By Mohammed Abbas

MANAMA, Nov 15 (Reuters) - Gulf Arab states hope Iran's President Mahmoud Ahmadinejad will use a visit to Bahrain on Saturday to show his country is not seeking to escalate a standoff over its nuclear programme, analysts say.

Ahmadinejad's visit comes amid mounting concerns in the Gulf that the United States could launch military action against the Iran, though Washington says it is committed to resolving the crisis over Tehran's nuclear ambitions diplomatically.

"The Gulf will be watching for reassurance that Iran is not seeking escalation, and will talk about its nuclear ambitions within international laws," said Mansoor al-Jamri, editor of Bahrain's independent al-Wasat newspaper.

British newspapers quoted Bahrain's Crown Prince Sheikh Salman bin Hamad al-Khalifa earlier this month as saying Iran was developing nuclear weapons, a view shared by the West but rarely expressed in public by Iran's Arab neighbours.

Iran says its nuclear programme is for electricity.

Bahraini officials later denied the British newspaper reports, and an official account of the interviews he gave them said he had called for diplomacy to ease tensions.

Gulf Arab states, including Bahrain, the United Arab Emirates and Saudi Arabia have strong cultural links with non-Arab Shi'ite Iran through their own Shi'ite populations or the large Iranian community in the region.

They also have close trade links. Iran will sign an agreement on Saturday to supply natural gas to Bahrain.

But rulers in the largely Sunni-ruled and U.S.-allied region are wary of what they see as growing Shi'ite influence.

Bahrain is Sunni-ruled, with a majority Shi'ite population. Sectarian strife has flared in the past, but reforms such as pardoning prisoners and exiles have eased tensions.

However comments by an Iranian newspaper editor in July that Bahrain, home to the U.S. navy's fifth fleet, was an Iranian province and should be returned sparked outrage and protests on the island. Iran swiftly rejected the comments.

GULF ARAB ROLE

Gulf Arab countries have consistently warned against any slide into war over Iran's nuclear programme yet their input in dampening the mounting tension has been relatively small, analysts say, even though the region has the most to lose.

The Gulf is the world's top oil exporting region, and its economies are booming on a near five-fold increase in oil prices since 2002.

About 40 percent of the world's globally traded oil skirts Iran's coast through the Strait of Hormuz in the Gulf, and an Iranian commander last week said "martyrdom-seeking" militia could disrupt Gulf transport routes in the event of war.

Talks to resolve the impasse have centred on the U.N. nuclear watchdog in Vienna, and among the United States, Britain, France and Germany under the auspices of the U.N. Security Council.

A Saudi proposal this month to set up a consortium that would provide Iran with enriched uranium for peaceful purposes has not helped defuse the standoff as Iran said it would not halt its own enrichment programme.

"Ahmadinejad's trip is a very good opportunity for Bahrain to open frank discussions on many fronts," former Bahraini government minister Ali Fakhro said.

"I'm disturbed that not enough direct discussion with Iran has taken place, because it is a very important player in the region, politically, economically, militarily and culturally."

This week, a Bahrain state news agency report quoted Iran's Foreign Minister Manouchehr Mottaki as saying Ahmadinejad's visit aimed to enhance bilateral ties, and reiterated Iran's stance that it is complying with international nuclear law.

Mottaki was also quoted repeating an offer made in May to share nuclear technology with Gulf countries under the supervision of the U.N.'s nuclear watchdog. (Editing by Dominic Evans)

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