/ 12 May 2006

Feud over energy policy dominates summit

European Union leaders bluntly criticised Bolivia and Venezuela’s protectionist energy policies at summit talks of 58 European and Latin American leaders on Friday.

Summit host Austrian Chancellor Wolfgang Schuessel reminded the two countries that open markets were key to promoting economic growth and prosperity — a key issue at the meeting.

”There are always two possibilities in life. Either you want to open your markets or you don’t want to open your markets. It’s your choice,” Schuessel told reporters.

”But the reality is … open market societies are better in their performance than closed, restricted structures.”

British Prime Minister Tony Blair called on Bolivian President Evo Morales and Venezuelan President Hugo Chávez to show the world they are responsible in the use of their energy resources.

Blair said the nationalization of Bolivia’s and Venezuela’s energy sectors concerned everyone. ”The most important thing is that everyone uses their power they have responsibly, that is what we want to have happen,” Blair told a news conference.

He said energy was now ”a major issue for countries. Every country needs secure energy supply”, adding ”all of us have a responsibility to the world community to try to manage this sensibly”, he said referring to Chávez and Morales.

Leaders on both sides have called for unity and better cooperation amid a growing feud over energy and trade policy.

All eyes remained on Chávez, and more so on Morales, who was attending his first big summit with European leaders since taking office.

Morales warned on Thursday that companies including Brazil’s Petrobas may not be compensated following the forced nationalisation of their Bolivian operations, remarks that caused new concern among EU officials as well as Brazil.

The remarks caused growing concern and frustrations among the summit participants who hope to build on trade ties already worth billions of euros in two-way trade at Friday’s gathering.

The EU is Latin America’s second largest trading partner after the United States.

EU foreign policy chief Javier Solana, who held bilateral talks with Morales late on Thursday said the leftists leader remained someone the EU could do business with.

”We have to keep on talking, we have to keep on trying to influence the behavior of countries … of what are the basic rules of the international economy, which we think is very important,” he told the Associated Press. He warned, however, that a country that doesn’t offer security guarantees to others risks losing international investment.

Schuessel called on his counterparts to set aside ”big differences” and strive for a closer political and economic partnership.

European Commission President Jose Manuel Barroso urged all leaders to work in ”a spirit of compromise”.

”We also need to know what you as a group are expecting from us and what you can give,” Barroso said, adding that Latin American and Caribbean nations could count on the EU as a ”reliable and credible partner”.

Mexico’s President Vicente Fox, speaking on behalf of the Latin American grouping, acknowledged that there had been a lack of will to integrate on his side.

”The configuration of regional blocs that should allow us to move forward on a consistent path toward the integration of our countries is not advancing, nor giving the results that all of us had hoped for,” Fox said. ”It is necessary to make them more effective — it is our challenge and our responsibility.”

Fox added that the European Union is a ”successful model that should serve as an example to us”.

In a draft declaration to be adopted at the summit, the leaders are to commit to better coordinating issues like UN reform, terrorism, drugs, and fighting poverty. They were also to pledge closer cooperation on energy policy.

But Morales’ new hard-line stole the show on the first day of EU-Latin America talks on Thursday in the Austrian capital and came hours after Bolivia and Brazil agreed to study forms of compensation.

Morales said Bolivia’s nationalisation of its energy sector was justified and necessary to fight poverty, adding that nationalisation also would extend to land, minerals and forestry resources.

Leaders also were to launch free-trade talks with the Central American countries — Guatemala, El Salvador, Honduras, Costa Rica, Panama and Nicaragua.

However, the 25-nation EU was to hold off on starting similar talks with the Andean Community of Nations, which is in the midst of an internal fight over trade ties with the United States.

Morales on Thursday urged Colombia, Peru and Ecuador not to ratify trade deals with Washington, but to concentrate on keeping alive the regional Andean Community instead.

Both Morales and Chávez have warned they might pull their countries from the five-nation group if the other members move to finish deals with the US.

Colombia and Peru have reached such agreements with Washington that must now be approved by their legislatures. Ecuador is still negotiating.

Similarly, EU free trade negotiations with Mercosur, the group including Brazil, Argentina, Paraguay and Uruguay, show no sign of restarting after becoming bogged down over the EU’s refusal to open its agricultural market, while the South Americans refuse to grant access to their services sector. – Sapa-AP