Bush says Iran must release British "hostages"

By Jeremy Pelofsky

CAMP DAVID, Maryland (Reuters) - President Bush said on Saturday that Iran's detention of 15 British sailors and marines was inexcusable and called on Tehran to release "the hostages" immediately.

The standoff, which has helped push oil prices to six-month highs at a time of heightened Middle East tensions over Iran's nuclear program, showed no signs of easing.

Iranian President Mahmoud Ahmadinejad accused London of mishandling the aftermath of the March 23 capture of the British personnel in the northern Gulf after Britain expressed concern over Iranian "saber rattling."

Iran's ambassador to Moscow said the 15 Britons could face punishment if found guilty of illegally entering the Islamic republic's territorial waters.

Britain, the biggest ally of the United States in the war in Iraq, insists its sailors were seized well within Iraqi waters while on a U.N.-backed mission to search for smugglers.

Bush said he supported British Prime Minister Tony Blair's efforts to resolve the matter peacefully and rejected the idea of swapping Iranians held by the United States in Iraq for the detained Britons.

"The Iranians must give back the hostages. They're innocent," Bush told a news conference at the Camp David presidential retreat with visiting Brazilian President Luiz Inacio Lula da Silva.

"The Iranians took these people out of Iraqi waters. It's inexcusable behavior."