“We will triple trade between Israel and Brazil by 2015” Paulo Skaf, president of the Federation of Industries of the State of Sao Paulo, said at a conference in Jerusalem attended by the Brazilian president, Israeli President Shimon Peres and a group of Israeli and Brazilian business leaders.  Brazil is Israel’s largest trading partner in Latin America, with a number of large Israeli companies already exporting to Brazil.

Lula da Silva, whose main goal of this visit is to promote Middle East peace and diplomacy over Iran’s nuclear program, urged Israeli businesses to invest in Brazil, citing the country as one of the fastest growing in the world coming out of the downturn with growth of more than 5% forecast for 2010.

“I am launching a new investment plan in soon and I invite Israeli companies to take an active and significant part. Israel is known for its strong capabilities in technology and science. Thus, we encourage intensive cooperation with Israel.”

Earlier, the Brazilian leader had announced to President Peres that Brazil had given its final approval for a free trade agreement between Israel and the Mercosur bloc - Brazil, Argentina, Paraguay and Uruguay. Israel is the first country outside South America to sign a free trade agreement with the bloc.

BRASÍLIA — Brazil’s ambitions to be a more important player on the global diplomatic stage are crashing headlong into the efforts of the United States and other Western powers to rein in Iran’s nuclear arms program.

President Luiz Inácio Lula da Silva said Monday that the world needed to engage, not isolate, Iran, and he defended Iran’s right to develop nuclear energy for peaceful purposes, so long as there was “clear respect for international agreements.”

Mr. da Silva made his comments as he hosted President Mahmoud Ahmadinejad of Iran in the first visit to Brazil by an Iranian leader since Shah Mohammad Reza Pahlavi visited in 1965.

 The visit is part of a larger push by Mr. da Silva to wade into the seemingly intractable world of Middle East politics, and follows visits in the last two weeks by Israel’s president, Shimon Peres, and Mahmoud Abbas, president of the Palestinian Authority.

But the visit is drawing criticism from lawmakers and former diplomats here and in the United States, who say it could undercut Western efforts to press Iran on its nuclear program, and consequently chill Brazil’s relations with the United States and damage its growing reputation as a global power.

Brazilian officials say the goal of the visit is to strengthen commercial ties between the two countries and help bring peace to the Middle East.

“This is part of Brazil projecting its role and strength as a global player,” said Michael Shifter, vice president of the Inter-American Dialogue, a policy research group in Washington. “And part of this has to do with Brazil sending a message to Washington that it will deal whomever it wants to deal with.”

And beyond the nuclear standoff, critics in Brazil and the United States say Mr. da Silva’s reception legitimizes Mr. Ahmadinejad just five months after what most of the world sees as his fraudulent re-election, followed by a brutal crackdown on dissent.

“This state visit is a gross error, a terrible mistake,” said Representative Eliot L. Engel, Democrat of New York, chairman of the House Subcommittee on the Western Hemisphere. “He is illegitimate with his own people, and Brazil is now going to give him the air of legitimacy at a time when the world is trying to figure out how to prevent Iran from having nuclear weapons. It makes no sense to me, and it tarnishes the image of Brazil, quite frankly.”

Relations between the United States and Brazil were already tense after Mr. da Silva’s government criticized the United States over its handling of the crisis in Honduras and increasing its military presence in Colombia.

But Mr. da Silva’s overture to Iran is consistent with President Obama’s policy of engagement, and the Obama administration says it is optimistic that the meeting will not damage and at best could reinforce the efforts already under way by Washington and European powers to deal with Iran.

“We would hope that all our friends and allies would understand that this is really a critical moment for Iran itself,” Ian C. Kelly, a State Department spokesman, said Thursday. “We would hope that Brazil would play a constructive role in trying to get Iran to do the right thing and fulfill its international obligations.”

Celso Amorim, Brazil’s foreign minister, said Mr. da Silva was encouraged by Western leaders, including President Obama, to seek a “direct and open dialogue” with Iran, in particular on the nuclear issue.

“It was said and reiterated that it was in the interest of Western nations that Brazil has a good interface with Iran,” Mr. Amorim said in an interview.

Brazilian officials said Mr. da Silva would try to sell Iran on the benefits of a Brazilian-style nuclear program, which is constitutionally limited to civilian use.

But Mr. Amorim made clear that Brazil did not see its role as carrying water for the proposed agreement for Iran to export most of its enriched uranium for processing into nuclear fuel.

“We are not here to convince Iran to accept some proposal,” he said. “Brazil is interested in peace.”

Since his election in 2002, Mr. da Silva has sought to cement Brazil’s dominance as Latin America’s economic and diplomatic leader, using its economic might to raise Brazil’s foreign-policy profile.

His government has also lobbied for a permanent seat on the United Nations Security Council and has become a respected voice in world climate change discussions. In recent months, he has added Middle Eastern diplomacy to his portfolio.

Brazil is no stranger to the region. Its national oil company, Petrobras, is helping Iran develop its oil fields and the two countries did about $2 billion in trade in 2007, mostly in Brazilian exports of food to Iran, Mr. Amorim said.

Brazil joined United Nations peacekeeping missions in Egypt after the 1956 Suez Crisis and has been involved in the Middle East ever since, said David Fleischer, a political science professor at the University of Brasília.

“Brazil is just starting to realize the weight it has,” Mr. Amorim said. “It wasn’t Brazil that went looking for the Middle East, it was the Middle East that went looking for Brazil.”

Brazilian officials say the holy grail of Mr. da Silva’s Middle Eastern initiative is to improve relations between Israel and the Palestinians, and they see Iran as a key player in resolving the conflict.

Success in this endeavor “would really put Brazil on the map and might put Lula in line for the Nobel Prize,” Mr. Fleischer said.

But it would have been difficult to have chosen a more formidable or polarizing quest. Many critics do not see Mr. Ahmadinejad — who has denied the Holocaust, called for Israel to be wiped off the map and backs anti-Israel militias — as a constructive force in the Middle East.

More than 1,500 people protested his visit this month in São Paulo, home to Brazil’s largest Jewish community, and a smaller protest took place on Sunday in Rio de Janeiro. Another is planned for Brasília on Monday.

It is not only the Israeli side that is leery of Mr. Ahmadinejad. Mr. Abbas, the Palestinian leader, said after meeting Mr. da Silva in Brazil on Friday that he had asked him to urge Iran to end its support for Hamas, the radical Islamist movement that controls Gaza.

But both Mr. Abbas and Mr. Peres urged Mr. da Silva to join the Middle East peace process. “Brazil, as an important country, and President Lula, as a respected leader, can play an important role,” Mr. Abbas told the newspaper Folha de São Paulo.

Some political analysts and American officials say that in his effort to burnish his credentials as a statesman, Mr. da Silva is marching to his own drummer rather than cooperating with allies to achieve larger geopolitical goals.

“As Brazil becomes more relevant on climate change and in world economic forums it is not going to be able to so openly criticize or be antagonistic with other major powers without paying a political price for it,” said Christopher Garman, an analyst with Eurasia Group, a political risk consultancy in New York. “Brazilian policy makers will no longer be able to have their cake and eat it too.”

But a diplomatic success would go a long way toward muting the criticism.

“Brazil should expect criticism for hosting Ahmadinejad to be sure,” said Julia E. Sweig, a Latin America expert at the Council on Foreign Relations. “But if it can play a moderating role — and clearly Washington is hoping as much — on the nuclear issue, it can surely deal with the critics.”