South American leaders seek unity at Brazil summit

By Raymond Colitt

BRASILIA, May 22 (Reuters) - Leaders from 12 South American countries will attempt to overcome a series of recent regional spats and launch a long-sought regional union at a summit in Brasilia on Friday.

The heads of state will sign a treaty that creates the South American Union of Nations as well as an action plan that includes energy, infrastructure and financing projects.

"It isn't based only on a political statement," Brazil's Foreign Minister Celso Amorim said on Wednesday.

Unasur, as the entity is called, is modeled after the European Union and intended to give the region more international clout and a platform for faster economic growth.

But behind the show of unity, its members appear to be pulling the region in opposite directions. At one end of the spectrum are Bolivia and Venezuela, staunch U.S.-critics who favor state intervention in the economy and have nationalized several industries.

On the other hand there are market-friendly countries like Chile and Colombia, who have closer ties to Washington.

In the latest standoff, Venezuelan President Hugo Chavez denounced last week the incursion of Colombian troops in Venezuela, a claim Bogota denies but is investigating.

Only in March a Colombian raid on Marxist rebels inside Venezuela's ally Ecuador had prompted Chavez to order tanks to the Colombian border. Colombia killed a top rebel in the attack and says it found laptops at his camp that show Chavez's ties to the Marxist FARC guerrilla fighters.

The conflict has left its mark. Colombia turned down the presidency of Unasur because of its discrepancies with Venezuela and Ecuador, Colombian President Alvaro Uribe told RCN radio. Instead Chile will lead the group first, he said.

Colombia also rejected the Brazilian proposal to create a regional defense council, which Lula hoped the 12 countries would back in Brasilia.

"It's not the moment for Colombia to participate in that security forum," Uribe told RCN.

Uribe changed his hotel reservations in Brasilia when he heard Chavez and Ecuadorean President Rafael Correa were planing to stay at the same place, Folha de Sao Paulo newspaper said on Thursday.

Lula will try to mediate between Uribe and Chavez, a source close to the talks told Reuters.

As the major regional power, Brazil has for years been trying to unite South America as a counterbalance to U.S. and European economic interests in the region.

The summit is also expected to create a South American parliament to be based in Cochabamba, Bolivia. (Editing by Anthony Boadle)