BAKU (AFP) - Azerbaijani President Ilham Aliyev expressed concern Friday that potential sanctions on neighboring Iran could have a negative impact on regional stability.

"We are very concerned that any potential step to destabilize the situation can have a big impact on regional development in general," Aliyev told reporters in Baku.

"As far as sanctions against Iran, we will not support it. We think they are counterproductive. They will not lead to resolution of this issue -- they will only make the situation worse," Aliyev said.

Diplomats from major world powers met in New York on Thursday to review a draft UN Security Council resolution mandating sanctions against Iran over its refusal to halt sensitive nuclear fuel work.

Azerbaijan is a key regional ally for the United States and has also built close diplomatic and trade relations with Iran, with which it shares ethnic and cultural links.

"We have good relations with the United States... At the same time, we have very good relations with Iran. In our policy, these two elements do not contradict," Aliyev said.

Azerbaijani-Iranian trade amounted to 450 million dollars (355 million euros) in 2005 and has grown rapidly at a rate of some 70 percent over the past three years, according to the Iranianembassy in Baku.