Chavez cuts Colombia ties but fight seen unlikely

CARACAS (Reuters) - Venezuelan President Hugo Chavez cut ties on Thursday with Colombia in an escalating dispute between the two Andean neighbours over Bogota's charges that leftist Colombian rebels shelter in Venezuela.

Socialist Chavez, who views U.S.-backed Colombia as a threat, announced he was severing relations after Colombian President Alvaro Uribe's government presented evidence it said showed 1,500 Colombian guerrillas were hiding in Venezuela.

The move elevated tensions in the Andean zone, a regional tinderbox where clashing ideologies and the presence of heavily armed militaries, guerrilla groups and drug-traffickers make for a dangerous and volatile mix.

But an immediate military confrontation between Venezuela, South America's biggest oil producer and a leading U.S. supplier, and Colombia, the region's top U.S. military ally, did not appear immediately likely.

Chavez called the Colombian accusations, which were presented at the Organisation of American States (OAS), a U.S.-inspired "aggression," and said he was ordering "a maximum alert" on his country's long border with Colombia.

"We have no other choice but, out of dignity, to totally break our relations with our brother nation of Colombia," Chavez said as he hosted Argentine soccer idol Diego Maradona.

Venezuelan Foreign Minister Nicolas Maduro said he had ordered the closing of Venezuela's embassy in Bogota and gave the Colombian mission 72 hours to leave. He said Caracas was considering other measures, such as suspending flights.

Chavez, who portrays himself as an anti-U.S. and anti-capitalist standard bearer in Latin America, faces an opposition challenge in September 26 legislative elections and has ramped up his rhetoric against perceived foes. Critics say he is trying to distract attention from economic and other woes.

Colombia's OAS ambassador, Luis Alfonso Hoyos, called Venezuela's breaking of ties a "historic mistake."

"Venezuela should break relations with the gangs that kidnap and kill and traffic drugs, and not with a legally constituted government," he told reporters.

Chavez blamed the rift on outgoing Colombian President Alvaro Uribe, whom he called "crazed". He accused the United States of inciting Uribe to confront Venezuela.

But he added he hoped that Colombia's newly elected leader, Juan Manuel Santos, who will take office on August 7, would help bring relations back to normal.

President-elect Santos, in Mexico to meet President Felipe Calderon, told reporters: "The best contribution we can make is not to make any pronouncement. President Uribe is president of the republic until August 7.

REGIONAL MEDIATION MOVES

Other Latin American states, including regional powerhouse Brazil, sought to defuse the diplomatic dispute.

"Brazil is helping and will continue to help through talks with both sides," said Marco Aurelio Garcia, foreign policy advisor to Brazilian President Luiz Inacio Lula da Silva.

Argentine ex-President Nestor Kirchner, head of the Unasur group of South American states, had agreed with Lula and Ecuador's president "to make all possible efforts to resolve the crisis," Argentine state news agency Telam reported.

Chavez said he had spoken to both Lula and Kirchner.

Colombia and Venezuela share a long, porous border and have squabbled on and off for years, stoking fears of a possible military confrontation between the two oil producers.

But both have much to lose. Chavez last year suspended trade with Colombia to protest a deal by Bogota that allowed U.S. forces to use Colombian military bases. This slashed trade to a fraction of the previous nearly $7 billion (£4.6 billion) annually.

"We do not expect the current frictions and Venezuela's "maximum alert" at the border to escalate into an open military engagement between the two nations," said Alberto Ramos, senior economist for Goldman Sachs in New York.

Colombian presidential spokesman Cesar Velasquez said Bogota would not move troops to the border.

Washington said the breaking of relations was not helpful.

Chavez broke ties shortly after Colombia presented photos, videos and maps to an OAS meeting in Washington. Colombia said the evidence showed hundreds of Colombian rebels sheltering in jungle camps inside Venezuela, from where, Bogota said, they carried out killings, kidnappings and drug-trafficking.

Colombia's attorney general said it would investigate whether rebels had launched about 60 attacks then took refuge over the border and whether they received help from Venezuelan people or officials. Depending on the results, Colombia said it may take the case to the International Criminal Court.

Colombia also demanded that Venezuela allow an international commission and journalists to inspect the 87 sites where it said Colombian rebels were on Venezuelan soil.

Hoyos showed a series of photos and videos of alleged Revolutionary Armed Forces of Colombia, or FARC, leaders and guerrillas relaxing, roasting pigs and playing a piano at what he called "summer camps" he said were well inside Venezuela.

Venezuela's ambassador rejected the Colombian data as a lie. "There is no evidence, no proof," Roy Chaderton said.

(Additional reporting by Hugh Bronstein, Monica Garcia, Javier Mozzo Pena in Bogota; Deborah Charles and Arshad Mohammed in Washington; Missy Ryan in Mexico City; Helen Popper in Buenos Aires and Raymond Colitt in Brasilia; Writing by Pascal Fletcher; Editing by Frank Jack Daniel and Philip Barbara)