The UAE, angered by the Iranian President's visit to a Gulf island both countries claim, warned yesterday that the dispute could not "go on forever" and urged Tehran to agree to talks or international arbitration.
Tensions rose last week following President Mahmoud Ahmadinejad's visit to Abu Musa, one of three islands also claimed by the UAE and located near important oil shipping channels at the mouth of the strategic Strait of Hormuz.
"We cannot have this matter going on forever," the UAE Foreign Minister, Sheikh Abdullah bin Zayed al-Nahayan, told a news conference.
"We have to have a clear agenda, a deadline for negotiations and if there is no outcome ... then we can either go to the International Court of Justice or to international arbitration."
The UAE has recalled its ambassador from Tehran for consultations, and also cancelled a friendly football match with Iran set for today, in response to what its officials called a "flagrant violation" of its sovereignty.
The visit also drew criticism from Saudi Arabia, whose cabinet said that Mr Ahmadinejad's trip had violated UAE sovereignty and was a "transgression".