President Bush (search) on Friday ordered a partial cut in U.S. assistance to Venezuela because of its alleged role in the international trafficking of women and children for sexual exploitation.

The action means the United States will not support $250 million in Venezuelan loan requests expected to come before international lending institutions during the next fiscal year, a State Department official said.

If Venezuela secures sufficient support from other governments, its loan requests could be approved without U.S. backing.

Bush took the action under legislation that calls for sanctions against countries that fail to crack down on international trafficking in persons. The legislation is designed to encourage countries to take decisive action against the practice.

Bush's decision was announced in a White House memorandum to Secretary of State Colin Powell (search).

Left intact were programs designed to monitor Venezuelan elections and to support political party development, part of U.S. efforts to promote democracy worldwide.

It is official U.S. policy to carry out these activities on a nonpartisan basis, but Venezuela complained this year that the U.S. program in that country favored groups that supported the recall of President Hugo Chavez (search).

Chavez won the Aug. 15 recall referendum by a wide margin.

A State Department report issued in June on trafficking in persons worldwide was sharply critical of Venezuela.

"Venezuela is a source, transit and destination country for women and children trafficked for the purposes of sexual exploitation," the report said.

"Brazilian and Colombian women and girls are trafficked through Venezuela," it said.

The report added that Venezuelans are trafficked internally for the domestic sex trade and to Western Europe, particularly Spain.

"Venezuelan sex tourism that encourages underage prostitution is a concern," it said.

The study cited reports that in border areas, Venezuelans are trafficked to mining camps in Guyana for sexual exploitation and abducted by leftist rebels in Colombia to be used as soldiers.

In an interview Friday with the Associated Press, Secretary of State Colin Powell said it remains to be seen whether the U.S.-Venezuelan relationship can recover from deep strains during the past several years.

"We have concerns about some of the actions that President Chavez has taken over the years in pursuit of his vision of Bolivarian democracy," Powell said.

"We want the Venezuelan people to do well. We are friends of the Venezuelan people. And now that the election, or the referendum, is over, we will just have to see how things develop."