Iran dominates US hearing on UAE nuclear deal

* Senior Republican says cannot support nuclear deal

* US nuclear power companies eager to tap UAE market

* Video raises human rights concerns

By Doug Palmer

WASHINGTON, July 8 (Reuters) - U.S. lawmakers expressed concern on Wednesday about the United Arab Emirates' ties with Iran as they debated a U.S. nuclear cooperation agreement with the moderate Gulf state that is expected to go into force in October.

Iran is one of the UAE's biggest trading partners but lawmakers said the relationship also poses security risks. The West fears Iran's nuclear program could be used to build nuclear weapons but Tehran says it is solely for civilian power generation.

Representative Howard Berman, who chairs the House of Representatives Foreign Affairs Committee, said the main issue was "the extent to which the UAE has been a reliable partner of the United States in working to prevent Iran's efforts to develop a nuclear weapons capability."

"For many years, Iran has sought to use the UAE as a transit point to illicitly procure items to support its nuclear and other WMD (weapons of mass destruction) programs."

Although the UAE has taken steps over the last two years to combat money laundering and terrorist financing and to strengthen export controls, "a nuclear cooperation agreement at this point ... is one line some of us are not prepared to cross," said Representative Illeana Ros-Lehtinen, the top Republican on the panel.

President Barack Obama formally submitted the so-called "123 Agreement" to Congress in May after determining it would enhance U.S. national security, rather than pose an unreasonable risk.

The pact was negotiated and signed by the administration of former President George W. Bush before leaving office.

Undersecretary of State Ellen Tauscher told lawmakers the UAE made a number of "unprecedented commitments" in the pact to ensure it would not use U.S. technology to develop a nuclear weapon or help others in the region do that.

"The UAE's expressed commitment not to pursue enrichment and reprocessing capabilities is a marked contrast to Iran, which continues to defy its international obligations...," she said.

Although the UAE was the world's third-largest oil exporter in 2007, it plans to build a number of nuclear reactors to meet an expected need for an additional 40,000 megawatts of electricity by 2017.

U.S. nuclear reactor builders GE (GE.N) and Westinghouse Electric Co, a subsidiary of Toshiba Corp (6502.T), hope to get a big share of the expected $40 billion market if Congress does not block the deal.

Stopping it would require both the House and the Senate to approve a joint resolution of disapproval within 90 days of Obama submitting to Congress. Berman said the review period for the agreement would end on Oct. 17.

Representative James McGovern said he was concerned about a video that surfaced this spring that "depicts Sheikh Issa bin Zayed al Nahyan severely torturing an Afghani grain dealer with the help of his uniformed official personnel."

Sheikh Issa, a member of Abu Dhabi's ruling family, was detained by prosecutors in May after the 2004 video surfaced. But McGovern said he was concerned by reports that Sheikh Issa still has not been charged with any crime.

(Editing by Cynthia Osterman)