By Walker Simon

NEW YORK, Oct 22 (Reuters) - Venezuelan President Hugo Chavez is poised to score a public relations victory in Latin America if the U.S. Congress fails to approve free-trade pacts in the region, a top State Department official said on Monday.

Failure by Congress to ratify trade pacts with Peru, Colombia and Panama would spark a crisis in U.S. relations with Latin America, which Chavez, a U.S. adversary, would turn to his advantage, U.S. Undersecretary of State for Political Affairs Nicholas Burns told reporters.

"If we turn away (from approving the pacts), it's going to embolden someone like Hugo Chavez that he can make hay out of that crisis," said Burns. "We certainly don't want to see someone like Chavez gain a public relations benefit if it doesn't get through, that's surely what he'll try to do."

Chavez blames U.S.-backed free-market policies for increasing poverty in Latin America. He has promoted his leftist Bolivarian Alternative for the Americas, of which Cuba, Venezuela, Bolivia and Nicaragua are members.

Burns, who spoke to reporters after a speech to Wall Street investors, was the latest Bush administration official to step up rhetorical pressure on Congress to approve the pacts.

The deal with Colombia is the most controversial. Democrats threaten to block it on concerns over anti-union violence and killings by illegal paramilitaries.

The AFL-CIO labor federation has fiercely opposed the trade agreement with Colombia, which it has called the most dangerous country in the world for unions. It has accused President Alvaro Uribe's government of failing to aggressively prosecute hundreds of cases of murdered labor unionists.

Burns said the Colombian government had made strides in reducing violence and added that Washington had encouraged Colombia to speed up bringing to trial cases of human rights abuses by the military and the demobilizing of paramilitary forces.

Colombia is one of the top five recipients of U.S. aid, having drawn about $5 billion in aid since 2000, he said.

"Colombia has already been the closest country to the United States in the hemisphere in terms of assistance in terms of counterterrorism and counternarcotics," he said.

"What's the message if we turn away from free trade, that the country that is closest to the United States can't get a free-trade agreement with the country?" he asked.

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