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Nato says there is no provision for member states to be suspended or expelled from the military alliance after a report said the US could seek to suspend Spain over its Iran war stance.
Reuters quoted a US official who said an internal Pentagon email had suggested measures for the US to punish allies it believed had failed to support its campaign.
The email also suggested reviewing the US position on the UK's claim to the Falklands islands in the south Atlantic, which are also claimed by Argentina.
A Nato official told the BBC that the organisation's founding treaty "does not foresee any provision for suspension of Nato membership, or expulsion".
Spain's leader has also dismissed the report. The BBC has contacted the Pentagon and UK government for comment.
Donald Trump has repeatedly criticised Nato allies for their reluctance to play a greater role after the US and Israel attacked Iran in late February and Iran subsequently restricted shipping through the key Strait of Hormuz route.
Spain has refused to allow the use of air bases on its territory for attacks on Iran. The US has two military bases in Spain, Naval Station Rota and MorĂłn Air Base.
Pedro Sanchez told reporters: "We do not work based on emails. We work with official documents and official positions taken, in this case, by the government of the United States."
Sanchez added that Spain supported "full cooperation with its allies, but always within the framework of international law."
Meanwhile UK Prime Minister Keir Starmer has insisted that greater involvement in the war or the current US blockade of Iran's ports is not in the UK's interest. The UK has allowed the US to use British bases to launch strikes on Iranian sites targeting the Strait of Hormuz and RAF planes have taken part in missions to shoot down Iranian drones.
The UK, France and others have said they would be willing to keep the Strait of Hormuz open after a lasting ceasefire or the end of the war.
Last month Trump said he had always considered Nato to be a "one-way street". "We will protect them, but they will do nothing for us," he wrote.
The internal Pentagon email said access, basing and overflight rights (ABO) were "just the absolute baseline for Nato", the unnamed US official told Reuters.
As possible retaliation for this perceived lack of cooperation, the email suggested reassessing American diplomatic support for longstanding European "imperial possessions" such as the Falkland Islands, Reuters quoted the US official as saying.
The Falklands, known in Argentina as the Malvinas, are about 8,000 miles from the UK and about 300 miles from mainland Argentina.
Argentina has long claimed sovereignty over the islands, a British overseas territory in the south-west Atlantic Ocean. The two countries fought a war over the issue, after Argentine forces invaded the islands in 1982.
Another option in the email outlined suspending "difficult" countries from important positions within the alliance, according to the official.
The official told Reuters that the memo does not suggest that the US could withdraw from the alliance, nor does it propose closing bases in Europe.
In response to the Reuters story, Pentagon Press Secretary Kingsley Wilson said that despite "everything" the US has done for its Nato allies, "they were not there for us".
She added: "The War Department will ensure that the president has credible options to ensure that our allies are no longer a paper tiger and instead do their part.
We have no further comment on any internal deliberations to that effect."
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