Luiz Inacio Lula da Silva, near right, publicly praises Hugo Chavez of Venezuela while he leads Brazil to a more prominent role.

By SIMON ROMERO and ALEXEI BARRIONUEVO

CARACAS, Venezuela - President Hugo Chavez of Venezuela and President Luiz Inacio Lula da Silva of Brazil clasped hands here at a summit meeting late last month, as employees of Venezuela’s state oil company raised their fists and shouted Cuban-inspired socialist slogans before the cameras.
It was an image of solidarity that might once have alarmed Washington, which has seen the United States’ standing steadily eroded by a shift toward left-leaning, populist leaders across the region in the last decade.
But the carefully orchestrated event disguised a more recent turn in Latin America that presents new opportunities for the United States: Mr. da Silva has steadily distanced himself from Venezuela’s leader and quietly supplanted him as he nurtures Brazil into a regional powerhouse.
Today the two leaders, often partners but sometimes rivals, offer starkly different paths toward development, and it is Brazil’s milder and more pragmatic approach that appears ascendant. Amid the decline of American influence in the region, the Brazilian president is discreetly outflanking Mr. Chavez at almost every turn in the struggle for leadership in South America.
The key to Brazil’s success has been a lucky confluence of global economic trends, like rising demand for commodities like soybeans and sugar-based ethanol, but also the quiet stewardship of Mr. da Silva, a former auto plant worker. He has raised Brazil’s profile across the region in part by adopting a less confrontational approach to Mr. Chavez than that of the United States.
Instead of publicly denouncing Mr. Chavez, even when he has threatened Brazilian interests, Mr. da Silva taps into the kinship of the left and lavishes praise on him. Mr. da Silva went so far as to describe Mr. Chavez recently in the German magazine Der Spiegel as Venezuela’s “best president in a century.
“The pragmatic side of Lula, the union leader who was always a negotiator, has paid off,’’ said Kenneth Maxwell, a historian at Harvard University and a columnist for the Brazilian newspaper Folha de Sao Paulo.
“While Chavez grabs the headlines, the debate over whether Brazil is becoming a regional power is moot, he said. “Brazil has actually made it to that level, but in a very nonbombastic way.
Venezuela’s most pervasive influence remains limited to a handful of the region’s poorest nations - Bolivia, Cuba, Dominica and Nicaragua - members of ALBA, a trade alliance championed by Mr. Chavez. Meanwhile, Mr. da Silva’s unexpected embrace of the market-friendly ideas begun by his predecessor, Fernando Henrique Cardoso, has emphasized how heterogeneous political thinking has become in Latin America, even on the left.
While Mr. Chavez turned harder to the left after his brief ouster in 2002, Mr. da Silva shifted to the center once in power, surprising many skeptics. His lighter touch has warmed Brazil’s relations with countries as varied as Cuba, the Socialist bastion to which Venezuela provides a lifeline of subsidized oil, and Colombia, a top United States military ally whose relations with Venezuela have been strained in recent months.
In June, Brazil’s foreign minister, Celso Amorim, declared during a visit to Havana that Brazil wanted to extend credits for Cuba to import Brazilian agricultural products in hope of surpassing Venezuela as Cuba’s top partner. In Colombia, Brazilian investors recently took control of Avianca, Colombia’s largest airline.
Venezuela itself has grown more economically dependent on Brazil. Last month Brazilian agribusiness concerns forged deals to export more food to Venezuela, exploiting the persistent shortages in Venezuela’s economy caused by mismanagement and price controls.
In some countries where Venezuela and Brazil have emerged as rivals, like Bolivia, Mr. Chavez still has the upper hand. Bolivia, Brazil’s chief natural gas supplier, shocked Brazil in 2006 by nationalizing the energy industry, with Venezuela’s help. Last December, Mr. da Silva tried to enhance Brazil’s stature in Bolivia, South America’s poorest country, by extending a $600 million credit line for infrastructure projects there.
Meanwhile, Brazil’s trade surplus with the 11 other countries forming the Latin American Integration Association climbed to $16 billion in 2007 from $1.7 billion in 2002 .
Brazil hosted leaders of 12 South American nations in May to create Unasur, a continental bloc modeled on the European Union that unites the region’s two main trading groups, Mercosur and the Andean Community.
Brazil’s energy discoveries have also challenged Venezuela’s power. Mr. Chavez seemed particularly shaken last November by new estimates of the magnitude of an oil field off Brazil’s southeastern coast, known as the Tupi field. That find led Mr. da Silva to announce plans to join the Organization of the Petroleum Exporting Countries in a few years. Venezuela has long been Latin America’s main representative there.
In the security realm, Mr. Chavez was upstaged on July 2 when the Colombian military executed a rescue of 15 hostages, among them three American military contractors and Ingrid Betancourt, a former Colombian presidential candidate who was considered a key bargaining chip for the rebel group known as FARC.
The Venezuelan leader has successfully negotiated with the FARC for the release of six hostages since January. But his own ties with the group have come under such scrutiny that he has found himself calling for the FARC to give up its armed struggle.
Despite all of Brazil’s accomplishments in surging ahead of Venezuela in Latin America, Mr. da Silva has eschewed being labeled a leader in the region. “We are not trying to find a leader in Latin America, he said in a September interview. “We don’t need a leader. I am not worried about being the leader of anything. What want is to govern my country well.