SANTA MARTA, Colombia (Reuters) - Colombian President Juan Manuel Santos and Venezuela's Hugo Chavez restored diplomatic ties on Tuesday at talks to end the latest dispute between the ideologically opposed Andean neighbors.
Cross-border tensions have run high for more than a year, with the socialist Venezuelan president imposing what Colombia called a trade embargo and cutting ties completely last month over charges he backs leftist Colombian rebels.
Yet both leaders came to the colonial city of Santa Marta in a reconciliatory mood, motivated in part by the need to revive bilateral trade of $7 billion a year.
"We have decided to turn over the page and look to the future," U.S. ally Santos, who took office on Saturday, said after a lengthy meeting and a joint statement under a statue of South American independence hero Simon Bolivar.
Chavez, wearing a sports jacket bearing the tricolor of his country's flag, gave Santos a formal handshake instead of the back-slapping hugs he often shares with other leaders. But he urged the two to rebuild trust between their governments.
"Count on my friendship and the affection of all Venezuela," Chavez told Santos. "I will never stop regretting how relations ended with the outgoing government."
Among a series of accords between the pair including setting up a cross-border security committee, Venezuela agreed to pay debts owed to Colombian exporters, Santos said. That debt is estimated at about $800 million.
At the heart of the latest fight were Bogota's allegations that Chavez, a left-wing foe of Washington, harbors Colombian guerrillas, and Venezuelan complaints about a Colombian deal to give U.S. troops more access to military bases.
Those issues and ideological differences remain difficult to resolve in the short term, and Santos was careful to stress that the reconciliation should progress "slowly but firmly."
Markets have largely shrugged off the spat as rhetoric, but investors are applauding any resumption of trade.
In statements and responses to questions from reporters in Santa Marta, the pair brushed aside the base issue, but Chavez vowed not to allow Colombian rebels in Venezuela.
Santos, a U.S.- and British-educated economist elected in June, has clashed before with Chavez, a Cuba ally who says his homespun revolution in Venezuela is inspired by Bolivar.
The pair chose Santa Marta, a port town on the Caribbean sea, for its symbolism. The Venezuelan-born Bolivar died there after his long fight to free the region from Spanish rule.
PRAGMATISM OVER POLITICS
Santos has appeared to take a more pragmatic approach to relations with Venezuela than his predecessor, Alvaro Uribe. Chavez stands to benefit from better trade ties to boost his popularity before legislative elections in September.
Venezuela should gain cheap food imports from Colombia as it tries to control high inflation, and Colombia will restore some trade with its traditional No. 2 commercial partner.
"Deeper differences between the two governments, including over ideology and attitudes to the United States, will not simply disappear," said analyst Christian Voelkel with IHS Global Insights risk consultants.
News of the meeting and possibilities that trade could be restored helped push up Colombia's peso currency in trading on Monday after the talks were announced by both governments.
Colombia's long guerrilla conflict has often spilled over the Venezuelan border, where kidnappings and drug trafficking are common. Chavez has complained that Colombia's military is not doing enough to secure the frontier.
But Chavez's ideological affinity with Colombia's Marxist FARC rebels has led Washington and Bogota to accuse him of supporting the guerrillas. The former paratrooper dismisses the charges as U.S.-backed propaganda.
"The government that I direct does not support, does not permit and will not permit the presence of guerrillas, or terrorists or drug traffickers," Chavez said.
Andean tensions have run high since 2008 when Colombian troops attacked a FARC rebel base hidden over the border in Ecuador. Quito and Caracas warned of war and sent troops to the border area before a regional summit defused tensions.
The most recent squabbling came after Colombia signed a deal giving U.S. troops more access to its bases for anti-narcotics and counterinsurgency efforts. Chavez accused Bogota of working with Washington to undermine his government.
Chavez broke off ties again with Colombia last month after Uribe accused him of harboring more than 1,000 leftist Colombian FARC rebels on his territory.