LONDON (Reuters) - Saudi Arabia has warned Nato that it would pursue policies that could lead to untold and possibly dramatic consequences if Iran obtains nuclear weapons, a British newspaper reported on Wednesday. The Guardian newspaper quoted Prince Turki al-Faisal, a former Saudi intelligence chief and ambassador to Washington and Britain, speaking to senior Nato officials earlier this month at an unpublicised meeting at a British air base. Faisal did not outline what the policies would be, but the Guardian quoted an unnamed Saudi official in Riyadh it said was close to the prince as saying that Iranian nuclear weapons would compel the Gulf state do develop its own nuclear arms. We cannot live in a situation where Iran has nuclear weapons and we dont ... If Iran develops a nuclear weapon, that will be unacceptable to us and we will have to follow suit, the Guardian quoted the official as saying. Iran says its nuclear programme is for peaceful purposes, but Saudi Arabia, other Gulf states, Israel and the West fear the Islamic republic is developing nuclear weapons. Earlier on Wednesday, Britain accused Iran of carrying out covert tests of a missile that could carry a nuclear warhead, in violation of a UN resolution, an accusation which Tehran immediately denied.