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Published: Friday March 28, 2014 MYT 9:56:57 PM
Updated: Friday March 28, 2014 MYT 9:58:42 PM

Brazil grows wary of Venezuela under Maduro, reduces support

SAO PAULO (Reuters) - Brazil, Latin America's biggest economy and diplomatic power, has toned down its support for Venezuelan President Nicolas Maduro because of disappointment over how he is handling mounting economic problems and opposition-led street protests.

The shift, while subtle, has deprived Maduro of some of the regional backing he wants at a time of food shortages, high inflation and political uncertainty in the OPEC nation.

Broadly speaking, Brazilian President Dilma Rousseff remains an ally of Maduro. While Rousseff is more moderate, both are part of a generation of leftist Latin American presidents who grew up opposing pro-Washington governments and believe they are united by a mission to help the poor.

However, Rousseff has been increasingly disappointed by some of Maduro's actions and has reined in the more enthusiastic support that characterized Brazil-Venezuela relations under his predecessor, the late Hugo Chavez, according to two officials close to Rousseff's government.

Rousseff is worried the Venezuelan government's repression of recent street protests, and Maduro's refusal to hold genuine dialogue with opposition leaders, may make the political crisis worse over time, the officials said.

Worsening turmoil could, in turn, endanger the sizeable interests of Brazilian companies in Venezuela. They include conglomerate Odebrecht SA.

Brazilian newspaper Valor Economico reported this month that Venezuelan public-sector companies already owe Brazilian companies as much as $2.5 billion in debt.

"The path Maduro is on is full of risks," one official said, speaking on condition of anonymity. "We've been trying to encourage him to change."

The shifting stance does not amount to increased support for the Venezuelan opposition, the officials emphasized, adding that Brazil's main goal is encouraging democracy and economic stability in the region.

The clearest example to date of Brazil's changing tack came at a gathering of regional leaders for the inauguration of Chilean President Michelle Bachelet earlier this month.

Maduro had said he wanted presidents from Unasur, a South American regional body, to meet while in Chile and issue a declaration of support for his government.

However, Rousseff was cool to the idea and left Chile just hours after Bachelet was inaugurated. Maduro unexpectedly changed his plans and did not travel to Chile at all.

BIG INFLUENCE IN CARACAS

The next day, foreign ministers from Unasur met instead and expressly refrained from supporting either side in the conflict. They condemned violence and expressed "condolences" to the victims, the Venezuelan people and, lastly, "the democratically elected government."

In contrast to a Unasur statement last April, it did not mention Maduro by name despite the insistence of some regional diplomats. It was also heavy on language calling for peace and respect for human rights, while urging "all political forces" to engage in dialogue.

Such nuances carry significant meaning for both sides of the political divide in Venezuela.

As Chavez did before him, Maduro has frequently sought regional support in times of trouble. Unasur's more favourable statement last April was key to shoring up his legitimacy at home following a disputed presidential election.

Governments in Mexico and Peru have also publicly urged Maduro to talk more with the opposition in recent weeks. Others, such as Argentina and Nicaragua, have supported him more unconditionally.

Brazil's economic size and its status as a role model for pragmatic leftist policies in Latin America give it significant influence. Henrique Capriles, the Venezuelan opposition's leading figure, has pointed to Brazil's ruling Workers Party as having the kind of policies he would embrace if elected, although his coalition includes more conservative elements.

Both sides are eager to curry Brazil's favour and the signals sent by Rousseff's government are closely watched in Venezuela.

Many in Venezuela's opposition have expressed anger that Rousseff has not explicitly condemned Maduro for recent violence which has left 36 dead. Casualties have included government supporters and opponents as well as security forces.

Some opposition blogs have noted that much of the tear gas fired by police is made in Brazil.

But Brazilian officials privately say they must walk a fine line, since more critical statements could draw comparisons with Washington - Venezuela's No. 1 enemy - and risk shutting off dialogue with Maduro altogether.

Rousseff also wants to have constructive ties with the opposition while signalling that neither she nor other regional leaders will tolerate an undemocratic effort to depose Maduro, such as a 2002 coup that briefly toppled Chavez.

To that end, Rousseff privately sought out U.S. Vice President Joe Biden when they were in Chile for Bachelet's inauguration. She asked him for U.S. help in ensuring that Venezuela's opposition doesn't do anything radical such as trying to depose Maduro, according to two officials with knowledge of the conversation.

Another factor behind Rousseff's shift is Brazil's election in October, when she will seek a second term. Her two main opponents are both running to her right, and have criticized her for not being tough enough on Maduro.

(Editing by Kieran Murray)

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