For their first face-to-face encounter since a diplomatic crisis erupted in late 2007, Venezuelan President Hugo Chávez chose to host Colombian President Álvaro Uribe in this oil refining town in Venezuela, home to the largest refining complex of its kind in the world.

If the setting was intended as a display of power, however, it worked only insofar as oil wealth goes.

Since their relationship deteriorated into insults and accusations – after Mr. Chávez in March sent tanks to the Colombian-Venezuelan border in protest of a Colombian air raid in Ecuador and after Colombia charged Chávez with aiding Colombian leftist rebels – the tides have shifted for these two South American neighbors.

Both leaders gained Friday by promoting their reconciliation and both were equally ebullient about it. "We're destined to be together," said Chávez, showing off a book on Simon Bolivar, the South American independence leader, which Mr. Uribe had brought him. "We're brothers," added Uribe.

But while Chávez has suffered a series of international and domestic setbacks recently, Uribe's popularity has soared with the stunning rescue of French-Colombian politician Ingrid Betancourt and 14 other high-profile hostages held by the Revolutionary Armed Forces of Colombia (FARC) rebels. Many observers say that a power shift is under way, and that Chávez can no longer afford to dismiss the Colombian leader as merely a "pawn" of the United States.

"Uribe has recuperated political space, within and outside of his country, and he is taking advantage of his economic agenda while Chávez is in the weaker position," says Elsa Cardozo, a foreign-policy expert at the Central University of Venezuela in Caracas. "Chávez has suffered some setbacks since last year. He has lost some space. He needs to gain it back, so he is reconsidering his relationships."

The meeting was driven by economics for the partners who traded $6 billion last year. They announced promises to build a new railroad to link the two countries, which share a 1,300-mile border. Despite their ideological differences, an impasse hurts both. "The differences are going to remain," says Laura Gil, an international relations consultant in Bogotá. "But they have to normalize their relationship."

The meeting was the first since Uribe took away Chávez's role in mediating with the FARC. After Colombia launched a raid on Ecuadorean territory in an effort to capture a top FARC commander, Ecuador's President Rafael Correa, a Chávez ally, was outraged and has still not mended ties with Colombia. Chávez reacted by sending troops to the border.

Colombia later said that a computer from that raid contained data proving that Chávez has aided the FARC, a claim that he has vehemently denied. An Interpol investigation concluded the computer files were not tampered with.

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