Hugo Chávez and Evo Morales, the presidents of Venezuela and Bolivia who are leading Latin America's radical turn to the left, angrily faced down EU leaders at a trade summit in Vienna today.

The two leaders, both advocates of close national control of their enormous oil and gas resources, were the most controversial of the representatives of 58 Latin American and European nations attending today's meeting, where the EU sought reassurances about Señor Morales's intention to re-nationalise the Bolivian oil and gas industry and Señor Chavez's opposition to market reforms.

They lived up to their billing, saying free trade and "neoliberal" economic policies undertaken over the last 20 years in Latin America had done little to lift millions of Bolivians and Venezuelans out of poverty.

"Neoliberalism has begun its decline and has come to an end," Señor Chavez told reporters at the summit. "Now a new era has begun in Latin America. Some call it populism, trying to disfigure our beauty. But it is the... voice of the people that is being heard."

The combative tone of Señores Chavez and Morales drew delicate rebukes from EU leaders, who had hoped to use the summit to enhance the rapid growth of trade with Latin America.

Although he refused to mention any country by name, the European Commission President, Jose Manuel Barroso, said: "We are a Europe against populist tendencies."

Tony Blair, whom Señor Chavez has called the "main ally to Hitler" for his support of President George Bush and the war in Iraq, was more explicit, asking the two leaders to act responsibly.

"What countries do in their energy policy when they are energy producers like Bolivia and Venezuela matters enormously to all of us," he said. "My only plea is that people exercise the power they have got in this regard responsibly for the whole of the international community."

Since coming to power in December, Señor Morales has openly set about wooing China, South Africa and Iran as alternatives to traditional trading partners in Europe and North America.

In May, he caused enormous consternation by promising to re-nationalise Bolivia's energy industry in the next six months and yesterday he unsettled the summit by saying that foreign companies that had recouped their original investments in Bolivia would not be compensated when the state occupied their plants.

For his part, Señor Chávez, whose guest at the meeting was Aleida Guevara, a daughter of Che Guevara, says he is building an "axis of good" to oppose the US.

Although the tense exchanges between Señores Chavez and Morales and their European counterparts dominated the summit, they masked a general inertia that made any trade breakthroughs unlikely.

Trade between the EU and Latin America has doubled since 1990, last year reaching reached €130 billion, with European cars and electrical goods heading West in return for fruit, vegetables, iron, steel and oil. The EU is now the largest trading partner with Latin America after the US.

But dogged disagreements between Latin American leaders and the EU's refusal to open up its agriculture market to Mercosur, the free-trade group that includes Brazil, Argentina, Paraguay and Uruguay, have stalled any chances of further progress.

Long-running tensions within the five-nation Andean Community, which comprises Colombia, Peru and Ecuador alongside Venezuela and Bolivia, also stymied talks today. Señores Chávez and Morales are threatening to pull out of the group because the other members are all negotiating free trade deals with the US.

Times Recommends

• Michael Jackson: Not the final chapter
• Indian Army spends10m rupees on golf buggies
• Brüno toned down for 15 rating