U.S. officials have expressed concerns over the past several years about Venezuela's lack of
cooperation on antiterrorism efforts, its relations with Cuba and Iran, and President Chávez's
sympathetic statements for Colombian terrorist groups. Since May 2006, the Secretary of State
has made an annual determination that Venezuela has not been "cooperating fully with United
States antiterrorism efforts" pursuant to Section 40A of the Arms Export Control Act (P.L. 90-
629). As a result, the United States has imposed an arms embargo on Venezuela since 2006,
which ended all U.S. commercial arms sales and re-transfers to Venezuela. When the State
Department issued its first determination in 2006, it that it was based on Venezuela's near lack of
antiterrorism cooperation over the previous year, citing its support for Iraqi insurgents and Iran's
development of nuclear capabilities, the country's status as a safe haven for Colombian and
Basque terrorist groups, and its effort to derail hemispheric efforts to advance counter-terrorism
policies in the OAS. The determination was renewed in May 2007 and again in May 2008.

According to the State Department's Country Reports on Terrorism 2007 report, issued at the end
of April 2008, President Chávez continued his public criticism of U.S. counterterrorism efforts
and deepened Venezuelan relationships with Iran and Cuba, while his ideological sympathy for
two Colombian insurgencies (the FARC and the National Liberation Army) and high levels of
corruption among Venezuelan officials, have limited Venezuelan cooperation with Colombia in
combating terrorism. In addition, according to the report, Venezuelan citizenship, identity, and
travel documents remained easy to obtain, making the country a potentially attractive way-station
for terrorists. In July 2006, congressional testimony, the State Department's Principal Deputy
Coordinator for Counterterrorism, Frank Urbancic, had asserted that the United States was
detaining increasing numbers of third-country aliens at its borders carrying falsified or
fraudulently issued Venezuelan documents.152

Allegations of Venezuelan Support for the FARC
As in past years, the State Department terrorism report covering 2007 stated that "it remained
unclear to what extent the Venezuelan government provided support to Colombian terrorist
organizations." It noted that limited amounts of weapons and ammunition from official Venezuela
stocks and facilities turned up in the hands of Colombian terrorist organizations. The report also
noted that Venezuela did not systematically police its 1,400 mile border with Colombia in order to
prevent the movement of terrorists or to interdict arms or the flow of narcotics. Information on
captured computer files from Colombia's March 2008 raid of a FARC camp in Ecuador raised
further questions about potential support of the FARC by the Chávez government. Venezuelan
officials have dismissed the data as having been fabricated even though Interpol verified in May
2008 that the files had not been tampered with since they were seized. On June 6, 2008, two
Venezuelan nationals (one a national guard sergeant) and two Colombians were arrested in
eastern Colombia for gun-running. The four were captured with some 40,000 rounds of
ammunition allegedly destined for the FARC.

In a welcome turn of events on June 8, 2008, President Chávez called for the FARC to release all
hostages unconditionally and to cease military operations, maintaining that guerrilla warfare "has
passed into history."153 Assistant Secretary of State for Western Hemisphere Affairs Tom Shannon
noted the importance of Chávez's words, and expressed hope that they would be "backed up by
actions designed to prevent the use of Venezuela's frontier with Colombia for the movement of
weapons."154

On September 12, 2008, the U.S. Treasury Department froze the assets of two senior Venezuelan
intelligence officials ­ General Hugo Carvajal and General Henry Rangel ­ and the former
interior minister, Ramón Rodríguez Chacín, for allegedly helping the Revolutionary Armed
Forces of Colombia (FARC) with weapons and drug trafficking.155

State Sponsors of Terror List
In light of the captured FARC documents cited above, some observers, including some Members
of Congress, called on the Bush Administration to designate Venezuela as a state sponsor of
terrorism pursuant to Section 6(j) of the Export Administration Act (EAA) of 1979 (P.L. 96-72).
Other countries currently on the state sponsors of terrorism list include Cuba, Iran, North Korea,
Sudan, and Syria. The Bush Administration began an initial inquiry into designating Venezuela as
a state sponsor in March. In the House, H.Res. 1049 (Mack), introduced in March 2008, would
urge the Administration to designate Venezuela as such.

In terms of economic sanctions associated with being on the terrorism list, the EAA requires a
validated license for the export of goods and technology to a country if the Secretary of State
determines that the government of such a country "has repeatedly provided support for acts of
international terrorism" and if the export of such goods and technology could make a significant
contribution to the country's military potential or could enhance its ability to support acts of
international terrorism. Beyond the EAA, several provisions of law impose additional sanctions
on countries on the state sponsors of terrorism list, such as: a ban on arms-related exports and
sales; various restrictions and prohibitions on foreign assistance; denial of duty-free treatment of
goods exported to the United States under the Generalized System of Preferences (GSP); denying
companies and individuals tax credits for income earned in the terrorist-listed countries; and
authority to prohibit any U.S. citizen from engaging in a financial transaction with a terrorist-list
government without a Treasury Department license.

The sanctions associated with being on the terrorism list would likely have an effect on U.S.-
Venezuelan economic relations. A substantial portion of U.S. exports to Venezuela, particularly
for the oil sector, would likely require validated licenses for so-called dual-use exports and
technology. The termination of the tax credit that prevents double taxation would increase the cost
of U.S. companies operating in Venezuela, and could be a disincentive for some U.S. companies
operating there. The stock of U.S. foreign investment in Venezuela is estimated at $11.6 billion,
concentrated in the manufacturing and mining sector.156 The state sponsor of terrorism
designation also potentially could complicate U.S. oil imports from Venezuela, in part because
PdVSA owns Citgo, based in Houston Texas, which operates three oil refineries and two asphalt
refineries in the United States and has some 14,000 branded retail outlets selling gasoline across
the United States. PdVSA also has a 50% interest in a large refinery in the U.S. Virgin Islands.157
According to the Venezuelan government, PdVSA and Citgo annually purchase more than $2
billion in goods and services from 800 U.S. companies.158

The designation of Venezuela as a state sponsor of terrorism also could have increased popular
support for President Chávez at a time when Venezuela is preparing for state and local elections
in November 2008. Some Venezuelan opposition figures maintain that such a designation would
only be helpful to the Chávez government, which would portray itself as a victim. Short of
designating Venezuela as a state sponsor of terrorism, some observers have suggested the
consideration of "smart" or targeted sanctions aimed at Venezuelan officials or particular
activities in order to demonstrate U.S. concern with their alleged actions supporting the FARC.159
Suggestions for such sanctions generally include denying entry into the United States of
designated individuals or freezing assets of named individuals or entities, such as occurred on
September 12, 2008, when the Treasury Department froze the assets of three high-ranking
Venezuelan officials for their support for the FARC (noted above).

Iran and Hezbollah
Venezuela's relations with Iran have been longstanding because they were both founding
members of OPEC. Nevertheless, as their relations have intensified over the past several years,
U.S. officials and some Members of Congress have expressed concerns. In November 2007, the
House approved H.Res. 435 (Klein), expressing concern about Iran's efforts to expand its
influence in Latin America, and noting Venezuela's increasing cooperation with Iran.

Iranian President Mahmoud Ahmadinejad has visited Caracas on three occasions since 2006, and
President Chávez has visited Iran several times. The two nations have signed a variety of
agreements in agriculture, petrochemicals, oil exploration in the Orinoco region of Venezuela,
and the manufacturing of tractors, bicycles, and automobiles. Weekly flights between the two
countries began last year. In February 5, 2008 testimony before the Senate Select Intelligence
Committee, Director of National Intelligence Michael McConnell maintained that most
cooperation between Iran and Venezuela has been on the economic and energy fronts, but that
military cooperation is growing, and the two nations have discussed cooperation on nuclear
energy.

A major rationale for Iran's recent overtures toward Venezuela is to show that it is not isolated
diplomatically. Moreover, some observers maintain that Ahmadinejad's increased interest in
Venezuela since he came to power in 2005 has been to cause political angst for the United States
in its own neighborhood. According to one observer, once Ahmadinejad is gone, the bilateral
relationship will likely be reduced to the level of past years that was based largely on their OPEC
membership.160

Assistant Secretary of State for Western Hemisphere Affairs Tom Shannon has said that one of the
concerns about Iran's increasing interest in Latin America is its ties to the radical Lebanon-based
Islamic group Hezbollah. According to Shannon, "What worries us is Iran's history of activities in
the region and especially its links to Hezbollah and the terrorist attack that took place in Buenos
Aires [in 1994]."161 On June 18, 2008, the U.S. Treasury Department's Office of Foreign Assets
Control (OFAC) announced that it was freezing the U.S. assets of two Venezuelans ­ Ghazi Nasr
al Din (a Venezuelan diplomat serving in Lebanon) and Fawzi Kan'an ­ for providing financial
and other support to Hezbollah. U.S. citizens are also prohibited in engaging in any transactions
with the two Venezuelans, including any business with two travel agencies in Caracas owned by
Kan'an.162