By Mohammed Abbas
LONDON (Reuters) - Latin America has condemned Britain's threat to lift diplomatic protection from Ecuador's embassy to arrest WikiLeaks founder Julian Assange, yet the damage to London's reputation is unlikely to endure, with Brazil key to where the row goes next.
The spat over Assange, who has been holed up in Ecuador's London embassy since June, has come at a bad time for Britain, which is increasingly looking to fast-growing Latin America for commercial opportunities as Europe struggles with debt crises.
Britain has trumpeted its push to "think afresh about Latin America and the opportunities it presents", but has twice been accused of colonial arrogance this year by Latin American states who have garnered strong support from regional allies.
Argentina decries Britain's claim over the Falkland Islands, which Buenos Aires calls the Malvinas, and now Latin American states have rallied behind Ecuador, which accuses "colonial" London of expecting Quito to "kneel" before it.
Britain could scarcely have chosen a more emotive issue on which to challenge a Latin American state. The practice of taking refuge in a foreign embassy has a long history in the region, and diplomatic inviolability is a major taboo.
"I think both the Falklands/Malvinas issue and the Assange issue have undermined the image of Britain in Latin America," said Francisco Panizza, head of Latin American International Affairs research at the London School of Economics.
"It's reputational damage if you want, but at the moment it's contained and I don't think (the) countries of Latin America, except in the very unlikely situation Britain invades the Ecuadorean embassy, will try to exacerbate tensions," he added.
Assange is resisting extradition to Sweden, where he is wanted for questioning on rape allegations, because he says he fears Stockholm will send him on to the United States which remains furious over WikiLeaks' release of classified U.S. diplomatic and military documents.
But Britain says it is legally obliged to extradite Assange, and last week threatened to lift the Ecuadorean embassy's diplomatic protection to arrest him.
Quito was incensed and granted Assange asylum.
Leftist Ecuadorean President Rafael Correa has painted his small country's row with Britain as a David vs Goliath battle, and on Sunday foreign ministers from the Unasur bloc of South American states backed Ecuador's right to grant Assange asylum.
But while some Latin American states might subscribe to Ecuador's accusations of British colonialism - notably leftist leaders Venezuelan President Hugo Chavez and Bolivian President Evo Morales - others in the region have a more nuanced outlook.
For them, it was Britain's threat to enter Ecuador's embassy that was objectionable, and nothing more. For others, taking part in a show of Latin American solidarity may be more important than misgivings over Britain's behavior.
"There are times when you have to support your neighbors, even if you perhaps have a few reservations about it, knowing that next time round they will support you," said Victor Bulmer-Thomas of London's Chatham House foreign affairs think tank.
"There's nothing here in the Assange case up to now that has done serious damage to Britain's position in the region. No one is going to be cancelling oil contracts or anything else just because of this," he added.
Some of the fury may also be fuelled by a desire to poke the United States in the eye. Many Latin American states see their northern neighbor as overbearing and exploitative.
Assange accuses Washington of a "witch-hunt" after WikiLeaks' publication of sensitive U.S. diplomatic cables, and fears re-extradition to the United States should Britain send him to Sweden. Washington says it has no interest in the matter.
"That's the semi-voiced agenda .... it is a bit of U.S. bashing for sure," said James Dunkerley, Latin American politics specialist at Queen Mary, University of London.
Foreign ministers from across the American continent are due to convene a meeting of the Organization of American States on Friday in Washington to discuss the impasse over Assange.
Key to whether the spat escalates will be Latin American heavyweight Brazil, and all the indications so far are that it is keen to defuse the row as quickly as possible.
"We're going to stay quiet on this one," a senior Brazilian government official told Reuters on condition of anonymity, adding that Brazil would only raise the diplomatic temperature if Britain entered Ecuador's embassy.
"Our interest in the sovereignty issue is obvious", the official added, highlighting the fact that Brazil's embassy in the Bolivian capital La Paz has given refuge to a Bolivian opposition politician since June.
Brazil, an emerging global power which is due to host the soccer World Cup in 2014 and the Olympics in 2016, is pushing to become a permanent member of the U.N. Security Council - a move Britain backs - and has burgeoning trade links with the West.
"The Brazilians are the most important regional player at the moment, and they want this to go away," Dunkerley said.
"You're going to host the World Cup, the Olympics, you've just had your head of state over with the British, relations are generally good. Why complicate life further?," he added.
(Additional reporting by Brian Winter in Sao Paulo and Estelle Shirbon in London; Editing by Andrew Osborn)