President Bush (search) said Thursday that Venezuela "failed demonstrably" to make a concerted effort to block shipments of illicit narcotics to the United States and Europe last year.
The designation is certain to strain further U.S. relations with Venezuela's populist president, Hugo Chavez (search).
Venezuela could have been subjected to a cutoff of U.S. assistance, but Bush decided to waive the provision because of national security interests.
The United States has programs to support Venezuela's democratic institutions, establish community development projects and strengthen the country's political party system.
The administration decided not to cut these programs because they promote democracy in Venezuela, a key U.S. goal in a country where, officials say, the commitment to democratic norms has been eroding under Chavez.
Myanmar (search) was the only other country listed as having failed to meet its obligations under international counternarcotics requirements. But it has received that same designation in previous years.
A White House "statement of explanation" about Venezuela said 165 tons of cocaine moved through the country last year along with increasing quantities of heroin.
"Despite an increase in drug seizures during the past four years, it is our assessment that the government of Venezuela has not addressed the increasing use of Venezuelan territory to transport drugs to the United States," the statement said.
In early August, Chavez accused the U.S. Drug Enforcement Administration of using its agents in Venezuela for espionage, and said Venezuela was suspending cooperation with the agency. The Bush administration denied the espionage charge.
Chavez claims that Venezuelan authorities have been very successful in detecting shipments of illegal drugs. He has said the United States, as the world's top consumer of drugs, does little to decrease consumption.
Bush's designation on Thursday adds to the growing list of issues between the United States and Venezuela. The administration is concerned about the close ties Venezuela maintains with Cuba and Chavez's perceived efforts to expand Venezuelan influence in other Latin American countries.
The administration also has strong doubts about whether Chavez will uphold Venezuela's tradition of free and fair elections.
Venezuela was included on a White House list, issued annually, of major drug transit or drug-producing countries. The others are Afghanistan, the Bahamas, Bolivia, Brazil, Colombia, the Dominican Republic, Ecuador, Guatemala, Haiti, India, Jamaica, Laos, Mexico, Myanmar, Nigeria, Pakistan, Panama, Paraguay and Peru.
U.S. law requires that the administration issue an annual list of countries with drug production or trafficking problems. Almost all the countries named this year are repeaters.
The designation is not necessarily an adverse reflection of a country's commitment to combat drugs.
Colombia has been the world's principal source of cocaine over the years, but the United States has consistently given high marks to President Alvaro Uribe for his counternarcotics efforts.