BERLIN, March 8 (Reuters)
Germany will not follow Britain's lead in declaring Iran-backed Hezbollah a terrorist organisation, a senior official was quoted as saying on Friday, a decision that may fuel tensions with Saudi Arabia and the United States.
Minister of State Niels Annen told weekly news magazine Der Spiegel that the Shi'ite Muslim Islamist movement remained a relevant factor in Lebanese society and the European Union had already added its military wing to a list of proscribed groups in 2013.
Britain last month said it would ban all wings of Hezbollah for destabilising the Middle East.
Long the most powerful group in Lebanon, Hezbollah's influence has expanded at home and in the region. It controls three of 30 ministries in the government led by Western-backed Prime Minister Saad al-Hariri, the largest number ever.
Iran and Hezbollah, founded in 1982 by the Iranian Revolutionary Guards, are big players in the Syria war allied with President Bashar al-Assad.
Saudi Arabia, the United States and Israel have pressured allies to ban Hezbollah in its entirety.
Annen, who spoke to Spiegel after a visit to Lebanon, said Germany was interested in Lebanese stability and Britain's decision would have no direct impact on the position of Germany or the European Union.
Earlier on Friday, Hezbollah leader Sayyed Hassan Nasrallah had said other nations may follow Britain's example.
"Despite all that is said and done, they will be disappointed. Their actions will not be able to make us poor, hungry or isolated. Those that support us will continue in their support - be they countries, people or our people and the people of resistance in Lebanon," he said in a televised speech.
Germany's Annen rejected U.S. criticism his nation was doing too little to combat Iran's influence in the region and said Berlin's foreign policy remained focused on finding political solutions even in tough situations.
Germany has criticised the U.S. decision to withdraw from the 2015 nuclear agreement with Iran, and worked with France and the European Union to set up an alternative financing mechanism that would allow European firms to do business with Tehran despite U.S. financial sanctions.
Germany's refusal to ban Hezbollah as a whole could add to tensions with Riyadh over its leadership of a coalition fighting the Iran-backed Houthis in Yemen, and the killing of journalist Jamal Khashoggi.
France, Britain and European arms makers are pressing Germany to end a unilateral freeze in arms shipments to Saudi Arabia imposed by Berlin after Khashoggi's death that is holding up billions of euros of weapons deliveries. (Reporting by Andrea Shalal in Berlin; Additional reporting by Lisa Barrington in Beirut; Editing by Andrew Cawthorne)