By Lesley Wroughton
WASHINGTON (Reuters) - Outgoing World Bank chief Robert Zoellick on Thursday called for a new partnership in the Americas, criticizing the United States for insufficient leadership on trade and saying that Venezuelan President Hugo Chavez's political influence is waning.
In a politically pointed speech, which is unusual for the head of the global development institution, Zoellick urged strengthened ties between North and South America through more cooperation in trade, energy and security.
Chavez, a long-time antagonist of the United States, is embarking on his most challenging re-election campaign while battling cancer, with an opposition united behind his rival Henrique Capriles.
While Chavez is expected to win the October 7 election, his critics say his "revolutionary" economic policies - including waves of nationalizations - has sharply weakened the economy, fueled inflation and scared away foreign investors at a time when the country is faced with a slump in oil production.
Much criticized by the opposition are his preferential oil deals, under which foreign allies receive Venezuelan fuel at easy terms, including in exchange for food and other products.
"Chavez's days are numbered. If his subsidies to Cuba and Nicaragua are cut, those regimes will be in trouble," Zoellick said in prepared text for a speech to the Washington-based Inter-American Dialogue.
"The democrats of Latin America - left, center, and right - should be preparing. The calls for democracy - for an end to intimidating thugs, human rights, fair elections, and rule of law - should come from all its capitals," he added.
Zoellick, who steps down as World Bank president on June 30 when his five-year term ends, said Brazil could play a greater role in global security by preventing the spread of nuclear weapons.
He referred to a proposal in April by former U.S. assistant secretary of state for inter-American affairs, Bernard Aronson, that Brazil should voluntarily end its uranium enrichment program and call on other nations, including Iran, to follow its example.
"If Brazil wants to help shape the 21st Century, leadership in preventing the spread of nuclear weapons - with an idea and action - would send a powerful signal," said Zoellick, a former deputy U.S. secretary of state.
CRIME AND VIOLENCE
He also warned that fragile governments of Central America are at risk of being overwhelmed by crime and violence linked to drug trafficking, gangs and organized crime. The United States should take responsibility for the drug habits of its public that fuel demand for narcotics trade from the south, he added.
Zoellick, a former U.S. trade representative, said the United States should pursue new ways of trading with the region. Washington's influence in the region has long been dominated by trade and investment but is increasingly being weakened by China's growing influence.
"The United States is no longer leading the open trade agenda, as it relies increasingly on defensive measures," he said. "The United States has its own high costs of trade - antiquated ports and laws to protect special interests."
Zoellick said the current structure of U.S. Free Trade Agreements (FTA's) with the region offered a solid legal framework. Yet, Washington could use it as a way to explore ways to further reduce trade barriers and create fresh opportunities.
"The United States needs to make its hemispheric FTA network dynamic, linked to business and investment policies, and improved governance," he said.
He said innovation in the energy sector could transform regional energy security in the region, especially if Mexico opens its oil company PEMEX to outside investment and Brazil increased oil and gas supplies to the region from its giant deep offshore PRESAL oil and gas fields.
In particular, more cooperation in energy could help poorer countries in Central America and the Caribbean that have long suffered from high energy costs, Zoellick added.
(Additional reporting by Daniel Wallis in Caracas; Editing by Vicki Allen)