DUBAI/WASHINGTON (REUTERS) - United States President Donald Trump said on Saturday (June 22) that he would impose fresh sanctions on Iran but he wanted to make a deal to bolster its flagging economy, an apparent move to defuse tensions following the shooting down of an unmanned US drone last week by the Islamic Republic.

Last Thursday, an Iranian missile destroyed a US Global Hawk surveillance drone, an incident that Washington said happened in international airspace. Mr Trump later said he had called off a military strike to retaliate because it could have killed 150 people.

Teheran has said that the drone was shot down over its territory and a senior Iranian military commander on Sunday warned that any conflict in the Gulf region may spread uncontrollably.

Speaking in Washington on Saturday before heading to the US presidential retreat at Camp David, Mr Trump indicated that the government was taking a diplomatic path to put pressure on Teheran by moving to impose new sanctions.

Military action was "always on the table", the President said, but he added that he was open to quickly reaching a deal with Iran that he said would bolster the country's flagging economy. "We will call it 'Let's make Iran great again,'" Mr Trump said.

He later wrote on Twitter from Camp David: "We are putting major additional sanctions on Iran on Monday. I look forward to the day that sanctions come off Iran, and they become a productive and prosperous nation again."

The Trump administration has sought to use promises of economic revival to solve other thorny foreign policy challenges, including the Israel-Palestinian peace process, with the White House on Saturday outlining a plan to create a global investment fund to lift the Palestinian and neighbouring Arab state economies.

"We're not going to have Iran have a nuclear weapon," Mr Trump told reporters outside the White House.

"When they agree to that, they're going to have a wealthy country. They're going to be so happy, and I'm going to be their best friend. I hope that happens.

"Let's make Iran great again," he added, tweaking for the occasion his main domestic political mantra.

Last year, Mr Trump withdrew the US from the deal designed to curb Iran's nuclear ambitions in exchange for sanctions relief, and reinstated measures designed to choke off Iranian oil sales and cripple its economy.

Both Mr Trump and Teheran have said they are not seeking a war, but Iran has warned of a "crushing" response if attacked.

"Regardless of any decision they (US officials) make... we will not allow any of Iran's borders to be violated. Iran will firmly confront any aggression or threat by America," Foreign Ministry spokesman Abbas Mousavi told the semi-official Tasnim news agency on Saturday.

Any conflict in the Gulf region may spread uncontrollably, a senior Iranian military commander was cited as saying on Sunday, by the semi-official news agency Fars.

"If a conflict breaks out in the region, no country would be able to manage its scope and timing," Major General Gholamali Rashid said, according to Fars. "The American government must act responsibly to protect the lives of American troops by avoiding misconduct in the region."

Iran's Foreign Ministry summoned a United Arab Emirates envoy on Saturday because the UAE allowed the drone to be launched from a US military base on its territory, the Fars news agency reported.

Iranian Foreign Minister Mohammad Javad Zarif published a map on Twitter with detailed coordinates which he said showed the drone was flying over the Islamic Republic's territorial waters.

US Secretary of State Mike Pompeo said in a statement on Saturday that the US had "shown beyond any doubt" that the drone was in international airspace.

"When the Iranian regime decides to forgo violence and meet our diplomacy with diplomacy, it knows how to reach us," he said. "Until then, our diplomatic isolation and economic pressure campaign against the regime will intensify."

He also denied reports US forces would evacuate personnel from a military base in neighbouring Iraq over what military sources had said were "potential security threats".

FLIGHTS REROUTED

Tensions in the region began to worsen significantly when Mr Trump pulled out of a 2015 nuclear deal between Iran and six powers and reimposed sanctions on the country. The sanctions had been lifted under the pact in return for Teheran curbing its nuclear programme.

The US and Iran's main regional rival Saudi Arabia have also blamed Iran for attacks on two oil tankers last week in the Gulf of Oman and on four tankers off the UAE on May 12.

Both incidents happened near the strategic Strait of Hormuz, a major conduit for global oil supplies. Iran has denied any involvement.

Last Thursday, the Pentagon launched a long-planned cyber attack in retaliation for the oil tanker incidents, Yahoo News reported, citing former intelligence officials. The cyberstrike disabled Iranian rocket launch systems, the Washington Post said on Saturday.

A Department of Defence spokesman said it would not comment on cyberspace operations, intelligence or planning.

Washington, meanwhile, accused Teheran of stepping up cyber attacks. Mr Chris Krebs, director of the Department of Homeland Security's cyber-security agency, said on Twitter that officials have detected a rise in "malicious cyber activity" directed at the US by people tied to the Iranian government.

World powers have called for calm and sent in envoys for talks to try to lower the temperature of a dispute that has pushed up the price of oil.

German Chancellor Angela Merkel called on Saturday for a political resolution of the crisis, adding: "That is what we are working on."

Britain's Foreign Office said Middle East minister Andrew Murrison would visit Teheran on Sunday to raise concerns about "Iran's regional conduct and its threat to cease complying with the nuclear deal". Iran has threatened to breach the deal if the European signatories to the agreement fail to salvage it by shielding Teheran from US sanctions.

"The Europeans will not be given more time beyond July 8 to save the deal," Mr Mousavi said, referring to Iran's deadline of 60 days that Teheran announced in May.

The US Federal Aviation Administration last Thursday prohibited US operators from flying in Teheran-controlled airspace over the Strait of Hormuz and Gulf of Oman. Saudi Arabian Airlines joined some other international airlines on Saturday in taking related precautions.

Iran said on Saturday that its airspace was "safe and secure" for all planes to cross, Tasnim reported.

Separately, Iran has executed a former contract employee for the aerospace organisation of the Ministry of Defence on charges of spying for the US Central Intelligence Agency, the IRIB news agency reported on Saturday.