The Iraqi government on Sunday said the U.S. needed to take bolder steps to interact directly with Iran in order to improve security across the Middle East.

Iraqi National Security Adviser Mouwaffak al-Rubaie warned Washington that a strategy of aligning its Sunni Gulf allies against Iran would only further exacerbate tensions in the region.

“The United States, until they seriously engage with Iran ... the long-term regional security will be in doubt,” al-Rubaie said on the final day of a regional security summit in the Bahraini capital Manama.

It was a sharp rebuke to Washington a day after Defense Secretary Robert Gates called on Persian Gulf countries to pressure Tehran to renounce its nuclear program.

The U.S. has refused to hold talks with Iran until it suspends uranium enrichment, a process that can be used to produce fuel for both nuclear energy and nuclear weapons. Iran has insisted its nuclear program is intended for energy production and not for weapons development, as claimed by the U.S. and its allies.

In a speech at the conference Saturday, Gates appealed to Persian Gulf nations to support penalties designed to force Iran to suspend its uranium enrichment.

Iran’s Foreign Ministry on Sunday condemned Gates’ remarks.

“Basically, this expression is an intervention in the domestic affairs of the regional countries,” ministry spokesman Mohammad Ali Hosseini told reporters.

Al-Rubaie’s push for greater U.S. interaction with Iran was an uncomfortable reminder that Washington’s greatest enemy in the Mideast is also the country most closely tied to the predominantly Shiite government in Iraq _ the nation in the region where the U.S. has the most at stake.

“It is feasible for the government of Iraq to have on one side the strategic ally, the United States of America, and on the other side, we have a good relationship with Iran,” said al-Rubaie, a Shiite. “I believe they are not mutually exclusive.”

The disagreement with Washington highlighted the difficult line the U.S. is trying to walk with Iran, isolating the country over its nuclear program while pursuing limited engagement to enlist its support in Iraq.

The danger is that Iran could further increase instability in neighboring Iraq if it feels the U.S. is pressuring it over the nuclear issue.

Al-Hashemi said continued U.S. moves to isolate Iran over its nuclear program “would make life more difficult for the Iraqis.”

The U.S. also has accused Iran of supplying weapons to Shiite militias in Iraq, a charge Tehran has denied.

Al-Rubaie’s call for greater U.S. engagement with Iran came as Tehran announced that it was studying an Iraqi proposal to hold a fourth round of ambassador-level talks with the U.S. over security in Iraq.

Iraqi Vice President Tariq al-Hashemi, a Sunni, agreed with al-Rubaie’s assessment and said continued U.S. moves to isolate Iran over its nuclear program “would make life more difficult for the Iraqis.”

“I do believe Iran is a major power in the Middle East and holds a key for stability and peace for the whole region,” al-Hashemi told reporters at the conference. “This is why I’m saying that the nuclear issue should be sorted out in round-table negotiations.”

Washington’s attempt to push its hardline policy against Iran was undermined with the release of a new U.S. intelligence report that said Iran suspended nuclear weapons development under international pressure in 2003. The report was a dramatic turnaround from a previous one that said Iran restarted the program in 2005.