Analysis: Obama has warm words, not much else, for Latin America

BRASILIA (Reuters) - President Barack Obama has improved ties with Brazil on his Latin American tour but made no breakthroughs on divisive trade disputes and the U.S. military strikes on Libya have soured his charm offensive.

The trip has also done little to counter China's growing power in Latin America, a rise that hurts U.S. businesses facing much tougher competition in its fast-growing economies.

Repairing a period of tense relations, Obama lavishly praised Brazil's rising economic and political clout, and he tried to atone for years of what many in Latin America see as decades of high-handed treatment by Washington.

The concrete achievements were slim, however, especially when compared with the bold moves of China, which has overtaken the United States as the top trading partner in Brazil and Chile, the first stops on Obama's five-day tour.

"There were important political messages. Doors were opened but in terms of trade and investment there is not much beyond vague promises," Andre Nassar, head of a Sao Paulo-based think tank on trade, said of Obama's visit.

And the economic forces behind China's new power -- its rapid growth and position as a key buyer of Latin American metals and agricultural goods -- show no sign of disappearing.

In a slice of bad luck, Obama's tour, which ends in El Salvador on Wednesday, has been overshadowed by the leading U.S. role in military strikes against Libya.

Obama authorized the attacks while he was in Brazil, which has refused to back the U.N. resolution authorizing the use of force, awakening old concerns across Latin America about Washington's use of its military power.

Obama signed deals with Brazil on energy cooperation, $1 billion of infrastructure financing and a road map for future trade negotiations,

That would have been unthinkable just a few months ago when relations were at a nadir over Brazil's mediation in the Iran nuclear dispute, an initiative firmly opposed by Washington.

As expected, there were no breakthroughs on the big issues that would have lifted relations to a new level, notably trade disputes over steel and agricultural goods and Brazil's push for a permanent seat on the United Nations Security Council.

The gap between rhetoric and real progress was also felt in Chile, a free-market darling where Obama stressed Latin America's importance as a crucial trade partner but offered no specific plan to eliminate trade barriers.

"'I came, I saw, I said nothing,' could be Obama's tweet today," wrote Jose Pinera, former labor minister and brother of Chilean President Sebastian Pinera, on Twitter.

Obama's charm offensive, which included playing soccer with kids in a Rio de Janeiro slum, confirmed his popularity among many Latin Americans but did not sit well with images of U.S. war planes bombing targets in the Arab world again.

Nicaraguan President Daniel Ortega, one of several leftist foes of Washington in the region, said the attacks showed that Obama's rhetoric about a new start for Latin American ties could not be trusted.

"How can President Obama ask us to forget that past if it's so fresh and if it can be repeated, because we are seeing it now in Libya?" said Ortega, whose left-wing government in the 1980s fought U.S.-funded Contra rebels in a brutal civil war.

Only hours after Air Force One left Rio De Janeiro for Chile, Brazil called for a ceasefire in Libya and U.N.-backed dialogue to end the violence there.

The lack of progress on a stalled U.S.-Colombian trade agreement and the decades-old U.S. embargo against Cuba will be seen in much of Latin America as a further sign of the limits to Obama's offer of a "new era of partnership".

BRAZIL PROGRESS

The two-day Brazil trip marked an important thaw in ties with Latin America's largest economy and yielded signs that Obama and new Brazilian President Dilma Rousseff have established a personal bond.

Senior officials on both sides said it opened the way for real progress in the months and years ahead.

"The most critical part is that Dilma can now pick up the phone any time and call Obama because they established a good personal relationship," a senior government official said.

"They understood each other, they get along well. That will be of enormous help on any issues that may be difficult."

Brazilian officials put a positive spin on Obama's limited support for Brazil's bid for a U.N. Security Council seat, saying his consistent praise of its rising power status had put it in the same category as China and India.

The tone was a far cry from the strained relations under Rousseff's predecessor Luiz Inacio Lula da Silva, who alienated Washington by seeking closer ties with Iran, Venezuela and other anti-American governments in recent years.

Still, neither Obama nor Rousseff spared each other from publicly venting some long-standing grievances that signaled potential pitfalls to the newfound friendship.

Obama complained there are too many obstacles to doing business in Brazil, while Rousseff criticized U.S. trade barriers on steel and farm products. She also said Washington's expansionist monetary policy was fueling global currency distortions and trade protectionism.

"Mister President, if we want to build a deeper relationship, we also need to deal frankly with our disagreements," Rousseff said as she stood at Obama's side.

Following a meeting with U.S. Commerce Secretary Gary Locke, Brazilian business leaders voiced frustration with the lack of progress in dealing with Brazil's worsening trade balance with the United States.

"The diplomatic rapprochement is important but nobody's going to fill their belly on good will. We expect a more concrete approach by the American government," said Carlos Cavalcanti of the influential Sao Paulo industry federation.

Until such differences are overcome, it's unlikely that Brazil and the United States can join forces to face trade competition from China.

"Once we establish closer economic and trade ties, we can deal with Asia," said Marco Aurelio Garcia, Rousseff's foreign policy advisor.

(Additional reporting by Simon Gardner and Brad Haynes in Santiago and Brian Winter in Sao Paulo; Editing by Stuart Grudgings and Kieran Murray)