Energy Trade Ties Dominate EU-Latin America Summit

Bolivia will guarantee "genuine, long-lasting legal security" to foreign companies operating on its territory, Morales said in a letter sent to Spanish Foreign Minister Miguel Angel Moratinos on Thursday and made public Friday at the summit in Vienna. He also said he wanted his country to become a member of the world's leading oil cartel, the Organization of Petroleum Exporting Countries.

EU leaders used the forum to urge Bolivia, as well as oil-rich Venezuela, to cooperate with foreign powers and keep trade ties active.

British Prime Minister Tony Blair called on Morales and anti-US Venezuelan President Hugo Chavez to use their nations' petroleum resources "responsibly," according to his spokesman. Blair "sent a double message" in letters to the two presidents although he did not meet them personally, spokesman Ian Gleeson said.

"He said they should use their energy resources responsibly, and that in their own economic interest... they should work with foreign investors," Gleeson said.

French President Jacques Chirac said Morales had reassured him that there would be no "expropriation" of the goods of foreign oil companies.

Chirac told reporters after meeting Morales that the Bolivian president "is anxious to have talks with energy companies and an agreement, at least this is what I understood, which rules out any attitude of expulsion or expropriation."

Populism could hurt trade ties, leaders warn

UN Secretary General Kofi Annan, also attending the summit, said that globalization meant creating optimum conditions for investors who need to know "that the conditions under which they are making an investment will be sustained over the medium to the long term."

Morales claimed a stunning victory in Bolivia's presidential election last December after pledging to take a bigger share of earnings from Bolivia's vast energy resources and nationalize the country's oil and gas reserves.

Some 26 foreign companies, which include Brazil's Petrobras firm and France's Total, now have six months to renegotiate their contracts with Bolivia's state-run hydrocarbons company Yacimientos Petroliferos Fiscales Bolivianos (YPFB). During the transition period, 82 percent of profits will go to the Bolivian state and 18 percent to the corporations.

EU and Latin American leaders at the Vienna gathering warned that developing trade ties could be hit by populist moves by nations such as Bolivia and Venezuela to protect their energy sectors from foreign control.

The summit of 60 heads of state and government heard calls for more balanced trade relations, with a joint final statement demanding a "more compatible regulatory regime." The statement does not refer to Bolivia and Venezuela by name, but clearly has them in mind -- as did some of the speakers at Friday's plenary session.

European Commission chief Jose Manuel Barroso called for a "convergence of interests, not only of values." Mexican President Vicente Fox warned Latin America that populism "hinders meeting the challenges we have."

EU-Central American free-trade zone

The leaders adopted a 16-page joint statement stressing human rights, the fights against terrorism, drugs and organized crime, and concern for the environment, "including disaster prevention," according to a draft.

Alluding to Bolivia and Venezuela, the statement said that "while acknowledging the sovereign right of countries to manage and regulate their natural resources, we will continue and strengthen our cooperation with a view to establishing a balanced trade framework and more compatible regulatory regime."

The final statement also said that the EU and six Central American countries had agreed to open negotiations on setting up a free-trade zone. The Central American countries concerned are Costa Rica, Guatemala, Honduras, Nicaragua, Panama and El Salvador.

But the EU has been at odds to forge closer ties to two other Latin American groupings, the Andean community of nations and Mercosur, the South American common market.

German Foreign Minister Frank-Walter Steinmeier said the EU still had "doubts whether the organization was currently in a phase to successfully carry out such negotiations."