Azeri president warns against sanctions on Iran

BAKU, Oct 27 (Reuters) Azerbaijan's President Ilham Aliyev stressed the importance of his oil-rich nation's ties with the United States today but warned that any Western sanctions against neighbouring Iran would escalate tension in the region.

Former Soviet Azerbaijan lies on the strategically important Caspian Sea and shares land and sea borders with Iran, where millions of ethnic Azeris live.

However, Azerbaijan also relies heavily on oil it pumps to the West as its main source of income.

''We have good relations with the United States ... and good relations with Iran, and in our foreign policy these two elements do not contradict,'' Aliyev told a rare meeting with foreign media at his presidential palace.

But he expressed misgivings about proposed UN sanctions against Iran over its uranium-enrichment activities, which the West believes are a cover for bomb-making and Iran says are aimed solely at energy production.

''As far as sanctions against Iran are concerned, Azerbaijan does not support them -- we think they are counter-productive,'' Aliyev said.

''They (sanctions) will not lead to a resolution of this issue. They will only make the situation more tense in the region,'' he added.

Yesterday European countries sent a draft resolution to the United Nations Security Council proposing a ban on nuclear material and ballistic missiles trade with Iran.

Iran's arch-foe the United States wants stronger sanctions while Russia has said any trade ban would be a mistake.

The draft resolution on Iran is in response to UN demands that Tehran suspend its uranium-enrichment activities.

Aliyev said other countries' squabbles were their own business and Azerbaijan would avoid taking sides, pledging to balance good relations with both Tehran and Washington.

Azerbaijan sent soldiers to the US-led war in Iraq, and the US military is helping to upgrade its Caspian Sea navy.

British oil giant BP leads the consortium pumping oil out of the Azeri sector of the Caspian Sea, and the grouping includes US companies.

The oil is transported to Europe and the United States via rail and pipeline.

REUTERS PDM VC1843