The meeting produced the first major Obama administration comment on the recent flurry of contacts between Latin American leaders and mainly European suppliers that are actively pursuing new markets for their military hardware and weapons technologies.

Unlike previous exchanges, European government-backed suppliers have plied potential Latin American government buyers with a heady mix of easy lines of credit, offers of technology transfers, joint production projects and global sharing of customers for weaponry, either part-assembled or wholly manufactured on Latin American soil.

The arms-buying spree spans Latin America's ideological spectrum and includes populist socialist Venezuela, center-left Brazil, free market-oriented Chile and less resourceful but aspiring defense shoppers, including cash-strapped Argentina.

After the meeting with Vazquez in Washington and before a joint news conference, Clinton issued a statement praising Uruguay as a valued ally and longtime friend of the United States -- an indication, analysts said, that Washington was poised for re-engagement with Latin America after the "lost years" of the Bush era.

Clinton said, "Our two nations share core democratic values, a wide range of common concerns, and hopes for a peaceful and prosperous future for all of our peoples."

Clinton praised Vazquez "for Uruguay's leadership on regional and global challenges, for working within multilateral institutions to spur economic recovery, support the peaceful resolution of conflicts, and strengthen democratic institutions."

Clinton's comment indicated the United States would support Uruguay's efforts to take a proactive role in Latin American developments, as Brazil builds up its diplomatic initiative for pre-eminence on the continent, and Venezuela borrows and spends more on arms purchases to counter what it claims is a U.S. attempt to dominate the region.

Venezuelan President Hugo Chavez announced a $2.2 billion Russian line of credit to buy 90 T-72 tanks and an air defense system, and hinted at a strategic partnership with Iran that would include nuclear cooperation.

Clinton called for transparency on the part of Venezuela while Vazquez, without naming Venezuela, urged Latin American governments to direct their cash resources to economic development and fighting poverty.

"We urge Venezuela to be transparent (in) its purchases, clear about its purposes," Clinton said. "They should be putting in place procedures to insure that the weapons that they buy are not diverted to insurgent groups or illegal organizations, like drug trafficking gangs and other criminal cartels.

"So there is concern that we have expressed, and we'll continue to raise with other countries in the region. And we hope that we can see a change in behavior and attitude on the part of the Venezuelan government," Clinton said.

Vazquez said, "Not only is our country worried, but we have already expressed time and again our position against an arms race. We believe it is quite inconvenient for the region to devote such significant economic resources to purchasing arms. But it's a fact and we can't deny it that the countries are buying weapons.

"To make things worse, our region is the region that has the worst distribution of wealth. Under those conditions it is worse still to be devoting those resources to weapons," Vazquez said.

Analysts said Clinton's emphasis on an existing good relationship with Uruguay's left-leaning government indicated the Obama administration was keen to pursue constructive engagement irrespective of the political color of Latin American partners.

The London-based International Institute for Strategic Studies said Tuesday that, despite rearmament and anti-U.S. rhetoric, Latin America is moving toward more pragmatic policies that will facilitate the Obama administration's re-engagement with the continent.

earlier related report
S. America meeting ends amid deadlock over military deals
Quito (AFP) Sept 15 - A meeting of South American ministers ended without a consensus due in part to reservations from Colombia after a diplomatic spat between the United States and Venezuela over military deals in the region.

The meeting in Ecuador of the foreign and defense ministers of the 12 countries that make up the fledgling Union of South American Nations (Unasur) ended in disarray because of differences over the signing of military deals with non-Unasur countries.

"This is the topic on which we need to continue working. We need guarantees and limits... especially as concerns international agreements," Ecuadoran Defense Minister Javier Ponce told reporters.

Foreign Minister Fander Falconi said "the discussion stalled on the type of guarantees" and noted that the Colombian government requested more time.

The meeting was overshadowed by disputes between Washington and Caracas, which accused each other of triggering a possible arms race in South America through military deals seen as destabilizing for the region.

"We have expressed concern about the number of Venezuelan arms purchases," US Secretary of State Hillary Clinton said in Washington. "Certainly (they) raise the question as to whether there is going to be an arms race in the region."

But Venezuelan Foreign Minister Nicolas Maduro shot back during the Unasur meeting that an imminent US deal to use seven Colombian bases was the real cause for concern.

"How can the secretary of state say Venezuela is involved in an arms race when it is her country installing seven military bases?" Maduro asked, saying Clinton's words "have no political or moral basis."

Washington has said the deal is aimed at boosting counternarcotics and anti-guerrilla cooperation between the United States and Colombia.

Originally called to explore widespread concerns in South America over the US-Colombia deal, the meeting was expanded to discuss other major defense pacts, including Venezuela's arms purchases from Russia, and Brazil's big weapons buys from France.

Venezuelan President Hugo Chavez has announced a string of recent contracts with Moscow to buy 24 advanced fighter jets, 92 battle tanks and 300 surface-to-air missiles among other weapons acquisitions. The total value of the deals is more than six billion dollars.

A fierce US critic, Chavez has said the arms are not to threaten neighboring countries but a response to threats he sees from the US "empire" wanting to invade his oil-rich nation.

Ecuador, the current Unasur chair, has called on South American states to be open with their neighbors about the aims of their arms build-ups, and exchange information to dispel concerns.

"The region does not want to find itself in an arms race," Ecuadoran Foreign Minister Falconi said ahead of the meeting.

But he also reiterated concerns voiced by Venezuela, Bolivia, Chile, Brazil and Argentina that the US-Colombia deal would allow a US presence in the region that goes well beyond the stated mission of fighting Colombian drug traffickers and rebels.

Colombia, which has received nearly six billion dollars in mostly military aid from the United States since 1999, has so far rebuffed demands that it give its neighbors legally binding guarantees that US personnel and hardware will not operate outside Colombian territory.

"There must be guarantees not just for one but for all," said Colombian Defense Minister Gabriel Silva.

Venezuela and Ecuador briefly put their military forces on near-war footing against Colombia in March 2008 after Bogota ordered a cross-border raid into Ecuador to kill a rebel Revolutionary Armed Forces of Colombia (FARC) leader.

Bogota accuses Chavez of backing the FARC with money and weapons.

Brazil, which has also expressed skepticism over US aims in South America, could see its recent deals with France subjected to scrutiny under the broadened terms of the Unasur meeting.

Brasilia has already agreed to spend 12 billion dollars to buy five French submarines -- one of which will be converted to nuclear power -- and 50 military helicopters.

It has also opened contract negotiations to buy 36 modern French fighter jets for an additional four to seven billion dollars.

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