Venezuela's left-wing President Hugo Chavez has said his country is "fully democratic", a day after MPs granted him sweeping powers to rule by decree.
President Chavez urged Mercosur to reject capitalism
Mr Chavez was addressing other Latin American leaders at a Mercosur trade bloc summit in Rio de Janeiro, Brazil.
He said his ally, Cuba's President Fidel Castro, was battling for his life, but Mr Chavez did not elaborate.
Mercosur leaders agreed to set up a democracy watchdog to monitor elections in member states, including Venezuela.
Mr Chavez said the political changes underway in Venezuela were "complex and difficult" and asked other South American leaders for understanding.
"In Venezuela there is a completely democratic process under way," he said.
'Destruction of the world'
Mr Chavez, who won re-election last month, has come under fire recently for his plans to spread "socialism for the 21st century".
Critics fear he is imposing censorship and trying to build an authoritarian regime with all institutional powers consolidated into his own hands.
On Friday he urged his fellow Latin American leaders to reject free market economics.
"I believe that capitalism is the road to the destruction of the world".
Arriving in Rio for the summit on Thursday he had said he wanted to "de-contaminate" Mercosur of the free market economic policies recommended to Latin America in the past by Washington.
At the close of the summit, Mr Chavez said he had spoken to Fidel Castro for nearly half an hour several days ago.
"I don't know when Fidel will die," he said. "I hope he lives 80 more years, I hope he lives 100 more years".
The state of Fidel Castro's health has been a closely guarded secret since he fell ill last July, but Cuban authorities deny he has terminal cancer as some US officials have said.
In a joint statement, the Mercosur leaders called for the resumption of the Doha Round of global trade talks.
They urged rich nations to drop agricultural subsidies and open their markets to goods from developing nations.
The summit's host, President Lula, said a successful Mercosur was essential for Latin America to become a bigger player on the world stage.
"Without integration Latin America has no way forward," he said.
The five Mercosur governments - Argentina, Brazil, Paraguay, Uruguay and Venezuela - agreed to set up a democracy watchdog which will monitor elections in member countries.
The BBC's Steve Kingstone in Rio de Janeiro says the aim is to ensure that Mercosur remains true to its democratic principles.
Mr Lula said all countries should respect democracy and human rights.