Brazil, he said, could help to address the difference with investments, such as the construction of a phosphate fertilizer facility currently under progress in Argentina by Brazilian mining giant Vale.

“This project alone will generate very large purchases by Brazil,” he said.

Rousseff’s entourage will include her top aides in charge of economic, social development, energy, technology and foreign affairs.

Following the visit to Argentina, Rousseff is scheduled to visit Peru in February and Paraguay and Uruguay in March.

Mercopress

During a Tuesday ceremony in Madrid at the end of the EU/Latam-Caribbean leaders’ summit Lula who steps down from office at the end of the year, was awarded the New Economy Forum Prize 2010 and was praised by Argentine president Cristina Kirchner, Spain’s Vice president Maria Teresa Fernandez de la Vega and the European Commission president José Manuel Barroso.

In his speech Lula pointed out that “people talking, understand each other, that is why I went to Iran,” in reference to the role he played together with Turkey in helping find a way out to the nuclear problem with the Tehran regime.

As to the financial crisis, the Brazilian president said that “too many are paying for the excesses of a very few” and called for a reform of the international financial system and a reduction in the inequalities between countries.

“I feel very much at home in Spain, I have great friends”, and recalled that in the eighties he had a ‘brief but significant’ meeting with then Spanish president Adolfo Suárez, who was not a man of the left but certainly a “true and convinced democrat”.

In 1989 when Lula first ran for president he was grateful to former Socialist president Felipe González who received him at Government house.

The Brazilian leader also praised current president José Luis Rodriguez Zapatero, whom he met during the awards of the Prince of Asturicas Prizes and finally had a special acknowledgement for the Spanish trade unions, Comisiones Obreras and CGT, as well as Spanish businessmen with whom he has “extraordinary relations.”

He then went on to praise Argentine president Cristina Kirchner for the “good harmony” that the two countries have been building since the administration of former president Nestor Kirchner, be it not “for minor differences in football”.

Mrs. Kirchner had previously mentioned that “it was probably the first time in 200 years of history that an Argentine president was participating of an honor ceremony for a Brazilian president” in reference to the long rivalry and historic dispute between the two powerful neighbors for leadership in the region.

Spain’s Vice-president Fernandez de la Vega underlined Lula’s commitment to fighting poverty and in favor of economic development, turning hopes into reality which is “what he has offered the 200 million Brazilians that can be proud of the outstanding position their country occupies in world politics plus the fact it exercises a clear leadership in solidarity”.

“In the long years of his political and union leader experience President Lula always has shown that with will, determination, work, justice is possible, progress is possible, peace is possible, building countries is possible, building more fair, more cohesive societies is possible at the same time more confident in themselves and in progress”, added the Spanish official.

The EC president Barroso said Lula was “undoubtedly a statesman, a great statesman and thanks to his personality and dedication has made Brazil an influential player in world affairs”.

Mercopress

"We addressed all bilateral issues and agreed that the area ministers will be meeting to review and analyze each sector's activities, its difficulties, achievements and solutions," said Kirchner who described her meeting with President Lula as "very good."

However Brazilian Foreign Secretary Celso Amorim said it was of great concern for Brazil "the deflection of exports, and the fact others should partially occupy Brazil's space" in the Argentine market.

"Obviously our idea is that Argentina decides to end the bureaucratic difficulties which restrict the access of Brazilian products to that market," added Amorim in an interview with the São Paulo financial publication Valor.

"We're not talking about trade reprisals or no trade reprisals" against Argentina but "it is essential to work to achieve reciprocal confidence in this field," underlined Amorim.

Mrs. Kirchner argued that Argentina has experienced a running 72 months trade deficit with Brazil and that of the US$ 25 billion Brazilian surplus, "five billion are from trade with Argentina."

She added that "Brazilian imports absorb 35% of our trade surplus" and emphasized that the approach "should not be on terms of surplus or deficit, positive or negative."

Mrs. Kirchner stated that there are very strong asymmetries because of the volumes and size of the Brazilian economy and even more important, "the degree of industrial development, which Argentina does not have. Let us not forget Brazil is a heavy weight at global level."

Further on Mrs Kirchner said that Argentina is in its second "re-industrialization" process which began in May 2003, with a competitive exchange rate, promotion programs, decoupled utility rates, which have helped us, step by step, rebuild our industry."

At the hour long meeting Mrs. Kirchner was supported by Economy minister Amado Boudu; production minister Deborah Giorgi and Health minister Juan Manzur.

Minister Giorgi was blunter in the appreciation of the situation and said that the "trade differences" will be addressed in São Paulo next Monday and Tuesday. Brazil is particularly sensitive to the 60 days import licenses system imposed by Argentina to delay the introduction of foreign produce.

Mercopress

On Monday, Kirchner will meet President Luiz Inácio Lula da Silva and is scheduled to sign a US$ 200 million credit extended by the BNDES (Brazil's Economic and Social Development Bank) specifically for Argentine infrastructure projects and export promotion.

This is the first time the BNDES participates in the financing of non Brazilian companies and is seen as a crucial step in the integration process as well as helping Argentina to level the growing trade deficit (US$ 4 billion) with its neighbor.

"Brazil is a partner and not a competitor, but we must seek a balance and avoid distortions," underlined Daniel Scioli, governor of Buenos Aires province who together with Foreign Affairs minister Jorge Taiana and Federal Planning minister Julio De Vido are the core of the Argentine delegation.

On Sunday President Cristina Kirchner will be the guest of honor of Brazil's Independence Day celebrations and she will see the military parade next to President Lula.

But the agenda will concentrate on trade and investment. Mr. Taiana and De Vido will have to face the complaints of Brazilian corporate representatives eager to invest in Argentina but who face mounting bureaucratic hurdles and the overall uncertainty atmosphere which looms over the country's political situation.

Another issue is replacing foreign currencies for the Argentine peso and the Brazilian real in bilateral trade operations, which has apparently been tested successfully.

Energy, defense and nuclear cooperation issues as well as some recent political incidents when the "strategic alliance" did not function as expected are certain to be in the agenda, particularly the Bolivian supply of natural gas (to both countries), which is threatened by strikes and political turmoil.

Lula visited Buenos Aires last February and it was then agreed to hold these mini summits every six months.

Mercopress

Lula will arrive on Sunday night and have dinner with Kirchner and on Monday he will be present at the inauguration of a seminar for businessmen, returning to Brazil the same afternoon.

Regarding the motives of the visit, Marcel Baumbach, a spokesman for the Brazilian president, said: "The idea that president Lula is taking with him to Argentina is that we must strengthen the mechanisms of co-operation in Mercosur as the best way of dealing with the gap left by the events in Geneva."

By mentioning Geneva, Baumbach was referring to the difficulties between Argentina and Brazil in the Doha round trade negotiations when Brasí­lia was willing to accept a higher level of industrial protection than was acceptable to the former, a position that was regarded by some in Buenos Aires as "treachery."

Nevertheless both countries want to put the dispute behind them, according to David Fleischer, a political analyst at the University of Brasí­lia, who said: 'Brazil and Argentina had a disagreement and Lula's visit will be a good opportunity to resolve it. Both parties have an interest in putting this matter behind them."

He also pointed out that Brazil wants to increase its wheat imports from Argentina while Argentina wants to continue importing electricity and natural gas during a season where demand for them is very high due to the winter.

BAH

"Cristina yields and sends the tax bill to Congress." said Folha de Sao Paulo, adding in the front page that the congressional debate on the controversial tax was one of the demands from the farmers.

Clovis Rossi, the main political columnist from daily newspaper Folha de S. Paulo, wrote that in Argentina "everybody wants to protest and nobody wants to negotiate," although there's a huge distance "between agitating phantoms of the past and wanting to compare the current situation with the 2001/02 collapse."

"Even if the government has lost support it's not demoralized as happened and was evident seven years ago with the entire political establishment. The economic situation is deteriorating but is very far from the 2001 melting of the Argentine economy," wrote Rossi recalling the time when bank deposits were confiscated triggering a popular revolt that ended with the resignation of then president Fernando De la Rúa..

Similarly Rio's daily O Globo published in the front page a headline saying "Unexpected Back Step for Cristina," adding that the pans' banging of Monday night in several Argentine cities forced the government to make its position "more flexible."

Another mainstream daily, O Estado de S. Paulo wrote that protests forced Cristina to yield adding that the on going conflict with farmers has reduced "Argentina's economic growth expectations for this year" and possibly in 2009.

The financial newspaper Valor, on the other hand, argues that "inflation has fueled the Argentine crisis" and pointed out to contradictions inside the administration of Mrs. Kirchner regarding the method to measure the evolution of prices.

"The inflationary escalade is hitting harder those countries with heterodox economic policies and this had made Venezuela and Argentina leaders in the prices' competition," concludes the newspaper.

Mercopress

Accompanied by the heavy weights of the current and future cabinet plus some new faces such as Economy minister Martin Lousteau, the day visit to Brasí­lia included a two-hour closed-doors meeting with President Lula.

After the meeting and taking no questions Mrs. Kirchner said that "we've honored our word that the first protocol visit to a head of state as elected president would be here in Brazil."

"We've reviewed the bilateral relation in a very fruitful meeting and have decided to strengthen the regional block taking into account that the world is moving to an interaction of blocks," therefore the closer relation with Brazil and the regional block "is functional to current world reality."

Among things decided with President Lula the Argentine elected president mentioned the creation of a "bilateral commission" to review "both countries agenda and pending issues," which will meet twice annually alternatively in Argentina and Brazil.

The idea is to elaborate a "construction methodology" in which bilateral issues are discussed by "specific points and not by ministries" as currently happens.

"On my proposal we've decided that the commission agrees on targets and objectives, with timetables, so that good intentions don't turn into "reunionism" (meetings' galore) as we call it in Argentina. We want specific results".

Cristina Kirchner underlined that "we must ensure that both societies have the perception that the integration process advances with concrete, quantifiable results that can be shown to the people".

Apparently the proposed commission will be formally presented at the coming Mercosur summit to be held December in Montevideo, capital of Uruguay.

Before leaving Mrs. Kirchner described Brazil as "the brotherly country" and emphasized that "with no doubt" the meeting with Lula was "most fruitful and very successful". With this visit and understanding "we're also ratifying that Argentina belongs to the region."

The heavy-weight ministers that will make up the hard core of Mrs Kirchner cabinet, at least for the beginning, and whom also traveled to Brazil included cabinet chief, Alberto Fernandez; Foreign Affairs minister Jorge Taiana; Planning minister Julio De Vido and Defense minister Nilda Garré.

In anticipation of the visit Brazilian press reports said that the president Lula's administration views the electoral victory of Mrs. Kirchner "as logical and a continuity" of the current process.

This means that both countries continue to face as their major challenge energy shortages which demand "joint actions" as well as "coordinated negotiations with third parties particularly Bolivia."

The Brazilian press also mentioned that the Kirchner project insists in the "reindustrialization" of Argentina in which Brazil plays a leading role, and in spite of a 40% revaluation of the Brazilian currency in the last three years, Argentina has been unable of mounting an infrastructure to take advantage of such conditions.

South America's leading economy continues to have a comfortable trade surplus with Argentina.

Other trade issues are more specific and refer to some hurdles that respond to domestic market interests but which affect bilateral relations.

Finally there's the ongoing initiative that never manages to take off, to have bilateral trade billed in Argentine pesos and Brazilian Reais.

But overall the fact that Mrs. Kirchner and her cabinet chose Brazil and the pragmatic leader Lula as their first reference could be indicative of continuity but with a more touch of class in international relations and less eclecticism.

Mercopress

Although Argentina's populist Nestor Kirchner and Socialist Lula always have time for smiling pictures and comments on soccer – they rule South America's leading powers of the sport – it is known that behind doors and at the negotiation table things are different.

Bilateral trade is significant for both sides and the challenge of current and future energy supplies has become crucial since Argentina is running short of reserves and Brazil is determined to limit foreign dependency.

But present on the stage is also Venezuela's Hugo Chavez with his fat check book and promises of "cheap" oil to those who support his Socialist XXI century development project, and in practical terms questioning Brazil's natural leadership of the region.

Furthermore Bolivia's Evo Morales sponsored by Venezuela decided the nationalization of oil and gas resources with limited compensation for Brazil's huge investments in developing the industry over the last ten years.

Lula's proven pragmatism must then face the challenges of this blend of nationalism with populism, which also happens to attract Argentina's Kirchner and his mid seventies protest mentality, particularly in an electoral year.

Furthermore Chavez has an inclination for Argentine sovereign bonds, and has openly criticized Lula's bio fuels and ethanol projects, arguing they will escalate world food prices, (and for having decided on a strategic alliance with the White House on developing alternative fuels).

Thus to ensure Brazil's long standing strategic policy of privileging Argentina in trade and energy integration (they both share access to Bolivia's vast resources of natural gas) Lula must enchant the president from the cold south Patagonia, who also needs Brazil to set distance from an ever absorbing Chavez, who doesn't seem to have the correct allies in the world.

On Friday, in Chile, Lula should feel more at home: Michelle Bachelet is the fourth president of a coalition that has successfully blended free enterprise with Socialist responsibility, becoming South America's showcase.

Brazil traditionally has been the natural ally of Chile helping it to counterbalance the pressure from Argentina and Peru.

Lula is scheduled to sign several bilateral political and economic agreements and both presidents will be discussing the "political situation of South America and energy integration", according to the official release.

Friday afternoon Lula da Silva will be one of the main speakers at the Latin America Economic Forum in Santiago with an audience made up of government officials and the cream of world corporations' leaders.

Mercopress