Colombia rebels not terrorists: Chavez

By Frank Jack Daniel

CARACAS (Reuters) - Venezuela's leftist President Hugo Chavez on Friday urged world governments to label Colombia's cocaine-funded Marxist guerrillas insurgents instead of terrorists, a day after rebels freed two women hostages.

Colombia's interior minister immediately denounced the call to meet a major rebel demand as "completely off-the-wall."

Chavez, who brokered the rare hostage release, said the rebel fighters, the FARC and ELN, "are not terrorist groups, they are armies, real armies that occupy space in Colombia."

Colombia's conservative President Alvaro Uribe later issued a statement saying the insurgents are indeed terrorists who fund their operations with cocaine smuggling, recruit children and plant land mines in their effort to topple a democratically elected government.

The FARC and ELN use kidnapping as a weapon in their decades-long war on the state. Along with right-wing paramilitary, they are self-financed through involvement in the Andean nation's multibillion-dollar narcotics trade.

"I ask you (Uribe) that we start recognizing the FARC and the ELN as insurgent forces in Colombia and not terrorist groups, and I ask the same of the governments of this continent and the world," Chavez said in his annual state of the nation speech.

Led by the United States, which funds Uribe's counterinsurgency war and has military advisers in the country, many allies of Colombia consider both groups terrorists.

"Colombia's violent groups are terrorists because the only thing they have produced is displacement, pain, unemployment and poverty," Uribe's statement said.