LONDON Prime Minister Tony Blair warned Iran on Tuesday of a "different phase" if it does not free 15 British military personnel captured in the Gulf four days ago.
The sailors' capture and new U.N. sanctions imposed on Tehran on Saturday over its disputed nuclear programme have stoked tensions between the West and Iran and pushed oil prices to a 2007 high.
Russia and the United Arab Emirates on Tuesday urged Iran to comply with U.N. demands that it halt sensitive nuclear work but Tehran says the U.N. resolution is illegal.
Iran, which denies any intention of making atomic weapons, has said it may charge the two boatloads of British sailors and marines with illegally entering its waters in the northern Gulf. Britain insists they were operating in Iraqi waters.
"What we are trying to do ... is to pursue this through the diplomatic channels and make the Iranian government understand these people have to be released and that there is absolutely no justification whatever for holding them," Blair said.
"They have to release them. If not, then this will move into a different phase," he told GMTV television.
Blair's spokesman said the next step London could take would be to publish proof, in the form of global satellite positioning (GPS) records, that the sailors had not entered Iranian waters.
"We so far haven't made explicit why we know that because we don't want to escalate this," he said.
British officials had shown Iran data on the sailors' exact position when seized, a British government source told Reuters.
The government has been assured the sailors are well but has not been given access to them or told where they are being held.
Britain and the United States led the diplomatic push for Iran to face sanctions over its nuclear programme and have both accused Tehran of stoking Sunni-Shi'ite tensions in Iraq.
Washington broke ties with Tehran in 1980 after its diplomats were taken hostage in Iran, but U.S. Defence Secretary Robert Gates said on Tuesday the United States was now "open to high-level exchanges" with the Islamic Republic.
But, he warned, "we should have no illusions about the nature of this regime or about their designs for their nuclear programme, their intentions for Iraq or their ambitions in the Gulf region," he said in a speech in Washington.
LEAVE DOOR OPEN
Foreign Secretary Margaret Beckett telephoned her Iranian counterpart on Tuesday to demand the sailors' release and spoke "in very robust terms" to "again demand their safe and speedy return and immediate consular access."
Beckett cut short a visit to Iran's neighbour Turkey due to the seizure of the naval personnel, she said in a statement. Earlier, she said Britain would "continue to leave the door open for a constructive outcome".
Iraq's Foreign Ministry and an Iraqi fisherman who witnessed the capture said it took place in Iraqi waters. But an Iraqi government spokesman on Tuesday said Baghdad had no confirmation of where the sailors were seized and said Iraq feared the fallout from increased tension between Britain and Iran.
"We are making efforts with the Iranians to solve this issue because any escalation would impact Iraq. Any tension would (play out) on Iraqi land," said Ali al-Dabbagh.
Iran captured eight British servicemen in similar circumstances in 2004 and released them after three nights.
Analysts have said the current crisis appeared more complex and would take longer to resolve than three years ago.
"The incident in 2004 was less tense, there were fewer gathering clouds, so they may well be held for longer," said Alex Bigham, of the Foreign Policy Centre. "There are probably also internal political battles in Iran over what to do next."
Some hardline groups in Iran suggest the case could be a bargaining chip in its nuclear and other rows with the West, exposing what analysts said were divisions with more moderate voices who want to build bridges abroad, not exacerbate tension.
(Additional reporting by Jeremy Lovell, David Clarke, Katherine Baldwin and Sophie Walker in London, Fredrik Dahl in Tehran, Zerin Elci in Ankara, Diala Saadeh in Dubai, Dmitry Solovyov in Moscow and Kristin Roberts in Washington)