ANALYSIS - Arab states gloat at Iran strife, but wary of result

By Andrew Hammond

DUBAI (Reuters) - U.S.-allied Arab states who fear Iranian expansionism may be enjoying the spectacle of violent protest over President Ahmadinejad's re-election, but fear over the fallout is beginning to filter through.

Thousands of Iranians have clashed with police in recent days claiming elections that gave populist anti-Western leader Mahmoud Ahmadinejad a second term were rigged.

Arab officials broke their silence on Monday when the United Arab Emirates' foreign minister appeared to back Tehran's claims of Western meddling, saying interference was "unacceptable".

"All countries in the region are in the same boat in believing that there is no interest for any country to be exposed to instability," Sheikh Abdullah bin Zayed al-Nahayan said in comments carried by Al Jazeera television.

Many of the smaller Gulf Arab states lying across the Gulf waterway have maintained close ties with the Shi'ite power, veering from Saudi and Egyptian-led attempts to ostracise Iran over backing for Arab opposition groups and Shi'ites.

Saudi media has given maximum play to Tehran's troubles, with newspapers splashing images of bloodied protesters on front pages and pan-Arab channel Al Arabiya running endless footage.

"The regime feels for the first time that there is a clear domestic threat," wrote Abdel-Rahman al-Rashed, manager of Saudi-owned Al Arabiya TV, in pan-Arab daily Asharq al-Awsat.

"The worst is if it digs its heels in at home and abroad. The best is if it realises the huge difference between its slogans and people's demands and chooses reconciliation through retreating from its projects and adventures."