VENEZUELA TO HELP FINANCE BOLIVIA'S COCA PRODUCTION

The Aid Will Boost Efforts To Develop Legal Commercial Products From
The Crop Used To Make Cocaine

CARACAS, VENEZUELA -- Venezuelan President Hugo Chavez has found a
novel way to dispense foreign aid: by promising to underwrite coca
production in Bolivia.

Officials here confirmed Wednesday that Venezuela would buy whatever
legal products Bolivia could make from coca leaf, as part of that
central Andean nation's attempt to wean farmers from the cocaine industry.

Chavez's promise could finance the production of about 4,000 tons of
coca in Bolivia, Venezuelan officials say.

Possible coca-based products include soap, bread, herbal teas,
toothpaste, unspecified medicines and cooking oils. No dollar amount
for Venezuela's support has been announced. Three factories are under
construction in Bolivia with Venezuelan financial and Cuban technical
support, and production could begin this summer.

First announced last month by Venezuela's ambassador to Bolivia,
Julio Montes, the deal is being finalized this week in Caracas during
meetings of the two countries' foreign ministers.

The pledge is the latest in a series of foreign aid promises in Latin
America as Chavez tries to expand his influence and promote his
"Bolivarian Revolution."

Among his foreign aid programs is a promised refinery for Nicaragua,
cut-rate fuels for Ecuador and continuing bond purchases from Argentina.

Chavez's promise is a big step in Bolivian President Evo Morales'
efforts to legitimize the production of coca leaves, a crop Morales once grew.

The announcement comes as the United States government is scaling
back its anti-drug funding to Andean nations, including Bolivia and Ecuador.

Chavez has long supported Morales' efforts to find commercial markets
for coca-based products.

Indigenous communities in Colombia and Peru, who claim the leaf is
sacred, have attempted to promote commercial, non-cocaine uses of
coca in soft drinks, cookies and anti-arthritis ointments. Botanists
have extolled the nutrients that the leaf contains.

But such projects have been opposed by the U.S. government, which
sees the export of any coca product as a violation of the Vienna
Convention, an international accord whose signatories agree the coca
leaf is a dangerous substance that should be banned.

Morales announced in December that he intended to expand legal
production of coca in Bolivia to 50,000 acres from 30,000 acres by
2010. The United States protested, saying that Bolivia needed only a
fraction of that acreage to supply domestic needs.

The coca deal will do nothing to lessen the animosity between the
Bush administration and the Chavez government. That hostility was
evident Wednesday at a congressional hearing in Washington during
which Secretary of State Condoleezza Rice said democracy and human
rights were under attack in Venezuela.

"I do believe that the president of Venezuela is really, really
destroying his own country, economically, politically," Rice told lawmakers.

But the Venezuelan and Bolivian governments made it clear that U.S.
objections would not affect their plans. Venezuelan Foreign Minister
Nicolas Maduro, appearing Tuesday before reporters with his Bolivian
counterpart, David Choquehuanca, said the two nations were working on
projects to "value and dignify the coca leaf."

Venezuela, Cuba and Bolivia recently signed the so-called People's
Trade Treaty, outlining cooperation and about $1 million in
investment on coca production research.