Tensions simmer as Chavez blasts Colombia's Uribe

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CARACAS, Nov 26 (Reuters) Venezuelan President Hugo Chavez froze ties with Columbia, as a dispute intensified over his role as a mediator to free 47 hostages held by Columbian rebels.

Uribe last week suspended Chavez's activities as mediator with Colombia's FARC rebels over hostages taken in the conflict. The US ally accused Chavez of overstepping his bounds and disclosing details of private talks.

The two leaders have maintained a pragmatic relationship despite their sharp ideological differences, but the row over the hostage talks has fueled tensions between the two countries with more than billion in annual bilateral commerce.

''They issued a statement yesterday filled with lies, and that is serious, very serious,'' Chavez said during a televised broadcast. ''President Uribe is lying, and he's lying in a shameless way.'' Chavez was referring to Colombia's statement on Saturday saying Chavez had been pushed out of the talks for speaking directly with a Colombian general about hostages despite an agreement with Uribe not to do so.

Responding later, Uribe charged Chavez with siding with the FARC in his mediation and accused the self-styled socialist of seeking to promote an ''expansionist'' plan inside Colombia.

''The truth, President Chavez, is that we need mediation against the terrorists not one that legitimizes terrorism,'' Uribe said. ''The truth, President Chavez, is that if you are fomenting an expansionist project in the continent, it has no entrance in Colombia.'' For months, Chavez had sought to persuade Marxist FARC rebels to release 47 hostages, including a French-Colombian politician, Ingrid Betancourt, and three U.S. defense contractors held for years in secret jungle camps.

Chavez yesterday warned his cabinet ministers they had to be ''on alert'' over commercial ties with Colombia, Venezuela's second-largest trading partner.

He also vowed Venezuela would not return to the Andean Community of Nations (CAN) trading bloc, which Venezuela quit last year to protest Peru and Colombia's free trade deals with Washington, after having said returning to the group was a possibility.

''Everyone should be on alert with respect to Colombia,'' Chavez said. ''The companies that Colombians have here, the companies we have over there, commercial relations -- all of that will be damaged.'' ''We are definitely not going to return to the CAN (Andean Community),'' Chavez said during an evening interview in which he responded to Uribe's statement.

Chavez this month said Spanish businesses could suffer the consequences of a diplomatic spat caused by Spanish King Juan Carlos telling Chavez to ''shut up'' during a summit in Chile.

REUTERS ARB BST0927

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