Cutting Things Down To Size.(International Edition; WORLD AFFAIRS)(Brazil emerges as a powerful force in Latin America)

Byline: Mac Margolis

As Brazil becomes a more powerful player, its neighbors are becoming increasingly aggressive.

Latin Americans have a long record of directing their often tempestuous nationalism at one prime target: the United States. But with Washington increasingly entangled in more volatile latitudes, regional battle lines are being redrawn. These days, the imperialistas speak Portuguese. Yes, Brazil, the onetime continental underachiever and now Latin America's economic pacesetter, is increasingly becoming target No. 1.

The loudest anti-Brazilian rumblings have come from the Andes, where populist leaders marching to the drumroll of Venezuelan strongman Hugo Chavez's "Bolivarian revolution" are trying to remake their nations by redistributing wealth and empowering long-neglected indigenous groups and minorities. Over the past two years, the leaders of Venezuela, Ecuador and Bolivia have hurled invective at their dominant neighbor, and lately the mood is getting ugly. In September, a power outage at an Ecuadoran hydroelectric plant built by Brazilian construction giant Odebrecht blew up into an international incident when President Rafael Correa ordered the Army to circle all four Odebrecht projects, froze the company's assets and insinuated he might stop payment on a $243 million loan from Brazil's national development bank. Despite high-level negotiations with Brazil, Correa finally kicked Odebrecht out of the country last month, charging the Brazilians with "disrespecting national sovereignty." Correa is also threatening to oust other Brazilian firms, including the state-owned oil giant Petrobras.

Now the contagion is sweeping south. In Paraguay, President Fernando Lugo took office in August under the banner of "energy independence"--populist code for squeezing concessions from the "imperio" just over the border. He is charging that Brazil is underpaying for the power it imports from the giant Itaipu plant and wants a free hand to sell half the total to any country he chooses. The Brazilians have tried to negotiate, but Asuncion seems unmoved. In September and October, angry peasants vowed to seize plots owned by resident Brazilian farmers. BRAZILIANS, GO HOME read the placards in San Pedro, the municipality where peasants are circling Brazilian farmers.

Ironically, Brazilian President Luiz Inacio Lula da Silva remains popular in Latin America. Before nationalizing two Brazilian oil refineries in 2006, Bolivian President Evo Morales reverentially referred to Lula as his "big brother." Chavez rarely misses a photo op with Lula, even as he lashes out at the country's business executives (he just slapped Odebrecht with $282 million in "extra" taxes) or the Brazilian Congress, which he once dismissed as "Washington's parrot." The first international trip Lugo took as president was to Brasilia.

But while leaders trade bearhugs with Lula, they seem just as ready to stick it to their neighbor--a direct response to Brazil's emergence in the region as a powerful economic player. With a $1.4 trillion economy and a global political agenda, Brazil stands out in a region hobbled by poverty and poor governance. Its industry eclipses that of its neighbors, assuring Brazil a fat regional trade surplus. Odebrecht is just one of a score of Brazilian multinationals prowling Latin America and beyond for ...