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By Ahmed Aboulenein
CAIRO, Jan 10 (Reuters) - Arab foreign ministers condemned attacks on Saudi diplomatic missions in Iran and warned on Sunday that the country would face wider opposition if it continued its "interference" in the internal affairs of Arab states.
Tensions between the Sunni Muslim kingdom of Saudi Arabia and Shi'ite Muslim Iran have escalated since Saudi authorities executed Shi'ite cleric Nimr al-Nimr on Jan. 2, triggering outrage among Shi'ites across the Middle East.
In response, Iranian protesters stormed the Saudi embassy in Tehran and its consulate in Mashhad, prompting Riyadh to sever relations. Tehran then cut all commercial ties with Riyadh, and banned pilgrims from travelling to Mecca.
Other Arab countries have recalled envoys to Iran and the United Arab Emirates downgraded relations in solidarity with Saudi Arabia.
"Iran has to decide what kind of neighbour it wants to be: a good neighbour or a chaotic neighbour and so far it behaves like the latter," UAE Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan said following an emergency Arab League meeting in Cairo.
Saudi Foreign Minister Adel al-Jubeir said cutting commercial and diplomatic ties was a first step, and that his country would discuss potential further actions against Iran with its regional and international allies. He gave no further details.
If Iran continues to support "terrorism, sectarianism and violence", it would face opposition from all Arab countries, Jubeir told a news conference following the meeting.
In a closing statement distributed after the meeting, the Arab League also referred to the reported discovery by Bahrain of a militant group that it said was backed by Iran's Revolutionary Guards.
All members of the Arab League voted in favour of the statement, with the exception of Lebanon, where Iranian-backed Hezbollah is a powerful political force.
Conflicts or political crises from Lebanon and Syria to Yemen, Iraq and Bahrain involve proxies of both Saudi Arabia and Iran.
A coalition led by Saudi Arabia has been fighting the Shi'ite, Iran-allied Houthi movement in Yemen since March 2015.
Iran also backs the government of Syrian President Bashar al-Assad in his country's civil war while Saudi Arabia insists he must go for any legitimate peace process to take place.
In Bahrain, Saudi Arabia backs the Sunni monarchy while Iran has expressed support for anti-government demonstrators in the Shi'ite majority Gulf kingdom.
The Arab League statement did not agree on any specific joint measures against Iran but set up a smaller committee comprising the Arab League secretary general and representatives from Egypt, the United Arab Emirates, Saudi Arabia and Bahrain to follow up on the row.
They are expected to meet again on Jan. 25 in the UAE, Arab League Secretary-General Nabil al-Arabi said at the news conference. (Additional reporting by Ali Abdelati and Mostafa Hashem; Editing by Digby Lidstone)