By Latin American Herald Tribune staff

COSTA DO SAUIPE, BRAZIL -- Brazilian President Luiz Inacio Lula da Silva said here Tuesday that the economies and the democracies of the Mercosur trade-bloc countries are strong enough to deal with the effects of the worldwide crisis.

"Our strength to deal with the global recession lies not only in the strength of our economies but in the vitality of our democracies," Lula said at the inaugural session of the Mercosur summit, attended by a number of special guests including Cuban President Raul Castro.

Lula said that in general Latin American countries "have given similar responses" to the crisis and underscored that "the chief concern is to protect workers' jobs and wages and to continue promoting social equality."

Also taking part in the meeting at the seaside resort of Costa do Sauipe were the presidents of Argentina, Cristina Fernandez; of Paraguay, Fernando Lugo; and of Uruguay, Tabare Vazquez, all countries that are full members of Mercosur.

Also on hand were the presidents of Chile, Bolivia and Ecuador, countries associated with Mercosur, together with the vice presidents of Colombia and Peru.

Venezuela's Hugo Chavez, whose country is in the process of acquiring full membership in Mercosur, arrived later at the hotel complex where the summit is being held.

Brazil, which holds the rotating presidency of Mercosur, also invited the presidents of Guyana, Mexico, Panama and Suriname to the Tuesday meeting.

In his address, Lula defended the need to increase South-South trade, insisted that countries of the region will not allow "setbacks to the improvement of people's standard of living" and defended greater Mercosur participation in the design of a new international financial architecture.

"Mercosur will not passively sit by and watch the debate on the world crisis; we want an important role in a new international architecture that is multipolar and multilateral," the president said.

Chavez also chimed in on the theme, saying that only the unity of Latin American and Caribbean nations will enable them to face the current global economic crisis.

"Our 33 countries joined have 20 million square kilometers and 550 million inhabitants. We registered 3.5 trillion dollars of gross domestic product in 2007, and our international reserves this year total 459 billion dollars," said Chavez.

Chavez said he thought that gave the group the possibility of designing solutions to address this global crisis, "of which we do not yet have accurate perception. Without wasting time, we should institutionalize and create an institution of our Latin American and Caribbean States."

Chavez said that if each country gave just 10% of their international reserves for the creation of an international fund, it would unite the region with great potential and political will.

Finally, President Chavez stressed that "this crisis and the problems that we have, can only have regional solutions. We must set an example to the world that we are a region with great potential and a political will with which we can overcome any crisis."

Yet even as Lula and Chavez demanded greater unity for Latin America, Brazil's foreign minister was forced to acknowledge that Mercosur nations again failed to reach agreement on eliminating double tariffs on third-country imports passing between members of the trade bloc.

Speaking at Monday's pre-summit session of the Mercosur Council, the bloc's highest political body, Celso Amorim said it was regrettable that technical negotiators were unable to reach agreement on a matter considered a top priority.

"That will have consequences. It wasn't just something we could leave for later. It's going to make negotiations with other groups difficult, especially with the European Union," the foreign minister said.

One tariff is charged on goods imported from nations outside Mercosur and a second when those same goods are exported from one member to another, a regime that contradicts the principal of free trade within the bloc.


Click here to read more about what Cuba had to say at the Summit.