On Thursday, Venezuelan authorities ordered the temporary closure of top U.S. businesses, including IBM and Microsoft, for alleged tax irregularities in a move that comes days after the government was reported to have shifted some $20 billion in U.S. Treasuries into funds sent to Europe.

Microsoft and IBM were ordered to close for 24 to 48 hours along with Honda Motor, Ericsson, Siemens and Nokia as part of a "zero tax evasion" policy. Venezuela's tax agency, Seniat, said the firms would be fined heavily for irregular book-keeping.

Earlier in the week, according to the Financial Times, Venezuela shifted between $10 billion and $20 billion in U.S. Treasuries into funds sent to Europe amid frigid relations between President Hugo Chavez and the Bush administration.

The economic action notwithstanding, the Bush administration and many countries in South American are increasingly worried by what they see as Chavez' quest for weapons, which he can pay for with oil revenues that have increased because of the spike in the global price of oil. This, they fear, could fuel a region-wide arms race.

His main supplier is likely to be Russia, which may be interested in selling Venezuela three submarines besides its Lada diesel electric boats, which have six 533mm torpedo tubes, with 18 torpedoes and/or anti-ship missiles.

This besides Chavez' plans to expand his military's paramilitary units. He has also placed a huge order for Russian assault rifles and Russian and North Korean rifles, leading to fears the weaponry will find its way into the hands of the Marxist Revolutionary Armed Forces of Colombia, or FARC, and the National Liberation Army, or ELN, which are fighting the Colombian government.

"Nobody has been able to explain why Venezuela is buying so many weapons. It can't be to defend itself against Colombia, because our country has no intention of invading Venezuela or giving it any military trouble," former Colombian Finance Minister Juan Manuel Santos told the Cambio newspaper in an interview published Monday. "But we should be concerned about having a neighbor armed to the teeth that wants to replicate its regime in the rest of Latin America. That generates a military imbalance in the area."

Despite this, however, and past announcements that several multinationals owe millions in back taxes, Chavez has continued to cozy up to U.S. oil companies.

Earlier this week, Venezuela awarded a natural gas exploration and extraction deal with Chevron Corp. and OAO Gazprom of Russia. Chevron won rights to one block for $5.6 million off the country's western coast and OAO Gazprom was awarded rights to two blocks with offers of $15.2 million and $24.8 million. The contracts for the Rafael Urdaneta natural gas project, which comprises 29 blocks spanning some 11,580 square miles, are valid for 30 years.

Venezuela, already a major oil producer, also has large and untapped natural gas reserves.

"Here it's shown that we have relations with the whole world -- an American company, Chevron," President Hugo Chavez said Tuesday. "We are good friends, good partners and good allies of many U.S. companies that work with us."

Chavez, who is a close ally of Castro, has been engaged over the past year in a war of words with the United States, which he accuses of trying to kill him. Washington has called the charges absurd and, in turn, accuses Chavez, a democratically elected former military paratrooper, of stifling democracy in his country.

Despite the friction, however, the United States is still the top buyer of oil from Venezuela, the world's fifth-largest oil exporter. And after deadly hurricanes struck the U.S. Gulf Coast, devastating a significant portion of the U.S. refining capacity, Caracas pledged to send an additional 1 million barrels of gasoline to the affected.

At least two more gasoline cargoes will be sent this month, an official from the state-owned Petroleos de Venezuela S.A. said.

"He has to recognize economic reality," said Ted Galen Carpenter, vice president for defense and foreign-policy studies at the libertarian Cato Institute, told United Press International in a telephone interview. "He'll sell oil to the highest bidder and that happens to be the U.S."

Chavez was elected in 1998 after a previous attempt to seize power through a coup failed. He has dismissed criticism that he's a dictator and, in turn, accuses the country's opposition and the United States of plotting together against him during an abortive 2002 coup. He has accused Washington of harboring an "imperialist" agenda in Latin America and other parts of the world.

"From North America and parts of South America, they continue attacking Venezuela, trying to say there is a dictatorship here," he told oil executives in the northwestern state of Falcon Tuesday. "Those who say I want to lead Venezuela toward a dictatorship are the same ones who tried to establish a dictatorship here, and they were defeated."

But Chavez' critics are not in Washington alone.

He is accused of supporting FARC and ELN in neighboring Colombia. Both groups, which rely on narco-trafficking and kidnapping for their funds, are on the U.S. State Department's list of foreign terrorist organizations.

Santos, the former Colombian official, accused Chavez of playing a disruptive role in the region, saying the Venezuelan leader had played a key role in the eventual loss of President Sanchez de Lozada in Bolovia, President Lucio Gutierrez in Ecuador and of supporting the Sandinistas in Nicaragua and left-wing groups in Brazil, Argentina and Peru.

"There is plenty of evidence," he said. "There is no separation of powers in the Chavez regime."

He added: "Chavez is a danger because he has always done what he says he will do and the world has underestimated him."

But many experts in Washington such as Larry Birns, president of the Council of Hemispheric Affairs, a liberal think tank that specializes on Latin America, say suggestions of terror threats are exaggerated and had there been any tangible evidence it would have been publicized better than it has.

"Chavez is dangerous not because of what he does but because of what he says. He projects a scenario quite different from the administration," he told UPI.

The Bush administration says Venezuela's role in the region is not constructive. Indeed, Chavez has taken steps that have irked the administration. His was one of the few countries that voted at the International Atomic Energy Agency against a decision to refer Iran to the U.N. Security Council for its nuclear program; he has forged better ties with Cuba, and more worryingly for Washington, with China and prior to the U.S.-led war on Iraq undertook a world tour where he met with then Iraqi leader Saddam Hussein, Iran's leadership and Libya's Moammar Gadhafi.

"He's obviously an annoyance," Carpenter of CATO told UPI. "But the Bush administration's stance that he's a geo-strategic threat is too much credit to an annoying populist politician who thrives on a philosophy that has long been discredited."

But Birns of COHA has another view. He called the administration's view of a Venezuela-Cuba threat "hokum," but said Washington was more concerned about China's growing energy influence in the region.

"We feel the administration is very concerned about this and they look upon Venezuelan and Chavez as the vestibule from which Chinese influence is going to fan out all over Latin America," he said.

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