President Hugo Chavez warned that the United States Ambassador to Venezuela could be asked to leave the country after the envoy said that American firms and investors must receive a fair price for their shares of Venezuela's largest telephone company when it is nationalised.
"If you continue meddling in Venezuela's affairs, first of all, you are violating the Geneva agreements and getting yourself involved in a serious violation and could ... be declared a persona non grata and would have to leave the country," Chavez said on Thursday, apparently in response to comments made earlier by William Brownfield.
Brownfield told local Union Radio the planned takeover of CA Nacional de Telefonos, or CANTV, should proceed "in a transparent, legal manner" and that Venezuela's government must offer "fair and quick compensation to the people who are affected or the owners."
"These are the only obligations that a government has when it decides to nationalize an industry," Brownfield added.
US embassy officials could not be immediately reached for a response to Chavez's statements and State Department spokeswoman Janelle Hironimus in Washington declined to comment.
Thursday's exchange is the latest demonstration of tensions between Caracas and Washington.
US officials have accused Chavez of becoming increasingly authoritarian and being a destabilising force in Latin America.
The Venezuelan leader has repeatedly accused Washington of scheming against his left-leaning government.
Chavez, who has repeatedly called US President George W Bush "a drunkard," "a donkey" and "the devil," has threatened to expel Brownfield before.
In April, Chavez warned that Brownfield could be asked to leave after accusing him of provoking a confrontation by visiting a poor pro-government area where protesters beat on the ambassador's car and chased his convoy.
Virginia-based Verizon Communications Inc holds the largest minority share of CANTV, which was privatised in 1991.
The takeover jeopardises an agreement by Verizon to sell its 28.5 per cent stake in CANTV to a joint venture of America Movil and Telefonos de Mexico SA, controlled by Mexican billionaire Carlos Slim.
The sale had been awaiting Venezuelan government regulatory approval. Emboldened by a landslide re-election victory in December, Chavez announced plans earlier this month to nationalize key sectors of the economy in his drive toward socialism.
The Venezuelan leader has said he wants an immediate state takeover of the telephone company and will not pay shareholders the market value.
The Venezuelan leader has said the price for CANTV would take into account debts to workers, pensions and other obligations to the state.
Brownfield said he was optimistic that shareholders would be fairly compensated.
"I think it can be a process that concludes in a satisfactory manner for all those involved, that's my hope," he said.
Chavez — a close ally of Cuban leader Fidel Castro — also has said he plans to nationalize the electricity sector, and take state control of four lucrative oil projects and the natural gas sector.
Relations between Caracas and Washington have been tense since Chavez was briefly ousted in a 2002 coup that he claimed the US played a role in.
The Bush administration has repeatedly denied involvement, although it recognised an interim government established by coup leaders.
Brownfield said he wanted to improve relations through "a serious and pragmatic dialogue between the two governments, to identify issues of mutual interest and to look for solutions to those issues."