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Last Updated: Tuesday, 28 November 2006, 03:59 GMT
Iran backs Venezuela car factory
By Greg Morsbach
BBC News, Caracas

Mahmoud Ahmadinejad (l) and Hugo Chavez
Venezuela and Iran have a growing relationship
Senior Venezuelan and Iranian government officials have opened a joint car plant in central Venezuela.

Venezuelan President Hugo Chavez inaugurated the factory together with Iran's minister for industry.

Venezuela is currently undergoing a process of industrialisation to make it less dependent on US imports.

Mr Chavez has set up a string of industrial projects with partners such as Iran, China and Russia to give his country the expertise it needs.

Despite its vast oil production, Venezuela has always relied heavily on the US. It now aims to make its own cars, tractors, computers and other high-tech products.

New markets

Iran and Venezuela already operate a tractor and cement factory here.

The latest business venture with Iran is supposed to give poor Venezuelan families access to vehicles they could otherwise not afford.

Take the so-called "People's Car" for example - the budget vehicle only costs around $7,000 (3,600).

Mr Chavez, who is facing presidential elections this Sunday, insisted on driving the car around the industrial complex a few times while the press took pictures.

The Iranians see the plant as an attractive business opportunity - they expect to roll 20,000 cars off the assembly line each year.

Many will be exported to other South American countries.

Iran wants to use Venezuela as a base to do business in the region and a gateway to new markets.

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