Venezuelan President Hugo Chavez (right) greets Peruvian President Alan Garcia during the inauguration ceremony of Ecuador's new President Rafael Correa in Quito yesterday. - Reuters

LIMA (Reuters):

Peruvian President Alan Garcia said he and Venezuelan leader Hugo Chavez agreed yesterday to renew diplomatic ties between their countries, mending a rift that caused them to withdraw their ambassadors in May.

Speaking on Peru's RPP radio while in neighbouring Ecuador, where the two presidents are participating in the inauguration ceremony for President Rafael Correa, Garcia said the countries would also discuss cooperation in the energy sector.

"I've spoken to Hugo Chavez. We'll restore diplomatic ties within a month's time, and will see what kind of energy cooperation we can gain," Garcia said.

Chavez told the same radio station: "The very fact that we are going to send ambassadors and are working on a (common) agenda shows that the moment is good, the moment is excellent in Latin America."

The two South American countries recalled their ambassadors last year amid Peruvian claims that Chavez was interfering in Peru's presidential race to favour leftist candidate Ollanta Humala.

Throwing words

In the run-up to Peru's presidential runoff, Garcia, a centrist, dubbed Chavez "shameless" and Chavez responded by calling him a "thief." Both demanded apologies.

Garcia also said earlier he would not allow Venezuela's state oil firm, PDVSA, to gain a foothold in Peru, as it had done in impoverished Bolivia by pledging to invest $1.5 billion of its largess in energy projects.

Chavez's efforts to build leftist alliances in Latin America on the back of anti-U.S. sentiment have irked more pro-U.S. neighbours Peru and Colombia, who have signed free-trade agreements with Washington and are awaiting their ratification.