Photo: Iran's President Mahmoud Ahmadinejad (L) and Venezuela's President Hugo Chavez hold hands during an agreement signing ceremony at Miraflores Palace in Caracas November 25, 2009. Chavez used a visit by Ahmadinejad on Wednesday to brand Israel as a murderous agent of Washington. Chavez and Ahmadinejad, on the last leg of a tour of three left-leaning South American nations, hugged, held hands, and praised each other as fellow revolutionaries. REUTERS

Venezuela's President Hugo Chavez used a visit by Iranian President Mahmoud Ahmadinejad on Wednesday to brand Israel as a murderous agent of Washington.

Chavez and Ahmadinejad, on the last leg of a tour of three left-leaning South American nations, hugged, held hands, and praised each other as fellow revolutionaries.

The Venezuelan singled out a comment by Israeli President Shimon Peres during a visit this month to South America that his and Ahmadinejad's days in power may be numbered.

"We know what the state of Israel stands for -- a murderous arm of the Yankee empire," Chavez told joint news conference. "What the president of Israel said, we take as a threat."

Chavez broke relations with Israel this year. He won praise in the Muslim world after branding an Israeli military offensive in the Gaza Strip as genocide.

OPEC members Venezuela and Iran have grown much closer in recent years. Chavez supports Ahmadinejad's controversial nuclear program, while Iran is helping Venezuela map uranium deposits.

The two leaders signed a raft of business and industrial agreements relating to 129 joint projects that Chavez said ranged from assembling bikes and producing car-parts, to processing milk and building houses.

His trips to left-leaning Brazil, Bolivia and Venezuela this week have helped cement ties with countries that back Iran's right to develop atomic power for peaceful purposes.

"What do the imperialists say? That Ahmadinejad is here because we are making the atomic bomb here too," Chavez said.

"They're the ones with the atomic bombs, and remember the Yankee imperialists dropped bombs on Hiroshima and Nagasaki," he added, referring to the bombings of Japanese cities that ended World War II.

Venezuela is Ahmadinejad's final stop during a regional tour that earlier this week brought him to Brazil and Bolivia. He received backing from Brazil's Luiz Inacio Lula da Silva for his nuclear energy program and said he would help Bolivia certify lithium reserves.

"Brother Ahmadinejad, companion, I'd say gladiator of the anti-imperialist battles, you're an example of strength, perseverance for the freedom of your people," Chavez said in comments carried by state television.

"We're very happy to open the doors of our house to you and pleased with your tour in South America."

Venezuela, Latin America's biggest oil producer, and Iran, the second-biggest producer in the Middle East, are tightening ties as the government in Tehran faces international sanctions and Chavez seeks to escape what he calls US "hegemony" in world affairs.

Ahmadinejad, who questions the Holocaust, called the Jewish state an "illegal Zionist regime" that threatens Iran and has started seven wars during the past 60 years.

Ahmadinejad rejected Western allegations that Iran is pursuing a nuclear bomb, supports terrorism and violates human rights, saying they are lies by nations that use their armies to invade other countries and spread poverty.

Ahmadinejad gave Chavez a nano-microscope for scientific research as a gift and as proof of the technological advances in Iran. "They make bombs, we use human logic which is stronger than their bombs," he said.

The two countries have developed 129 projects and are reviewing a further 68 agreements, Chavez said. The projects include rice production, food processing plants, a cement plant, plastic injection ventures and an investment fund, he said.

The fund, with headquarters in Caracas, was inaugurated today with a starting capital of $400 million, and will climb to $1 billion at the end of 2010.

Iranian airline Mahan Air will fly direct routes between Tehran and Caracas, and the two countries will study the construction of a hydroelectric plant in Venezuela, according to agreements signed today.

“No one will part us from our path to construct a new model of development and independence," Chavez said.

"Iran is already a potent force in the world, Venezuela is on its way, to save the world from the destruction of capitalism." The two countries have already reached an agreement under which Iran will help Venezuela assess mineral resources, including uranium, gold and coltan, according to Chavez.

The two countries have a joint investment bank and are building a cement factory in Venezuela.

A joint venture makes bicycles under the "Atomic" brand in Venezuela, while other ventures make cars and tractors in the South American country.

Venezuela, Iran and Malaysia agreed in 2006 to build a $1.5 billion, 140,000 barrel-a-day oil refinery in Syria. Construction hasn't started.