CARACAS, Venezuela (AP) -- President Hugo Chavez said Friday diplomatic and commercial relations with Colombia would be suspended until it apologized for paying bounty hunters to snatch a senior rebel from inside Venezuela.

"I've ordered all agreements and business with Colombia to be paralyzed," Chavez said in a speech before Congress.

Chavez said the move includes freezing a July agreement to build a $200 million natural gas pipeline from Venezuela to Colombia's Pacific coast, which would allow Venezuelan fuel to be more easily shipped to the United States and Asia.

Chavez's announcement came a day his government recalled Venezuela's ambassador to Colombia after that country acknowledged that it sent police and bribed local authorities to capture Rodrigo Granda, a leader in the rebel Revolutionary Armed Forces of Colombia, or FARC.

"With much pain I have called back the ambassador in Bogota and he will not return until the Colombian government offers us apologies," Chavez said.

Chavez's statements came hours after Colombian Vice President Francisco Santos defended Colombia's decision to pay bounty hunters as "an absolutely legitimate and necessary instrument in the fight against terrorism."

"From any point of view, it is unjustifiable that high Colombian officials are bribing Venezuelan authorities," Chavez said to rousing applause in the national assembly.

The director of Colombia's National Exporters' Association, Javier Diaz said the row was not likely to harm economic relations between the two nations.

"We have had these sorts of disputes often in the past, but commercial relations were never affected, and the governments overcome their differences," he said. "Only the projects that the two presidents have been working on together will be affected, like the gas pipeline."

According to Venezuela's Interior Minister Jesse Chacon, the December 13 capture of rebel Granda in Caracas was a clear "violation of sovereignty."

Chacon said the abduction was planned by Colombian authorities and that Colombian police entered Venezuela ahead of time to coordinate Granda's "kidnapping."

Five Venezuelan National Guard troops and three army officers have been detained for involvement in the kidnapping of Granda.

Investigators say Granda was turned over to authorities December 14 in the Colombian border city of Cucuta, Chacon said. It was there that Colombian authorities originally said they nabbed Granda.

But after days of pronouncements by Venezuelan officials -- including Chavez -- that the Colombian police were lying, Colombia on Wednesday acknowledged it paid bounty hunters an unspecified sum for the capture.

Venezuelan officials have said four Colombian police officers were detained in an area frequented by Granda days before his capture. The four were suspected of taking photographs of military installations in the city of Maracay, but were later released without charges.

Copyright 2005 The Associated Press.