The United Arab Emirates and Iraq on Monday called for an end to escalating tensions over Iran's threat to close down the strategic Strait of Hormuz, a move that would affect their economies.

"Iraq is against escalation and against dealing with these differences using military force but with dialogue," Foreign Minister Hoshyar Zebari told reporters at a joint news conference with his Emirati counterpart in Abu Dhabi.

"There is a major confidence crisis with Iran and we also see ourselves as a country that overlooks the Gulf and is definitely affected by tension and escalation," Zebari said, adding 90 percent of Iraqi oil exports pass through Hormuz.

Emirati Foreign Minister Sheikh Abdullah bin Zayed al-Nahayan echoed Zebari's fears.

"Any talk on waterways and especially Hormuz has an effect on us," Sheikh Abdullah said. "We will do everything possible to defuse the crisis."

"I don't think the escalation will serve the region or the markets' stability," he added.

Western governments have moved to step up sanctions on Iran over its nuclear programme, threatening an embargo on its oil exports.

The step has drawn an angry response from Tehran which has in turn threatened to shut the strait -- a chokepoint for world oil transportation -- if it is attacked or heavy sanctions are imposed.

On January 23, European Union foreign ministers are expected to announce additional sanctions on Iran targeting its oil exports and possibly also its central bank.

Separately, Sheikh Abdullah announced during the news conference that the United Arab Emirates is committed to scrapping Iraq's debts which he put at 5.8 billion dollars.

Source: AFP