State Department spokesman Sean McCormack made it clear Washington took a dim view of the two billion dollar deal sealed in Caracas earlier Monday during a visit by Spanish Defense Minister Jose Bono.

"In terms of the sale of some military systems by Spain to Venezuela, we have expressed our concerns to the government of Spain concerning those sales," McCormack told reporters here.

He said US authorities were looking at technology licensing issues related to the sale of a dozen C-295 transport planes and eight military patrol boats to Venezuela, which has been at odds with Washington over a range of issues.

"There may be some issues related to the fact that there would be US technology included in some of the equipment which Spain has said that it intends to sell to Venezuela," the spokesman said.

"So as part of the normal licensing process, we are going to take a look at that. And we're currently working through those issues. There hasn't been any final conclusion on that question yet."

Caracas says the equipment is needed to combat drug smuggling. But the US administration distrusts President Hugo Chavez's leftist politics and fears materiel sold to his government could be used to arm Colombian rebels.

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