Washington banned all US arms sales to Venezuela today, citing the major oil supplier's lack of help in the fight against terrorism, a State Department official said.
The move comes after years of antagonism between leftist Venezuelan President Hugo Chavez and Washington on issues ranging from trade to oil prices that have dragged relations to their worst state in decades.
The US is concerned about Mr Chavez's friendly relationship with Cuba and Iran, two countries it says sponsor terrorism, and his failure to stop Colombian leftist guerrillas using Venezuelan territory, the US official, who was not authorized to speak for the record, said.
The US decided to punish Venezuela by adding it to a blacklist of countries who are considered to "not fully cooperate" against terrorism.
Hours earlier, the State Department announced it was restoring full diplomatic ties with oil-producing Libya, rewarding the long-time pariah nation for scrapping its weapons of mass destruction programs.
The arms ban means the United States prohibits all military sales to the South American country and prevents any re-sales of US arms and technology from other nations, the official said.
It extends a practice of opposing third countries making sales to Venezuela that the United States has been using increasingly in recent months.
Venezuela, one of the world's top oil exporters, has warned for months the United States would move against it over terrorism but says it cooperates with Colombia against guerrillas and denies its ties with US foes mean that it helps militants.
The US official said the Bush administration considers "the Venezuelan government showed a near total lack of cooperation with anti-terrorism efforts last year."
Pete Hoekstra, a Michigan Republican, who chairs the House Permanent Select Committee on Republican Intelligence, said in a statement: "The hostility shown by the Venezuelan leadership towards the United States along with its efforts to sow totalitarianism in the hemisphere, at the expense of the Venezuelan people, should be alarming to everyone."