President Bush lauded democracy and railed against divisiveness in Latin America during his visit in Brazil. Before returning to Washington, the president will visit Panama.

By WILLIAM DOUGLAS
Knight Ridder News Service

BRASILIA - President Bush on Sunday again nudged Latin America's biggest country on free trade -- with no better results than at last week's Summit of the Americas -- and took thinly varnished jabs at Venezuela's Hugo Chávez.

Speaking in the Brazilian capital, Bush hailed the growth of democracy in Latin America and denounced those in the region who rule by fear, divisiveness and blame in what his audience took as a reference to the leftist president.

One vision of Latin America offers ''hope . . . founded on representative government, integration into the world community and a faith in the transformative power of freedom in individual lives,'' he told an audience of university students, diplomats and business leaders. ''The other vision seeks to roll back the democratic progress of the past two decades by playing to fear, pitting neighbor against neighbor and blaming others for their own failures to provide for their people,'' Bush added.

U.S. officials declined to say specifically if he was referring to Chávez, a leftist populist who regularly criticizes Bush and strongly opposed the U.S.-backed proposal for a Free Trade Area of the Americas (FTAA), almost seizing the spotlight at the summit Friday and Saturday in Argentina.

But while Chávez may be the loudest and harshest opponent of the FTAA, it is Brazil's Luíz Inácio Lula da Silva, president of South America's biggest country and most powerful economy, who is almost certain to decide the fate of the FTAA.

At the end of the Mar del Plata summit, Bush and 28 other leaders backed continued talks on the FTAA, while Brazil, Venezuela, Argentina, Uruguay and Paraguay said they were opposed.

PRAISE

It was little surprise then that Bush's overnight visit to Brazil, billed as a state visit in which the two men would discuss a range of bilateral issues, would tilt instead to discussions on the free-trade pact and Bush efforts to charm his host.

In his speeches and meetings and a barbecue at Lula da Silva's official weekend retreat, Bush effusively praised his host and stressed the democratic ties that bind the United States and the nation of 186 million people.

''I want to send a very clear signal to the people of Brazil that the relationship between America and Brazil is an important relationship, that is a friend'' Bush said during a meeting with business leaders.

``It's in our interest that our neighborhood be a prosperous neighborhood. It's in our interest that we work with the largest country in the neighborhood.''

Bush's wooing of Lula da Silva signaled the importance of this stop on Bush's five-day, three-country Latin America tour that takes him to Panama and then back to Washington today. The White House needs Brazil's support if it has any hopes of winning approval for the FTAA, first proposed in 1994.

''He's got to be convinced, just like the people of America must be convinced, that a trade agreement in our hemisphere is good for jobs, it's good for the quality of life,'' Bush said at his host's weekend retreat.

For his part, Lula da Silva said he's all for free trade but wants Washington to remove ''unjustified barriers to our bilateral trade'' -- especially U.S. farm subsidies and import restrictions that would put Brazilian producers at a disadvantage.

''We insist on eliminating, through negotiation, the unjustifiable barriers that hinder our bilateral trade,'' Lula da Silva told reporters before the barbecue in Bush's honor.

UP TO THE EU

Bush said he understood Lula da Silva's concern and said the U.S. government would be willing to reduce subsidies and tariffs -- if the European Union would follow suit.

''We would very much love to tell our farmers the same thing the President wants to tell his farmers, that there's access to markets,'' Bush said.

Brazilian Foreign Minister Celso Amorim added that the U.S. goal of breathing fresh life into the hemispheric trade agreement will remain moot until the farm-subsidy problem is solved.

''While that issue remains in doubt at the World Trade Organization, it's going to be difficult to consider any other type of international agreements,'' he told reporters.

Bush concurred with Lula da Silva that the best opportunity to resolve the issue would be progress at upcoming talks in the World Trade Organization.

But the meeting of the two presidents represented a gathering of weakened leaders, with Lula da Silva crippled by a corruption scandal that has led to resignations of members of his government and political party, and Bush hobbled by sagging popularity and an on-going criminal investigation into who on his staff leaked the identity of an undercover CIA agent.