President Mahmoud Ahmadinejad's comments were the strongest criticism yet by predominantly Shi'ite Muslim Iran of mainly Sunni Saudi Arabia over its involvement in the Yemen conflict.
Saudi Arabia has been fighting Yemen rebels since the insurgents carried out a cross-border raid in November.
"We were expecting that Saudi Arabian officials act like a mentor and make peace between brothers, not that they themselves enter the war and use bombs … and machineguns against Muslims," Ahmadinejad said in a televised speech.
"If only a small part of the weapons of Saudi Arabia were used in favor of Gaza and against the Zionist regime (Israel), today there would be no sign of the Zionist regime in the region," he said on state television.
Ahmadinejad said Saudi Arabia, the world's top oil exporter and a regional U.S. ally, used crude oil income to buy weapons which are then used to "kill brothers" and create sedition.
Ahmadinejad, who often rails against the West, also said he believed the United States, Britain and Israel were behind the Yemen conflict, aiming to "set the whole region on fire" in a bid to dominate the Middle East.
"I hope that my Yemeni brothers sit down and talk and negotiate and solve the problems," he said.
"SUSPICIOUS"
Yemen, the Arab world's poorest nation, became a focus of U.S.-led efforts to battle militancy after a Yemen-based wing of al Qaeda said it was behind a failed December 25 plot to bomb a U.S.-bound airliner.
The government of veteran ruler Ali Abdullah Saleh is also embroiled in a war with rebels of the Shi'ite Zaidi sect in northern provinces.
Yemen has accused clerics in Iran of backing the rebels and Iranian media have attacked Saudi Arabia for joining the war against the rebels.
Both Saudi Arabia and Yemen have stepped up efforts against the rebels in recent days. A Saudi defense official said on Tuesday that Saudi forces had killed hundreds of rebels who infiltrated the country along the Yemen-Saudi border. Those clashes also killed four Saudi soldiers.
Ahmadinejad accused the West of seeking to dominate the region, terming the September 11, 2001, attacks on the United States as "suspicious."
"All their planning is aimed at this goal. Human rights, fighting nuclear weapons and terrorism are all a big lie," he said. "With the pretext of September 11 they started the fire of war in Afghanistan, Iraq, Pakistan and today in Yemen."
Speaking a day after a bombing killed a Tehran scientist in an attack Iran blamed on Israel and the United States, Ahmadinejad also said the Jewish state was collapsing, state broadcaster IRIB reported.
"The supporters of Zionists should know that the Zionist regime is on the way down to collapse and no one can save it," he said. "The Iranian nation will cut from the arm any hand that has been extended to it with the aim (of committing) a crime."
(Additional reporting by Hossein Jaseb; writing by Fredrik Dahl; Editing by Charles Dick)
