Bolivia is forging "diplomatic relations with Iran to improve the country's economic situation, not to hurt or offend anyone," Garcia said while Morales was in New York this week at the U.N.

Bolivian and Iranian officials declined to offer details on what sort of energy agreements are in the works, but analysts say Iran alone can't give Bolivia the massive investment it needs to boost gas output in the face of potential domestic shortages and looming commitments to its big clients, Argentina and Brazil.

"I think the fact that Morales is talking to the Iranians is a sign of desperation," said Christopher Garman, who heads Latin American research at the Eurasia Group political risk consultancy. "Bolivia is not going to have a white horse saving its energy needs."

But Bolivia-Iran trade can't go anywhere but up.

Bolivia exported nothing to Iran between 2000 and 2006, and Iranian exports to Bolivia totaled just US$10 million (€7 million) last year, according to government statistics, down from US$24 million (€17 million) a year earlier.

Meanwhile, ties between Caracas and Tehran are strong and growing. Iran and Venezuela have signed more than 180 trade agreements since 2001, worth more than US$20 billion (€14 billion) in potential investment between the two, according to Iran's official news agency, IRNA.

Among the deals:

_ Iran has partnered with Venezuela to begin producing cars, tractors and plastic goods and has agreed to help Venezuela build public housing.

_ Iran Air began flights between Tehran and Caracas, with a stopover in Syria, earlier this year.

_ Venezuela and Iran have started building two petrochemical complexes - one in each country - at a total cost of US$1.4 billion (€990 million).

_ Iran is also helping explore for natural gas off the Venezuelan coast, and the two governments expect to jointly invest US$6 billion (€4.2 million) in heavy crude projects, all in the next two years, Venezuela's oil minister, Rafael Ramirez, told the AP.

_ Venezuelan and Iran have formed a joint company for international energy projects and are looking to build a refinery in Syria, Ramirez said.

Ecuadorean President Rafael Correa also wants closer ties with Tehran, and Iran's PressTV reported last month that Iran will for the first time open an embassy in Quito.

Meanwhile, President Daniel Ortega of Nicaragua last month accepted promised Iranian aid of funding for 4,000 tractors, milk-processing plants, 10,000 houses, piers and the construction of a farm equipment assembly plant. In exchange, Nicaragua agreed to export coffee, meat and bananas to Iran.

Chavez is a vocal defender of Iran's nuclear program, accusing the United States of trumping up unfounded concerns about possible nuclear weapons as a pretext to attack a regime it opposes.

"Iran isn't making an atomic bomb, not at all," Chavez said Monday. "They just want to develop nuclear energy. Venezuela will do it also someday."

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