The US has stopped Spain selling 12 military aircraft to Venezuela by refusing to allow American military technology to be used in the planes.

Venezuela planned to buy the aircraft from the Spanish company Eads-Casa but US determination to prevent Hugo Chávez building up his armed forces wrecked the deal, according to the deputy president, José Vicente Rangel.

George Bush's administration claims President Chávez, an ally of Fidel Castro, is a destabilising force in Latin America. The US imposed an arms ban on Venezuela in May.

Mr Rangel said replacing the US technology with French or Israeli parts had made the €500m (£335m) deal too costly. Miguel Angel Moratinos, Spain's foreign minister, confirmed that what would have been his country's biggest arms deal was now just a sale of naval vessels.

Venezuela's decision to drop the order for 10 C-295 transport planes and two CN-235 patrol planes came the day after Spain declined to back its effort to be a temporary member of the UN security council.

For those who view the General Assembly chamber as "a very sacrosanct place," Chavez's performance exhibited "bad taste," said Tanzania's ambassador, Augustine P. Mahiga. "It can be a platform for the battle of ideas but not for the vilification of one country."

Venezuela's U.N. ambassador, Francisco Javier Arias Cardenas, characterized the race as a challenge between a fearless champion of the developing world and the world's lone superpower.

"We are not competing with a brother country. We are competing with the biggest power on the planet," he said.