U.S. ACCUSES VENEZUELAN OFFICIALS IN DRUG CASE

ELORZA, Venezuela -- The U.S. government, ratcheting up a diplomatic
crisis with one of its leading suppliers of crude oil, placed
sanctions on several high-ranking Venezuelan officials Friday,
accusing them of aiding the drug trafficking of Colombia's main guerrilla army.

The Treasury Department said it would freeze financial assets and bar
any business dealings with three key aides to Venezuelan President
Hugo Chavez, including two intelligence officials and the former
interior and justice minister.

"Today's designation exposes two senior Venezuelan government
officials and one former official who armed, abetted and funded the
FARC [Revolutionary Armed Forces of Colombia], even as it terrorized
and kidnapped innocents," said Adam J. Szubin, director of the
Treasury's Office of Foreign Assets Control.

The U.S. move escalates a fast-growing diplomatic confrontation
between Washington and a small bloc of anti-U.S. governments in the
region that are led by Mr. Chavez's Venezuela and include Bolivia,
Ecuador, Nicaragua and Honduras.

Thursday, Mr. Chavez accused the U.S. of planning his overthrow and,
amid a hail of vulgar insults, ordered U.S. ambassador Patrick Duddy
to leave the country within 72 hours. That followed a similar move
Wednesday by Bolivian President Evo Morales, who kicked out U.S.
ambassador Philip Goldberg after accusing him of fomenting a
separatist movement in eastern Bolivia. On Friday, Honduras said it
would indefinitely postpone allowing the U.S. ambassador there to
present his credentials out of solidarity with Venezuela and Bolivia.

State Department spokesman Sean McCormack condemned the expulsions
and added: "The charges leveled against our fine ambassadors by the
leaders of Bolivia and Venezuela are false -- and the leaders of
those countries know it."

Mr. Chavez is using the deepening confrontation to renew threats to
cut off oil shipments. Thursday, he said the price of crude would
double to $200 a barrel if he decided to end exports to the U.S.
Analysts said they doubted Mr. Chavez would carry out his threats,
because his government needs the oil revenue more than the U.S. needs the oil.

Relations between the U.S. and much of Latin America have festered
during the Bush administration, mostly because of regional opposition
to the Iraq war and the rise of populist governments antagonistic to
traditional U.S. influence in the region. But relations took a sharp
turn for the worse in recent days and weeks. Tensions began rising
anew when Mr. Chavez and his left-wing allies all took Russia's side
in its recent intervention in Georgia, and Venezuela further angered
Washington by allowing two Russian long-range bombers to land in Venezuela.

Mr. Chavez's rhetoric and actions have diverted attention from
mounting evidence this year that his government is tightly allied to
the FARC, which has been trying to overthrow the Colombian government
for five decades and is designated as a terrorist organization by the
U.S. and European Union. Earlier this year, files found in the
computer of a dead guerrilla chief suggested the rebels were being
financed and possibly armed by Mr. Chavez's government.

Evidence from the laptops has added to other intelligence from the
U.S. government that suggests the collaboration went beyond money and
weapons and extended into the drugs trade. A U.S. intelligence
document reviewed by The Wall Street Journal, for instance, says that
Gen. Hugo Armando Carvajal Barrios, the head of Venezuela's military
intelligence, protected a three-ton cocaine shipment from the FARC
that was found last September in the Venezuelan port of Puerto La Cruz.

The Treasury action Friday targeted Gen. Carvajal along with Henry de
Jesus Rangel Silva, the head of Venezuela's overall intelligence
agency, and Ramon Emilio Rodriguez Chacin, interior and justice
minister until last week.

The Treasury Department said Friday that Gen. Carvajal also had
helped to provide the FARC with Venezuelan identity documents to make
it easy for guerrillas to cross the Colombian-Venezuelan border. It
also said Mr. Rodriguez Chacin was the "main weapons contact for the
FARC" in Venezuela's government and tried to arrange a $250 million
loan for the group.

Venezuelan government officials didn't respond to the U.S.
accusations Friday. Attempts to reach government agencies were unsuccessful.

U.S. officials said they didn't believe this week's expulsion of the
envoys was related to the imminent U.S. sanctions, which had been in
the works for weeks. Rather, U.S. officials say the expulsions were
related to domestic politics in both Venezuela and Bolivia. In
Bolivia, President Morales is facing a growing protest movement from
eastern provinces that oppose his plans to push through a new
constitution, and Mr. Chavez faces local elections in November amid
rising prices, rampant crime and other problems.

"We view this as a form of diplomatic and political panic -- a way of
trying to push off blame for their own internal situation on to an
external actor," said a senior U.S. official.

Bolivia appears on the brink of serious political bloodshed. At least
eight people were killed in protests Thursday against the
government's proposed constitution, which would restrict the money
the eastern provinces receive from the production of gas and soy exports.

The expulsion of the U.S. ambassador by Mr. Morales inflamed his
opponents, who view his anti-Americanism as a self-defeating parody
of Mr. Chavez's brand of populist politics. Mr. Chavez promised
Thursday to arm insurgents in Bolivia if the government falls,
underscoring the degree to which Mr. Chavez intervenes in Bolivian
life. Mr. Morales, for example, regularly hands out checks to mayors
from a personal fund provided by Venezuela.

As far as Venezuela goes, Mr. Chavez has his own problems. In
November, the populist leader faces gubernatorial, legislative and
municipal elections where, analysts say they believe, he might lose
as many as 10 of the country's 23 states as well as the country's
most important cities, including the capital, Caracas. Such a defeat
would shatter the virtual lock Mr. Chavez enjoys today in the
country's politics, where he controls 21 of 23 states, all of the
seats in the country's national assembly and all but a handful of the
country's city halls.

Analysts say Mr. Chavez has helped to ramp up the crisis with his
favorite ideological enemy in a bid to distract Venezuelan voters and
energize his base ahead of the vote. "True, it may excite his
hard-core supporters ... but many Chavez backers will be quite uneasy
and critical of this clearly disproportionate, self-defeating move,"
said Michael Shifter, vice president for policy at the Inter-American
Dialogue, a Washington-based think tank.

While Mr. Chavez regularly accuses the U.S. of plotting to kill him,
the latest accusations were even more colorful than usual. Among
other things, Mr. Chavez said U.S. planes marked with Venezuelan
colors were set to bomb the presidential palace of Miraflores, an
echo of the failed 1961 Central Intelligence Agency-backed attempt to
overthrow Mr. Chavez's ideological inspiration, longtime Cuban
dictator Fidel Castro.

Friday's announcement of sanctions comes after increasing U.S.
frustration with Venezuela over the war on drugs. Last week, U.S.
anti-drug czar John Walters said Venezuela was increasingly being
used as a key transit point for cocaine shipments from Colombia's
rebels headed either to Europe or to the U.S. East Coast.

"There's an utter lack of effort by the Venezuelans to deal with the
problem," Mr. Walters said in a recent interview. He said that
cocaine shipments from Venezuela had risen 500% in the past five
years from an estimated 51 metric tons in 2002 to 256 metric tons in 2007.

Most of the cocaine coming from Venezuela originates with Colombia's
FARC guerrillas, who Colombian intelligence analysts believe have
more than 1,000 members inside of Venezuela. Last year, Mr. Chavez
took up the cause of the FARC and pushed hard to get diplomatic
recognition for the guerrillas. Colombian authorities estimate the
FARC earn from $300 million to $600 million a year from their control
of the cocaine trade.

In March, Colombian authorities recovered a treasure trove of data
from the computers of Raul Reyes, a FARC leader killed in a
cross-border raid in Ecuador. The documents found in Mr. Reyes's
computers drew a disturbing picture showing a close alliance with
Venezuela. In particular, Mr. Chacin and Gen. Carvajal appear to have
played major roles in building the alliance.