Bush hails ethanol alliance with Brazil

SAO PAULO -- President Bush announced a new energy partnership with Brazil yesterday to promote wider production of ethanol throughout the region as an alternative to oil, the first step in an effort to strengthen economic and political alliances in Latin America.

As the president opened his six-day tour of the region, President Hugo Chávez of Venezuela responded with a trip to Argentina, where he addressed an "anti-imperialist" rally and said the US leader deserved the "gold medal for hypocrisy."

Bush arrived last night in Montevideo, Uruguay, where thousands of protesters turned out before he arrived. The president also will visit Colombia, Guatemala, and Mexico.

The ethanol agreement was crafted to expand research, share technology, stimulate new investment, and develop common international standards for biofuels. The United States and Brazil, which make 70 percent of the world's ethanol, will team up to encourage other nations to produce and consume alternative fuels, starting in Central America and the Caribbean.

The alliance could serve not only to help meet Bush's promise to reduce US gasoline consumption but also to diminish the influence of Chávez, the fiery leftist who has used his country's vast oil reserves to build support among neighbors.

Analysts have called it the beginning of a new OPEC-style cartel for ethanol makers, a characterization US officials dispute because they say they want to expand, not control, production.

"It's in the interest of the United States that there be a prosperous neighborhood," Bush said during a hard-hat tour of a fuel depot with Brazil's president, Luiz Inacio Lula da Silva. "And one way to help spread prosperity in Central America is for them to become energy producers."

Lula, pointing to economic and environmental benefits of ethanol, said the alliance marks "a new moment for the global car industry, a new moment for fuel in general in the world and possibly a new moment for humanity."

But ethanol politics are complicated. Under pressure from farm-state lawmakers in the United States, Bush yesterday refused to discuss Lula's desire to reduce a 54 percent tariff on imported Brazilian sugar cane ethanol, which protects domestic corn-based ethanol producers. That led to charges of double standards given the Bush administration's longtime advocacy of free trade.

The emphasis on ethanol has also drawn criticism from environmentalists and others who complain that it will create more problems. Because the United States makes ethanol from corn, it has caused price increases, for example, for tortillas in Mexico. Brazil makes ethanol from sugar cane, and critics say increased production would result in further deforestation of the Amazon.

Greenpeace issued a statement saying that limits on carbon emissions, which Bush opposes, would be a better way to reduce greenhouse gases blamed for global warming.

Bush is seeking to renew US commitments to a region estranged from the United States, but some analysts expressed skepticism that he would be able to wean Latin Americans away from Chávez.

"Bush may be aiming at Chávez with his 'ethanol diplomacy,' but Lula clearly is not," said Mark Weisbrot, co-director of the Center for Economic and Policy Research in Washington. "He is happy to have good commercial relations with the United States and expand these in any area, but he has made it clear that he is not going to downgrade his good relations with Venezuela."