CAIRO (Reuters) - Egypt's security services questioned an Iranian diplomat in Cairo on Sunday on allegations of spying, Egypt's official news agency MENA said, a move that may prove a setback for improving ties between the two nations.
Iranian television denied the man, named as Qassem Hosseini, had been detained although it cited its source as saying Tehran was dealing with the case through official channels.
Ties between Egypt and Iran were severed after Iran's 1979 Islamic revolution and after Egypt made peace with Israel the same year. But they have been improving since a popular uprising toppled Egyptian President Hosni Mubarak on February 11.
Hosseini "was accused of spying for a foreign country, Iran, with the intention of harming the interests of Egypt," MENA said. It said initial investigations by state security prosecutor Taher el-Kholy showed Hosseini was "gathering information regarding recent events in Egypt ... then sending it to Iranian intelligence."
Al-Alam television, an Arabic news channel owned by the Iranian state, cited an Iranian source as saying Hosseini was at work in his Cairo office on Sunday. The source added that Iran was "reviewing the issue through official channels."
Although Egypt and Iran do not have full diplomatic relations, each has a mission in the other's capital.
Tehran sees the prospect of improved ties with Egypt as one of the desirable outcomes possible from what it calls the "Islamic awakening" in the Arab world which it hopes will reduce U.S. influence in the region and unite Muslim countries. Egyptian Foreign Minister Nabil Elaraby said after meeting an Iranian official in Cairo in April that Egypt was open to re-establishing diplomatic relations.
Under Mubarak, a close ally of the United States who regularly met top Israeli officials, Shi'ite Iran and Sunni Egypt had sparred for influence in the Middle East.
In February, after Mubarak was deposed, two Iranian warships passed through Egypt's Suez Canal with approval from the military rulers in Cairo, the first such crossing since the Islamic revolution. Israel called Iran's move a provocation.
(Reporting by Shaimaa Fayed in Cairo and Parisa Hafezi in Tehran; Writing by Shaimaa Fayed; Editing by Louise Ireland)