President Hugo Chavez recalled his ambassador from Bogotá on Tuesday and threatened to halt Colombian imports after the neighboring country claimed anti-tank weapons found in a rebel arms cache came from Venezuela.
Chavez also said he would sever diplomatic ties completely and seize control of Colombian-owned businesses "if there's one more accusation against Venezuela."
The actions ratcheted up tensions between the two countries amid Chavez's criticism of a pending deal to increase the US military presence in Colombia, a key Washington ally in the region that has accused Chavez of helping leftist rebels.
Chavez is a strong critic of US influence in Latin America.
His warning to Colombia stems from President Alvaro Uribe's complaint over the weekend that anti-tank rocket launchers sold to Venezuela by Sweden during the 1980s were obtained by Colombia's main rebel group, the leftist Revolutionary Armed Forces of Colombia, or FARC.
Sweden confirmed the weapons originally were sold to Venezuela's military.
Chavez accused Colombia of acting irresponsibly in the accusation, saying there is no evidence Venezuela was the source of the weapons.
"We are not going to accept this irresponsibility," Venezuela's socialist leader said.
In Bogota, the Colombian Foreign Ministry's said Uribe and Foreign Minister Jaime Bermudez were traveling outside the country and would have no comment until they return.
Chavez threatened to halt all trade agreements with Uribe's government and find new suppliers to replace imports from Colombia.
Venezuela and Colombia share some $6 billion in annual trade. Among goods imported from Colombia are milk and other food items that periodically become scarce in Venezuela due to government-imposed price controls.
"We can get them from any other country," Chavez said.
Chavez also raised the possibility of shutting down a 139-mile (224-kilometer) pipeline that carries 5.7 million to 8.5 million cubic meters (200 million to 300 million cubic feet) of natural gas daily from Colombia to oil installations in western Venezuela.
"The gas that comes from Colombia isn't indispensable for us. We could shut down that gas pipeline," he said.
Colombian officials have long alleged that Chavez's government aids the FARC by giving senior rebel leaders refuge and allowing the guerrillas to smuggle tons of cocaine through the country to raise money for their insurgency. Chavez has denied doing that.
Relations between the two South American nations have been rocky in recent years. Tensions hit their low point in 2008 after Colombia attacked a FARC camp in Ecuador. Chavez responded by briefly dispatching troops to the 1,400-mile (2,300-kilometer) border with Colombia and temporarily pulling out his ambassador in Bogota.
Chavez was infuriated when Colombian officials later leaked electronic documents they said were found on the computer of a FARC commander killed in the cross-border raid. In the documents, rebel commanders discussed obtaining bazookas and other weapons from Venezuelan officials, including then-military intelligence chief Hugo Carvajal.
Chavez and Uribe smoothed over their fight last year and relations calmed.
Elsa Cardoso, a professor of political science and international relations at the Central University of Venezuela, said she expects the conflict this time to be more severe and longer lasting.
"Accusations against Venezuela's government have been accumulating: drug trafficking, arms trafficking and connections to Colombian guerrillas," Cardoso said in a telephone interview. "Venezuela has put itself in the eye of the hurricane."
Before the rocket report, Venezuela was upset by Colombia's decision to forge stronger military ties with the United States.
Chavez, who has sought to use Venezuelan oil wealth to forge an anti-US bloc in the region, has strongly criticized a pact being negotiated to let US forces use three airfields and two navy bases in Colombia.
Colombian officials say Venezuela should not be concerned, saying the US forces will be helping fight drug trafficking. Colombia says the number of US service personnel and civilian military contractors will not exceed the 1,400 mandated by the US Congress.