Chávez Talks of Cuban and Venezuelan Confederation

Venezuela and Cuba have cemented their alliance with a range of economic deals which President Hugo Chávez said could pave the way to a confederation.

The Venezuelan leader wrapped up a three-day visit to the communist-run island with agreements on 14 joint ventures, including oil refining, nickel production, fishing and tourism. The package consolidated Venezuela's role as ally and benefactor in easing Cuba's economic crunch and boosting the regime's chance of retaining power after the death of the ailing leader Fidel Castro.

Mr Chávez signed the deals on Monday with Fidel's younger brother Raul, signaling a determination on both sides to sustain the alliance despite the apparent lack of chemistry between the Venezuelan and Cuba's acting leader.

Venezuela's socialist revolution was forging closer ties with its Caribbean brother, said Mr Chávez. "Cuba and Venezuela could easily form a confederation of states, two republics in one, two countries in one. This is no delirium."

The former soldier, who was making his seventh visit to Havana, has used his country's vast oil reserves to reduce Washington's sway over Latin America and ease the impact of its embargo on Cuba.

Discounted Venezuelan oil and other deals are valued at around £1.5bn a year, not far off Moscow's Soviet-era subsidies and a lifeline to a government struggling to ease crippling fuel, transport and food shortages.

There are plans to modernize the decaying Cienfuegos refinery so that it could process 65,000 barrels of crude a day, distill gas and make petrochemical products.

For its part Cuba has dispatched thousands of nurses, doctors and teachers to slums in Venezuela, Bolivia, Nicaragua and other left wing allies.

In addition to socialist solidarity Mr Chávez's talk of confederation stems from his dream of uniting Latin America along the principles of Simón Bolívar, the region's 19th century liberation hero.

Nevertheless many middle class Venezuelans are emigrating over fears of expropriations and socialist indoctrination in schools. Polls show few Venezuelans want to swap their Americanized consumer culture for Mr Chávez's vision of a "new socialist man" but that has not dented his high popularity.

During a weekend meeting with Fidel Castro, Mr Chávez praised him in quasi-religious tones as "the father of all revolutionaries" and "our father, who is in the water, earth and air". The 81-year-old Cuban leader, convalescing from a serious intestinal illness, looked frail but alert.

A US state department spokesman said in response: "We are delighted that Fidel Castro has had an opportunity to discuss things with his friend President Chávez. It's too bad that in almost half a century of misrule in Cuba, he's never had the same conversation with his own people."