When Venezuela's Taoist Defense Minister, Raul Baduel, met his U.S. counterpart last month, he produced a characteristically meditative solution to ill-feeling between Washington and Caracas.

A fine cigar.

Donald Rumsfeld demurred, protesting his wife would not let him smoke. But makers of Venezuelan cigars insist Rumsfeld missed a little-known treat by not sampling tobaccos they reckon can compete with the big names from Cuba.

"Why should Venezuela be known for oil and pretty Miss Worlds but not for a good cigar?" said Miguel Patino, president of the Bermudez tobacco factory in the tuna-canning port of Cumana, the first colonial city in South America.

His workshops, set among the bright yellow and blue facades of the old town, are humid hives of activity perfused with aromas ranging from bitter peat to chocolate.

His 60 employees, mainly women, roll out leaves and guillotine cigars into shape under the beat of ceiling fans.

"Cuban tobacco is a myth to me. There are three, four or five very good brands but the other 30 or 40 are very bad or mediocre. We have some tobaccos that can compete with the good ones," he said.

Venezuelan cigars offer a legal taste of the Caribbean to U.S. citizens, who are forbidden from buying cigars from communist Cuba. Despite President Hugo Chavez's rhetorical battles with Washington, there is no tobacco embargo.

Prussian naturalist Alexander von Humboldt, pioneer of natural history in South America, shared some of Patino's belief in the potential of Venezuelan tobacco, collecting seeds in the early 19th century.

But since then, the industry has never rivaled that of Caribbean neighbors and very few Venezuelan cigars are sold in the United States.

Venezuela has relied on oil for export income and has let high-quality crops such as cocoa and coffee fall by the wayside. The story with tobacco is similar.

Almost all Venezuelan cigars cater to the internal market, where visitors are sometimes startled by the rural Venezuelan habit of popping the lit end into your mouth.

The custom is believed to have started with washerwomen trying not to get ash on clothes or spatter the lit tip. But some Venezuelans insist the practice has its origins in staving off witches or hunger.

However, a U.S. entrepreneur found in the late 1990s that there was plenty of potential for introducing Venezuelan cigars to foreigners who would smoke them the normal way.

COMING HOME

New York lawyer Michael DeLisa, whose Venezuelan grandmother rolled cigars, set up a factory in Cumana in 1997, exporting the vast majority of his annual output, as well as other brands from Cumana, such as "Crispin Patino" from the Bermudez factory. Other brands included "Don Quijote" and "La Cumanesa."

There was little trouble finding buyers. "In our first five days, we had the whole year's output committed," DeLisa said.

The main challenge in exporting Venezuelan cigars was strengthening the taste. "The palate here is very much lighter, it does not match our export markets," DeLisa told Reuters in Caracas.

DeLisa says he moved production from private homes where women rolled cigars into a factory environment where training could be offered.

But he had a contractual spat with Patino and said he became jaded with Cumana, and has now shifted his project to Venezuela's Caribbean island of Margarita.

He also said he stirred resentment from the established tobacco houses in Cumana by trying to pay wages comfortably above what women would get from working at home.

On leaving Cumana, DeLisa concentrated on his sideline as a boxing historian, writing "Cinderella Man," which was turned into a film last year with Russell Crowe as 1930s heavyweight champion James Braddock.

However, he is now back setting up a workshop on Margarita, bringing in Cuban workers to train up a work force more isolated from the infighting in Cumana, and forecasts this should crank output up to 1 million cigars a day.

Venezuelan cigars will make a return to the U.S. market when DeLisa's "Don Sebastian" are launched in Miami, where the Latin American emigres have a strong appetite for "puros."

In Cumana, Patino said he no longer has a foothold in the U.S market, reaching only Spain and Germany outside Latin America. Despite this, he still exports more than 70 percent of the 4,000 boxes he sells each year.

Still, should you be after a Venezuelan cigar today, your best bet is to head to a big Las Vegas boxing fixture where DeLisa has crossed over the two interests in his life.

At ring sides there is already a scramble for his "Champion Cigars."