Brazil-Meeting of world leaders.

BRAZIL-MANY TOPICS ON THE AGENDA.

The two-day forum — one of the annual regional meetings hosted by the Swiss-based World Economic Forum — takes place just days before the leaders of 34 Western Hemisphere nations gather this weekend in Trinidad and Tobago for the Summit of the Americas, where the crisis will take centre stage.

The tone of Silva’s 30-minute address strongly indicated that he would use the summit as a platform to continue to rail against the US for a crisis he says Wall Street started — but for which he fears the world’s poorest will pay.

Saying one of the biggest political fads of the 20th century was the notion the state had little or no role to play in regulating the global economy, he called for a new economic order, one constructed with input from all nations.

"We cannot become prisoners of old paradigms that have collapsed in the last months," Silva said. "Latin America and the Caribbean have all the credentials to propose an international financial system that should not be synonymous of unleashed speculation, easy profits and socialization of the losses."

Silva called for a calm and balanced economic restructuring, though he offered scant details.

"I don’t want the state to manage the economy. I want the state to play the role of oversight," he said. "That will enforce and advocate for the majority of people, not the minority."

Colombian President Alvaro Uribe, who joined Silva on stage for the forum’s opening, said that he agreed the globe’s poorest should not pay for a crisis that began in the US, and that now was the moment for carefully reconstructing economic models that take into account the broadest range of people possible.

"We need to have a new concept of capital: capital that should be used for the construction of social wealth," Uribe said.

STOP ERECTING tRADE BARRIERS

Latin American leaders and executives urged governments in the region to stop erecting trade barriers, saying the financial crisis was a chance to tackle problems that have long hindered the region’s competitiveness.

Lula da Silva, hosting the forum, said protectionist moves by some countries would only deliver short-term relief from the economic downturn.

"Protectionism is like a drug, which offers immediate relief but then puts its victim in a prolonged depression," Lula, a strong proponent of renewing world trade talks, said in a speech opening the two-day meeting of business leaders.

The global financial crisis has slammed the brakes on five years of buoyant economic growth in the region, knocking demand for commodities from oil to copper, pushing economies into recession, and driving millions of people into poverty.

In a region with a long history of populism, leaders are feeling pressure to shield their economies as trade flows plunge and jobs are lost. Ecuador has sharply increased tariffs on imports, Mexico has raised duties on a long list of US imports, and Argentina tested Brazil’s patience by imposing extra import restrictions.

Mexico expects its economy to contract 2.8 percent this year, while fellow regional giant Brazil last month slashed its 2009 growth forecast to 1.2 percent from 3.2 percent.

US bank Morgan Stanley said in a report last month that the region would contract at least 4.3 percent this year, its worst showing since 1983.

But unlike in previous crises that have hit the region, stronger State finances have enabled governments to respond with "counter-cyclical" policies such as lower interest rates and fiscal stimulus packages.

"Independently of ideology, every single government should focus on counter-cyclical measures," said Ricardo Villela Marino, chief executive of Brazilian bank Itaú.

CHANCE FOR REFORMS

"Also countries should focus on trade with their neighbous. There’s scope for new initiatives in Latin America, particularly in inter-regional trade."

Despite five years of strong growth, the region still suffers from poor infrastructure and low education standards that economists say hinders its long-term potential. "Maybe this crisis was the only way of making the needed reforms," said Marcelo Bahia Odebrecht, the executive president of major Brazilian construction firm Odebrecht.

"Latin America was at a velocity we couldn’t sustain. There is a lack of everything — engineers, skilled staff, products," he said.

Pamela Cox, the World Bank’s vice-president for Latin America and the Caribbean, said countries should use their fiscal responses to the crisis to strengthen social safety nets and tackle long-standing inefficiencies.

Poor education, a lack of infrastructure, and subsidies that favour the rich are areas that could be improved if governments targeted them in their fiscal responses, she said.

"The quality of education is very poor in the region. It’s a competitive issue, it’s a poverty and equity issue, so pay attention to investment in people and not just in roads," she said.

Cox also voiced concern at recent protectionist steps, although she said she saw no "wholesale" rise in such barriers in the region.

"We are telling people this is not a good idea," she said.

"If you look back to the experience of the depression in the 1930s, it’s clear that these beggar-thy-neighbour policies ended up in lower growth and a longer period of recession for the world."