Venezuela’s Chavez ends Colombia fuel subsidy

CARACAS, (Reuters) – Venezuelan President Hugo Chavez  yesterday ratcheted up a spat with Colombia over a U.S. troop  plan, ending a fuel subsidy and accusing his neighbor of a  small military incursion across the shared Orinoco River.

Persistent Washington critic Chavez is furious at a plan to  house a few hundred more U.S. troops at seven Colombian  military bases and says it risks sparking war in South  America.

Colombian President Alvaro Uribe says the troop plan is  necessary to fight drug traffickers but Chavez claims a greater  U.S. presence in the region is a direct threat to him.

“Stop the supply of (subsidized) fuel to Colombia right  now, let them buy it at its real price. How can we favor the  government of Uribe like this?”

Under a 2008 agreement, OPEC nation Venezuela sells between  50,000 and 120,000 barrels of subsidized gasoline each month to  Colombia to combat rampant fuel smuggling.

Speaking on his weekly television show, Chavez also said he  had been informed Colombian soldiers crossed a river border in  a small boat, in what he called “a provocation,” although he  said the boat had gone by the time Venezuelan troops arrived to  check.

“This is a provocation by the government of Uribe, that’s  the Yankees there, the Yankees have started to command  Colombian military forces,” said Chavez, who often uses  incendiary words against his neighbor but usually backs down  quickly.

Colombian officials did not immediately return calls  seeking comment.

Chavez has already taken measures against Colombia’s state  oil company and car exporters, and yesterday urged companies to  buy less from one of Venezuela’s top trade partners. He  previously warned the fuel deal was under review. The two countries shared $7 billion in commerce last year,  with Venezuela exporting oil and chemical products in exchange  for food and textiles.

Venezuela has some of the world’s cheapest gasoline, which  costs just a few U.S. cents to fill a large tank and makes  contraband sales to more costly Colombia big business.

The OPEC nation says it loses 27,000 barrels per day and $1  billion per year to traffickers ranging from small-time  peddlers to large-scale smuggling.