Brazil urges summit to talk trade

Despite the smiles Cardoso (l) and Aznar disagree

Nearly 50 European Union, Latin American and Caribbean leaders are meeting in Spain to discuss free trade and democracy, amid signs of growing instability in parts of South America.

Security is tight at the summit

But even as the two-day summit opened in Madrid, participants could not agree on whether terrorism should top the agenda, instead.

"We do not want the great powers... to become uniquely obsessed by the security issue and replace the agenda of hope, and free trade and the fight against poverty and social and cultural exclusion," Brazilian President Fernando Henrique Cardoso warned.

He was responding to the Spanish Prime Minister, Jose Maria Aznar, who said that the fight against terrorism should be the main priority for the summit.

On Wednesday, Spanish police said they had foiled a car bomb attack, planned by the Basque separatist group ETA, to coincide with the meeting.

Terror suspects

Latin American leaders have been keen to allay fears in Europe that South America is unstable, observers at the summit say.

Chavez was overthrown in April

They fear progress in trade talks with Brussels is being overshadowed by recent political tremors in the region, such as last year's unrest in Argentina and a failed coup against President Hugo Chavez of Venezuela - who is attending the meeting.

This is Mr Chavez's first trip abroad since last month's turmoil.

Venezuela has also been accused of harbouring six suspected ETA members, who Spain wants extradited.

Limited hope

On the trade front, Chile is due to follow in Mexico's footsteps by signing an association agreement at the summit.

The deal will give Chile more trade with the EU, worth an extra eight billion dollars.

Other Latin American countries have also come to Madrid hoping to pull off an association deal with the Europeans, if not generous financial aid packages.

But the EU is not ready to commit itself to the sort of close partnerships it has offered Chile and Mexico, according to observers.