The report contained a September 15 letter from Obama in which he said: "I hereby designate Bolivia, Burma, and Venezuela as countries that have failed demonstrably during the previous 12 months to adhere to their obligations under international counternarcotics agreements."

Like US government officials, the annual International Narcotics Control Strategy Report refers to Myanmar by its previous name of Burma.

In Myanmar, described as second only to Afghanistan in opium production, "the low risk of enforcement and prosecution make it appealing to the criminal underground," the report said.

It also stressed that "political arrangements between traffickers and Burma's ruling military government allow organized crime groups to function with minimal risk of interdiction."

Turning to South America, the report said that "a porous western border with Colombia, a weak judicial system, inconsistent international counternarcotics cooperation, and a generally permissive and corrupt environment have made Venezuela" a major drug-transit country.

It said the country run by socialist President Hugo Chavez was "one of the preferred trafficking routes out of South America to the Eastern Caribbean, Central America, the United States, Europe and western Africa."

The report came down on Bolivia for money laundering activities which it linked "primarily to narcotics trafficking, corruption, tax evasion, and smuggling and trafficking of persons."

Despite the designations, the US government will still pursue cooperation with the two Latin American countries in fighting the drugs trade, the report said. As for Myanmar, there was no cooperation to begin with, officials said.

"I have also determined... that continued support for bilateral programs in Bolivia and limited programs in Venezuela are vital to the national interests of the United States," Obama said in his letter.