BRASILIA : Leaders of 12 South American nations on Friday signed a treaty to launch a Union of South American Nations, seeking foreign policy alignment and better relations among neighbours.

With oil prices soaring, countries were discussing how to boost energy policy coordination as well as cooperation on social and educational policies through the group, which was to have a parliament in the Bolivian city of Cochabamba.

The union, a forum where emerging world player Brazil can likely press its growing regional influence, groups Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela. In all, 388 million people live in those countries.

Only the French overseas territory of French Guiana was not involved.

"We leaders in the region know that current disagreements ... are fleeting, and that together, we are more sovereign," said host Brazilian President Luiz Inacio Lula da Silva, alluding to strains between Colombia's conservative US-backed government and the leftist governments of Ecuador and Venezuela.

Tensions arose in March when Colombian soldiers attacked a FARC rebel camp in the jungle just inside Ecuador, killing the FARC's number two commander, Raul Reyes.

Bogota has said computer data captured at the time proves close links between Marxist FARC rebels -- which Washington considers a terrorist group -- and the governments in Venezuela and Ecuador. Chavez has dismissed the allegations.

The new policy group is to meet once per year at the head-of-state level, and is to be presided over by Chilean leader Michelle Bachelet, after Colombian President Alvaro Uribe signalled it would not be "prudent" for him to lead it given the tensions.

Now, the Union "can become part of our national development plans, across a continent of "democracy, justice and peace," Lula stressed.

- AFP /ls