Iran, Venezuela in "axis of unity" against U.S

By Parisa Hafezi, Reuters, July 2, 2007

ASSALOUYEH, Iran (Reuters) - The presidents of Iran and Venezuela launched construction of a joint petrochemical plant on Monday, strengthening an "axis of unity" between two oil-rich nations staunchly opposed to the United States.

Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad, who both often rail against Washington, also signed a series of other deals to expand economic cooperation, ranging from setting up a dairy factory in Venezuela to forming an oil company.

"The two countries will united defeat the imperialism of North America," a beaming Chavez told a news conference during an official visit to the Islamic Republic, which the United States has labeled part of an "axis of evil".

"When I come to Iran Washington gets upset," he said.

The two presidents -- whose countries are members of the OPEC oil producing cartel -- earlier attended the ceremony to start building a methanol facility with an annual capacity of 1.65 million tons on the Islamic Republic's Gulf coast.

"Iran and Venezuela -- the axis of unity," read one of many official posters at the site near the port town of Assalouyeh, showing the two leaders hugging each other and shaking hands.

Ahmadinejad -- who came to power two years ago pledging to revive the values of the 1979 Islamic revolution -- hailed the event as a step towards boosting "brotherly" ties of the two "revolutionary" nations. Iran is embroiled in a worsening nuclear standoff with Western powers.

WESTERN "BARBARIANS"

Chavez, who last week pushed two U.S. oil giants out of his country as part of his self-styled socialist revolution, said: "This is the unity of the Persian Gulf and the Caribbean Sea."

Iranian officials said a second methanol plant would be set up in Venezuela. Each would cost about $650 million to $700 million and take four years to complete. Methanol is an alcohol which can be used as a solvent or an element in fuel.

That would help Iran to access the Latin American market, while Venezuela would get closer to buyers in India and Pakistan.

Chavez, who wants to forge an alliance of leftist states to counter U.S. policies, arrived in Tehran on Saturday after visiting Russia and Belarus.

In comments certain to please his hosts, who have often called on the United States to leave Iraq, Chavez branded those invading Iran's neighbor as "barbarians", drawing parallels with the European colonization of Latin America centuries ago.

"Those who try to convince the world that in Iran there are a bunch of barbarians are barbarians themselves."

Iran's hardline Kayhan daily said the two countries were riding on a "global anti-imperialism wave."

But both also face economic challenges.

Iran sits atop the world's second-largest oil and gas reserves, but U.S.-led efforts to isolate it over its nuclear ambitions are hurting investment in the sector, analysts say.

The Islamic state rejects accusations it is seeking to build atom bombs, saying it only aims to generate electricity.

Chavez last week forced U.S. oil majors from Venezuela, seizing oilfields from Exxon Mobil and ConocoPhillips.

But economists caution his social spending, mainly paid for by state oil company PDVSA, could run into trouble as Venezuela battles to maintain oil output after the exit of the majors. The opposition complain his anti-Americanism scares off investors.