By Jeremy Morgan and Russ Dallen
Latin American Herald Tribune staff

CARACAS – President Cristina Fernández de Kirchner of Argentina met with her Venezuelan counterpart, Hugo Chávez, during a brief official visit to Caracas on Thursday.

The two leaders met at the presidential palace, Miraflores, where they put their signatures to 12 agreements. Officials had earlier signed another nine bilateral accords between the two countries.

The new agreements include one under which Argentine energy company Enarsa will develop and exploit oil fields in east Venezuela, and with Venezuelan state oil company PDVSA carry out joint studies on mature oil fields.

Other accords call for Argentina to provide and build seed processing plants in Venezuela, and supply food processing technology, officials said. A large part of the accords, the presidents said, are aimed at making Venezuela self-sufficient in food production and helping it acquire a technological base sufficient so that it need not depend on foreign suppliers.

An increase in the number of air flights between the two countries is also envisaged, with a pact between Argentina's newly re-nationalized Aerolineas Argentina and Venezuela's state airline Conviasa.

The two governments also endorsed a memorandum of understanding regarding the industrial cooperation and agribusiness services between the Venezuelan company Corporacion Venezolana Agraria (CVA) and the Argentinean Instituto Nacional de Tecnologia Industrial (INTI).

Likewise, there was also signed a letter of intention between the CVA and the Argentinean Society Vasalli Fabril S.A. and another one between the Venezuelan electric power company Corporacion Electrica Nacional and the Empresa EMA from Argentina.

"Integration signifies increasing commercial and technological interchange," Fernádez de Kirchner said. She thanked Venezuela for helping "the country's finances" when her country "lacked access to capital markets."

Venezuela and Argentina have issued joint bonds on international markets, in effect lending Venezuela's financial clout when Argentina's credit rating was badly dented by the financial crash and debt default early this decade.

Venezuela has also purchased billions of Argentina's debt to re-sell on international markets, when Argentina was not able to sell them directly because of its 2001 default on $100 billion in debt.

Chavez made no mention of the $1.3 billion in Argentina debt that the country purchased at the beginning of August, although he did say on January 13th, in a speech to the National Assembly, that Venezuela had sold "most" of the debt. Argentina bond prices have fallen to a third of what they were when they were in August, indicating that Venezuela could have lost $750 million.

Fernández de Kirchner said economic cooperation between Buenos Aires and Caracas had led to the creation of 73 "socialist companies" in Venezuela, and that a total of 200 were planned.

While the new agreements were primarily concerned with "fraternal cooperation" in energy and agro-industry, officials said there was also agreement on closer collaboration in the battle against drug trafficking.

The two leaders emphasized that in 2009 there are "very encouraging" prospects for the bilateral relationship, and it is predicted that trade between the two countries will exceed the $3 billion level, which it reached in 2008.

"Venezuela has become our largest buyer of metallurgical ... and agricultural products," said the Argentine president, adding that Venezuela "was key" in ensuring the survival of the milk provider Sancor. The two leaders even initialed a memorandum of understanding to create an Argentina-Venezuela cooperation fund for industrial development, as well as a letter of intention to promote the innovation and the productive chains of the aluminum industry.

However, for all the talk of closer relations, problems hover over the bilateral relationship. Principal among these is Chávez' decision to nationalize steelmaker Sidor.


The majority shareholder in Sidor is the Argentine engineering group, Techint. Negotiations on compensation have meandered along for months, but the two sides are still said to be miles apart.

Whether this issue was raised at the Miraflores meeting wasn't disclosed. It was Fernández de Kirchner's second official visit to Venezuela as president, and the two leaders agreed to meet every three months.

Argentina is one of four founding members of the southern economic bloc, Mercosur, along with Brazil, Paraguay and Uruguay. Chávez is keen to take Venezuela into Mercosur, in which it at present has associate status.

Venezuela's application has yet to be ratified by the upper houses of parliament in Brazil and Paraguay, and objections have been raised by the opposition in Uruguay.

At a joint appearance after the signing ceremony, the two presidents both emphasized the need for Latin American integration and sent greetings to Cuba's Fidel Castro, with whom Fernandez had met on Wednesday in Havana.

There were also no statements about the allegations raised by the recent Kaufman and Duran trial in Miami, at which it was disclosed that, in addition to the $800,000 in a briefcase that was caught on its way to Fernandez de Kirchner, Chavez was sending other millions that successfully got through to help fund Fernandez de Kirchner's election campaign.