"I can understand when people mention that they are concerned about the Gulf" as a result of Iran's nuclear activities, Assistant Secretary of State for Near East Affairs David Welch said after talks with Qatari officials.

"The Gulf does not have water resources. They get desalinated water. They will be worried about possible pollution," he said.

Emirati Foreign Minister Sheikh Abdullah bin Zayed al-Nahayan said during a meeting of the Gulf Cooperation Council in Riyadh Saturday that the six GCC states feared a potential "radioactive leak from an Iranian nuclear power plant, which could cause an enormous ecological catastrophe by polluting the waters of the Gulf."

Welch said the row over Iran's nuclear program, which Washington suspects hides an attempt to develop an atomic weapon, should be resolved through talks.

"I think the only way to address it is by direct negotiation ... Of course, (negotiations) have to take as a starting point that there would not be any suspicious nuclear activities," he said.

The United States has offered to enter European-led negotiations over Iran's disputed nuclear program if Tehran verifiably suspends uranium enrichment.

World powers subsequently agreed on a package of incentives and penalties to get Iran to suspend nuclear fuel work, which are to be presented to the authorities in Tehran in the next few days.

Welch said the Palestinian Islamist movement Hamas could not ask for Israel to return customs duties and in the same breath reject accords with the Jewish state providing for the funds' return.

"I find it very strange that members of Hamas say Israel owes us this money ... The agreement that obliges Israel to return the money to the Palestinians is made under Oslo (a peace deal signed with the PLO in 1993). And the Hamas government refuses Oslo," Welch said.

The European Union and United States suspended direct aid after Hamas took office in March, citing its refusal to renounce violence, recognize Israel or abide by previous peace agreements.

Israel has suspended the payment of customs duties, worth around 60 million dollars a month, to the Palestinian Authority on goods that transit through its territory, compounding a deep financial crisis in the Palestinian territories.

Welch, who arrived from Kuwait, said he would hold further talks in Doha Monday before leaving for Jordan. He is also due to visit Israel, the Palestinian territories and Egypt.

Related Links