(Drops extraneous word in paragraph 2)
* U.S. says Chavez aides helped smuggle drugs
* Dispute raises specter of oil supply cutoff
* Bolivia and Honduras also take action against U.S.
By Frank Jack Daniel and Arshad Mohammed
CARACAS/WASHINGTON, Sept 12 The United States
on Friday imposed sanctions on Venezuelan officials it accused
of helping Colombian rebels smuggle drugs, deepening a
diplomatic crisis that raised the specter of an oil supply
The U.S. Treasury Department said Venezuela's top two
intelligence chiefs and a recently retired interior minister
had assisted Marxist guerrillas fighting the U.S.-backed
Colombian government to traffic in cocaine and guns.
The United States banned U.S. citizens from having dealings
with the officials and froze any U.S. assets they may own.
The sanctions were announced in Washington a day after
Venezuelan President Hugo Chavez threatened to stop crude sales
to the United States and expelled the U.S. ambassador, plunging
relations to the lowest point in years.
Chavez acted after his ally Bolivian President Evo Morales
threw out the U.S. ambassador, accusing him of stirring up
protests against the leftist government.
Chavez, who calls Cuba's Fidel Castro a mentor and sees
Russia as a counterbalance to U.S. power, had warned on
Thursday that world crude prices would immediately double to
above $200 a barrel if he cuts oil to the United States.
The clash was part of a long-brewing conflict between the
United States and Latin America's bloc of left-wing leaders
antagonistic to traditional U.S. dominance in the region.
Tensions were already high after Chavez allowed two Russian
long-range bombers to land in Venezuela and took Moscow's side
in disputes over Georgia and U.S. plans for a missile shield in
Chavez ejected the U.S. ambassador to Venezuela in an
expletive-laden tirade against "Yankees" on Thursday. Honduras
weighed in on Friday, blocking a U.S. envoy from immediately
taking up his post as ambassador.
Washington said on Friday it was expelling the Venezuelan
State Department spokesman Sean McCormack denied the United
States had done anything wrong in the countries and said their
action "reflects the weakness and desperation of these leaders
as they face internal challenges."
The Treasury Department accused ex-Interior Minister Ramon
Rodriguez of being was Venezuela's main weapons contact for the
Revolutionary Armed Forces of Colombia, or FARC, and had tried
"to facilitate a $250 million dollar loan from the Venezuelan
government to the rebels in late 2007."
It accused him and Venezuela's two top intelligence chiefs
of "materially assisting the narcotics trafficking activities"
of FARC. Washington considers the FARC, which uses drug money
to fight Colombia's U.S.-allied government, a terrorist
The United States has criticized the Chavez government for
not doing enough to stop Colombian cocaine passing through its
borders on the way to U.S. and European cities.
This year, laptops found by Colombia in a rebel camp were
seized on by Washington as evidence of cooperation between
Venezuelan officials and Colombian rebels.
Chavez said he would not restore normal ties before U.S.
President George W. Bush leaves the White House in January.
It is unclear whether Chavez knew in advance that U.S.
sanctions were coming against his officials, but Rodriguez
resigned unexpectedly last weekend.
Chavez, an ex-soldier trained in a tank division, was
briefly ousted in a 2002 coup initially welcomed by Washington.
Even at that time, Chavez did not go so far as to expel the
U.S. ambassador and has been a reliable oil supplier.
(Editing by Saul Hudson and David Storey)