BRASILIA - The leaders of 12 South American nations founded a union on Friday aimed at boosting economic integration and political cohesion in the region, but disagreements stymied ambitious plans on defense and trade.
The heads of states signed a treaty that creates the South American Union of Nations, or Unasur, as well as plans for energy, infrastructure and financing projects.
Brazilian President Luiz Inacio Lula da Silva hailed the organization, which aspires to become like the European Union, as a sign that South America was becoming a "global actor" and said the differences between governments were a sign of vitality.
"The instability some want to see in our continent is a sign of life, especially political life," he said. "There's no democracy without people (protesting) in the streets."
Unasur includes a revolving presidency, bi-annual meetings of foreign ministers and a parliament in Bolivia.
But it falls short of ambitious plans for economic and security integration, including the original intention to merge the South American customs union Mercosur and the Andean Community trading bloc.
Also, Colombia rejected a Brazilian proposal to create a regional defense council.
Lula met the region's more radical left-wing leaders of Venezuela, Ecuador and Bolivia before the summit, urging them to put aside differences with other countries in the region, a senior diplomat told Reuters.
As the major regional power, Brazil has for years been trying to unite South America as a counterbalance to U.S. and European economic interests in the region.
South America has been strained by political divisions pitting U.S. critics such as Bolivia and Venezuela that favor state intervention in the economy against market-friendly countries like Chile and Colombia, which have closer ties to Washington.
Despite a display of unity, the atmosphere was tense at the summit in Brasilia.
"Unfortunately our relations with the Colombian government are in a very deplorable situation, at a dead point," Ecuadorean President Rafael Correa told reporters.
Colombia accuses Ecuador of harboring Colombian rebel fighters.
Venezuela blamed Washington on Friday for fueling disputes through its ally Colombia.
"From the United States they have always promoted these types of regional conflicts," Venezuelan Defense Minister Gustavo Rangel told Reuters.
In the latest standoff, Venezuelan President Hugo Chavez denounced last week an incursion of Colombian troops in Venezuela, a claim Bogota denies but is investigating.
Colombia turned down the presidency of Unasur because of its problems with Venezuela and Ecuador. Instead Chile will lead the group first.
Former Ecuadorean President Rodrigo Borja turned down the post of secretary-general, saying it lacked decision-making powers.