Ecuador, Colombia Move Closer to Ending Border Rift (Update2)

By Matthew Walter and Josh Goodman

March 5 (Bloomberg) -- Colombia and Ecuador moved closer to settling a dispute stemming from Colombia's cross-border military incursion to kill a rebel leader last week.

Colombia avoided condemnation of its raid in an accord with neighboring Ecuador approved by the Organization of American States. The agreement sets a framework for an investigation into the incident.

``Ecuador is a nation of peace that rejects violence from wherever it comes,'' said Maria Isabel Salvador, Ecuador's foreign minister. ``This accord guarantees that no country again violates our sovereignty.''

The deal calls for OAS Secretary-General Jose Miguel Insulza to form a panel to probe the incident and convene a meeting of foreign ministers to consider the results. It may help lower tension in the region, and comes as Venezuelan tanks are moving to the Colombian border on orders from President Hugo Chavez, who said Colombia's March 1 strike risks a war.

Venezuela activated the country's navy and air force in addition to the 10 tank battalions. Chavez has pledged to support Ecuador's President Rafael Correa, who has also added troops on the border after the Colombian raid killed the second- in-command of the Revolutionary Armed Forces of Colombia.

Chavez, a socialist who blames the U.S. ``empire'' for Colombia's attack, today said Venezuela is a ``peaceful'' country and isn't seeking a war. An expanded military presence along the border -- already rife with paramilitary, drug trafficking and rebel activity -- raises tensions to a level that a miscalculation could trigger a military clash.

Bolster Popularity

``This mobilization isn't against the Colombian people, but against the expansionist aspirations of the empire,'' Venezuelan Defense Minister Gustavo Rangel Briceno said on state television.

Crude oil for April delivery rose $5, or 5 percent, to $104.52 a barrel on the New York Mercantile Exchange, a record close. Prices are up 74 percent from a year ago. Venezuela is the fourth-biggest supplier of crude oil to the U.S., and a member of the Organization of Petroleum Exporting Countries.

Brazil, which supported a drive by Ecuador and Venezuela yesterday to win a condemnation of Colombia's actions, offered its ``full-fledged support'' of the final agreement, Brazilian Ambassador to the OAS Osmar Chohfi told the council.

``This resolution is important for both countries,'' Chohfi said. ``It's also important for the region, for the peace and tranquility which we wish to preserve.''

Bigger Military

Former Venezuelan Defense Minister Raul Baduel, who withdrew his support for Chavez last year, said Venezuela's troop mobilization is a political maneuver designed to bolster the president's declining popularity.

Colombia, with more than 260,000 active troops maintains a military edge over Venezuela and Ecuador. The country has received $600 million a year since 2001 in U.S. military aid and training.

Chavez may be trying to regain his standing as soaring inflation and food shortages erode his popularity and after voters rejected his proposal to rewrite the constitution last year, his first electoral defeat since taking office in 1999, said Luis Vicente Leon, director of Caracas-based polling firm Datanalisis.

``This is going to be used to, in some way, stoke nationalism and improve the president's popularity,'' Leon said. ``Chavez has been able to improve his position domestically through all of his involvement in Colombia.''

Laptop Evidence

Colombia is a key trading partner with Venezuela and Ecuador, supplying them with food and other goods. It has a trading relationship with Venezuela worth more than $5 billion a year and with Ecuador worth $2 billion a year.

Colombia said March 3 it found evidence on the laptop of slain rebel leader Raul Reyes that showed Venezuela had funneled at least $300 million to the FARC, as the group is known.

Chavez on Sunday held a minute of silence on his television show for the slain rebel leader. He called on countries in January to remove the FARC from terrorist lists and recognize them as insurgents with political aims. Human-rights groups accuse the guerrillas of killing civilians, using illegal land mines and terrorist bombings.

General Oscar Naranjo, Colombia's police chief, this week said the computer files also indicated Ecuadorean Security Minister Gustavo Larrea had been in contact with Reyes in a bid to get Correa involved in the release of rebel-held hostages to boost his political standing. Chavez and Correa have denied the allegations.

The Venezuelan soldiers mobilizing today are focusing on Tachira, Zulia and Apure states, and will bolster the country's border security, Venezuelan General Jesus Gonzalez said. They will help reduce contraband food and fuel sales to Colombia, he said.

``Is it possible that something like what happened in Ecuador could happen here? The answer is simply yes,'' Gonzalez said.

To contact the reporter on this story: Matthew Walter in Caracas at mwalter4@bloomberg.net.

Last Updated: March 5, 2008 15:37 EST