Gen. Douglas Fraser, the head of the U.S. Southern Command, said Iran has nearly doubled the number of embassies in the region, from six in 2005 to 10 in 2010 while also building cultural centers in 17 countries. Last year, Iran also has hosted heads of state from three countries — Bolivia, Guyana and Venezuela.

"Iran continues expanding regional ties to support its own diplomatic goal of reducing the impact of international sanctions connected with its nuclear program," Fraser told the Senate Armed Services Committee. Washington fears that Iran is trying to develop nuclear weapons.

Fraser described a close relationship between Venezuelan President Hugo Chavez and Iran's President Mahmoud Ahmadinejad. They've had at least nine visits during Chavez's 12 years in office. Fraser said the alliance is still largely for diplomatic and commercial purposes, but said there were still too many unknowns.

"There are flights between Iran and Venezuela on a weekly basis, and visas are not required for entrance into Venezuela or Bolivia or Nicaragua. So we don't have a lot of visibility in who's visiting and who isn't, and that's really where I see the concerns," he said. I don't have connections with those organizations that Iran has supported in other parts of the world, Hezbollah. But we're still skeptical and watching that on a routine basis."

Fraser said the ties between the two countries are based on several shared interests, such as access to military and petroleum technologies and avoiding international isolation.

On a separate issue, Fraser said Venezuela has purchased $8 billion to $12 billion worth of weapons from Russia, China and Spain, including automatic weapons. The U.S. is concerned the weapons could end up in the hands of illegal groups.