Venezuela's populist president Hugo Chávez has been accused of using his country's oil wealth to help elect like-minded leaders in Bolivia, Peru, Mexico, and Nicaragua. But there's been little evidence, until now.

A cooperation agreement signed last week between Nicaragua's Sandinista leader - and longtime US nemesis - Daniel Ortega and Mr. Chávez is being touted by many here as an initiative to sell oil to Nicaragua on credit, allowing the country to invest more in poverty-fighting projects. Critics call it a blatant attempt to buy the Nov. 5 presidential election for Mr. Ortega.

"Central America is important for Chávez because the rest of his influence is concentrated in the Andean countries [of South America]," says Michael Shifter, vice president for the Washington-based Inter-American Dialogue. Mr. Shifter says Chávez is clearly on a mission to challenge US influence in the region, but that he also appears genuinely concerned with helping the poor - two traits that don't necessarily contradict one another. "This shows a larger ambition, and he is focusing his resources on Nicaragua and calculating that Ortega has a chance to win [elections in November]."

In the past few years, Chávez has made high-profile deals to sell discounted oil to Central American and Caribbean nations, and even to poor citizens in US states such as New York and Massachusetts.

But the deal struck between Chávez and Ortega comes during a grinding energy crisis, and before a pivotal election that could see another leftist leader come to power in the region. In the past year, energy shortages here have led to power-rationing blackouts and transportation strikes. Under the agreement, Venezuela will accept 60 percent of payment within 90 days of shipment, while the remaining 40 percent will be paid off over 25 years at 1 percent interest, including a two-year grace period.

The deal could be one of the most important real-world applications to date of the Bolivarian Alternative for the Americas (ALBA), a Latin American integration initiative started a year ago by Cuba and Venezuela to counter US efforts to promote hemispheric free-trade integration. ALBA promotes the principles of social and economic justice, but so far is known more for its symbolism than concrete action.

Yet the pact is gaining steam, with newly elected Bolivian President Evo Morales signing on to ALBA in Havana this past weekend to much fanfare. On Monday, Mr. Morales also sent shockwaves throughout the energy sector when he announced that he would nationalize Bolivia's gas reserves, the second largest in the region.

When in Venezuela last week, Ortega vowed to join ALBA if elected this November. But critics say the agreement between Chávez and Ortega, signed during Ortega's visit, effectively means Ortega has joined ALBA early, undermining the legitimacy of the current Nicaraguan government, and using Venezuelan oil money to boost his campaign bid.

"This is just a sophisticated mechanism for Ortega to launder Venezuelan money for his campaign," charged congressman Wilfredo Navarro, vice president of the incumbent Liberal Constitutional Party (PLC). "Forty percent credit is the same as 40 percent of the money that will disappear and end up in Ortega's campaign."

The Sandinistas, however, claim the pact with Venezuela is an example of how they offer solutions to problems that the pro-business government has been unable to resolve - a form of "governing from below," which Ortega promised he would do when his revolutionary government was voted out of office in 1990.

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