President Bush is tightening the U.S. economic squeeze on Syria (search) with a ban on all American exports to the Arab country except food and medicine.

For years, Syria has been branded an exporter of terror by the State Department, which automatically prohibits U.S. arms sales (search) and American economic aid. The executive order Bush signed Tuesday goes further in exacting punishment.

Bush accused Syria of pursuing weapons of mass destruction (search) and said that, coupled with its influence over Lebanon (search), represents an "extraordinary threat to the national security, foreign policy and economy of the United States."

State Department officials emphasized what they said was Syria's approval for Palestinian extremist groups such as Hamas to plot attacks on Israel from havens in Damascus.

Meantime, Prime Minister Tony Blair shares U.S. concerns about Syria, but will continue to pursue a policy of "critical and constructive engagement," his office said Wednesday. Blair's official spokesman said the government shared concerns about "WMD, terrorism, human rights and cooperation over Iraq."

Both the Syrian and Lebanese governments criticized the decision as wrong and unfair, but Syria said it still seeks dialogue with the Bush administration.

Lebanese President Emile Lahoud said the sanctions (search) were "wrong in content and timing" and Syria will be able to withstand the "new injustice."

Syria has said it has closed the Damascus offices of Palestinian militants, who it insists are not terrorists but fighters resisting Israeli occupation of their homeland. The militants did lay low after Secretary of State Colin Powell visited last May and warned President Bashar Assad to expel them or face sanctions. After Israel assassinated Hamas founder Sheik Ahmed Yassin in March and another top leader in April, the group's new leader, Khaled Mashaal, started openly preaching revenge.

In Friday's State Department briefing, the officials said under rules that barred identifying them that U.S. fuel oil imports from Syria, which amounted to about $200 million last year, could be decreased.

While Syrian exports are not banned, American oil firms will be unable to import equipment from their factories in the United States, and this could complicate their operations, the officials said.

Overall, the United States exported $214 million in goods to Syria last year and imported $259 million worth.

In Damascus, Syrian officials minimized the significance of Bush's action. Still, Ahmed Haj Ali, media adviser to Syria's information ministry, said the political effects of the sanctions were much bigger than the economic ones.

Diplomatic relations were not severed. State Department officials said one reason was to keep alive any lingering hope that Syria might join Middle East peacemaking efforts. Haj Ali said Syria was still committed to dialogue with the Untied States.

The new sanctions include a ban on flights to and from the United States, although there is no current commercial air traffic between the two countries.

Also, the Treasury Department (search) was authorized to freeze assets of Syrian nationals and entities involved in terrorism, production of weapons of mass destruction, occupation of Lebanon or terror in Iraq.

Restrictions were imposed on banking relations between American banks and the Syrian national bank.

The sanctions go beyond minimum requirements of the Syria Accountability Act (search). That law, which Bush signed into law in December, provides the basis for his actions Tuesday.

At the same time, the president chose not to take other, more drastic action under the law, such as barring American companies from doing business in Syria.

"President Bush did everything within his power to send a message through diplomatic channels that Syria should not support groups such as Hamas and Hezbollah, but it has continued to do so," said U.S. Rep. Ileana Ros-Lehtinen, R-Fla., chairwoman of the House International Relations Middle East subcommittee.

The United States is sending "a loud and clear message to the leaders of Syria that we will no longer turn a blind eye to their transgressions," said Rep. Eliot Engel, D-N.Y, who co-authored the legislation with Ros-Lehtinen. "The ball is now in Damascus' court."

John Kerry (search), Bush's probable Democratic opponent in November's election, endorsed the sanctions but said Bush had waited too long to impose them.

"The administration had previously acknowledged that Syria has failed to adequately police its border with Iraq, may be developing weapons of mass destruction and provides support to terrorist groups," the Massachusetts senator said.

"Given all these troubling facts, it is unfortunate that President Bush failed to impose sanctions until now."