Iran is world's top terror sponsor: Bush in UAE

U.S. President George W. Bush on Sunday picked the UAE capital Abu Dhabi to launch his strongest attack yet on Iran, calling it the "world's leading state sponsor of terror" and urging Gulf Arab allies to "confront this danger before it is too late".

Meanwhile, the city of Dubai declared a national holiday for Monday and urged residents to stay off major roads as it prepared to host Bush ahead of his visit to Saudi Arabia and Egypt.

Iran attack

"Iran is today the world's leading state sponsor of terror. It sends hundreds of millions of dollars to extremists around the world while its own people face repression and economic hardship at home," Bush said in Abu Dhabi, the third stop of his tour of Arab allies.

Bush accused Shiite Muslim Iran of undermining peace by supporting the Hezbollah guerrilla group in Lebanon, Palestinian Islamist group Hamas and Shiite militants in Iraq.

"Iran's actions threaten the security of nations everywhere. So the United States is strengthening our longstanding security commitments with our friends in the Gulf and rallying friends around the world to confront this danger before it is too late," he said in his keynote speech.

Bush had not raised the issue of Iran in either Kuwait or Bahrain, waiting instead to hit out at the Tehran regime from the UAE capital in his Middle East tour keynote address.

The UAE is Iran's main trading partner with up to 10,000 Iranian firms operating in its commercial hub Dubai.

"To the people of Iran, you're rich in culture and talent. You have the right to live under a government that listens to your wishes, respects your talents and allows you to build better lives for your families," he said.

"The day will come when the people of Iran have a government that embraces liberty and justice and Iran joins the community of free nations. When that good day comes you will have no better friend than the United States of America."

In Abu Dhabi, he was greeted in light drizzle by United Arab Emirates President Sheikh Khalifa bin Zayed al-Nahayan and Vice President and ruler of Dubai Sheikh Mohammed bin Rashid al-Maktoum, before heading to the palace for talks and lunch.

U.S. embarrassed

Earlier in the day, Bush had breakfast with sailors from the U.S. Navy's Fifth Fleet in Bahrain amid tensions with Iran over an incident in which Washington says its ships were harassed in the Strait of Hormuz.

The United States says Iranian boats threatened its warships on Jan. 6, but Tehran dismissed the incident as routine and accused the United States of exaggerating it for propaganda purposes.

But in an embarrassing climb down that was gleefully seized on by Tehran, the Pentagon admitted that a sound recording it had released of a voice threatening to blow up the U.S. vessels may not have emanated from the Iranian vessels.

The Navy Times reported that U.S. naval experts now believe the threatening voice may have been that of a local heckler known as the "Filipino Monkey" who frequently interrupts ship-to-ship radio traffic with insulting interventions.

Tehran accused Washington on Sunday of distorting the incident "to fool the region" during Bush's visit and called on U.S. officials to apologize.

"They tried to bring it up at the same time as Bush was traveling to the region to paint Iran in a bad light. But their plans fell flat," foreign ministry spokesman Mohammad Ali Hosseini said.

The Bush administration has kept up a campaign of rhetoric despite a U.S. intelligence report in December that concluded that Iran had halted its nuclear arms program in 2003.

Tehran says it wants nuclear technology for civilian reasons and agreed on Sunday to clarify the remaining questions about nuclear work in the next month, the U.N. nuclear watchdog said.

Arab states say they share U.S. concerns about Tehran's growing regional influence but want containment without resort to military force.

Saudi Arabia said ahead of Bush's arrival in the Gulf that it would listen to the president but that it had direct contacts with its neighbor and could directly talk through any problems.

Kuwait has repeatedly said it will not allow the United States to use its territory for any strike against Iran.