Paraguay halts vote on Venezuela joining Mercosur

ASUNCION, Aug 13 - Paraguay's government on Thursday withdrew a bill that would let Venezuela join the Mercosur trade bloc, fearing a defeat in Congress that could hurt relations between the two countries.

Paraguayan lawmakers had been due to discuss whether Venezuela should be allowed to join the South American trade group, but rightist opposition parties said they had enough votes to reject the bill proposed by President Fernando Lugo.

"We'd rather withdraw (the bill) because a rejection could cause significant disruption to our relations with Venezuela," Foreign Minister Hector Lacognata told reporters, saying the bill could be revived if they garner more support.

Lugo, a former Roman Catholic bishop, a close ally of Venezuela's socialist president, Hugo Chavez, backed Venezuelan membership of Mercosur on the grounds that the oil-rich nation would help balance larger and smaller members of the bloc.

Paraguay's government is also concerned a congressional rejection of Venezuela's membership could hamper $300 million debt restructuring talks between state energy firm Petropar and its powerful Venezuelan counterpart, PDVSA.

Venezuela's membership has been approved by Congress in Argentina and Uruguay, but it still needs a green light from Paraguay and Brazil.

Several Paraguayan legislators -- including some from the ruling party -- have harshly criticized Chavez in recent days for shutting down several media outlets and questioned his commitment to democracy.

Argentina, Brazil, Paraguay and Uruguay are full members of Mercosur, which was founded in 1991, while Bolivia, Chile, Colombia, Ecuador and Peru are associate members.