Middle East
18 July 2012
Last updated at 23:36 GMT
Yemeni President Abdrabuh Mansur Hadi later warned Iran to "leave Yemen to mind its own affairs".
His warning echoes US claims that Iran is meddling in Yemen, which is still wrestling secessionism and rebellion.
Few details were given about the arrests, which appear mainly to have been of Yemeni nationals.
But in his later comments, President Hadi appeared to threaten to make details of allegations linking Iran to the spy ring public.
"We will embarrass them in front of the world," he was quoted as saying on state TV.
"I will take the necessary steps, and a heavy price will be paid if you continue with this manner."
He called on Iran to "take into consideration the delicate circumstances the country is passing through... We say from here to leave Yemen to mind its own affairs, and that is enough for now."
Saudi 'rivalry' President Hadi's message echoes that of the US ambassador to Yemen Gerald Feierstein earlier this year, says the BBC's Natalia Antelava in Sanaa.
He said that Iran was sponsoring Shia Muslims in northern Yemen and supporting secessionists in the south in an attempt to undermine Saudi influence in Yemen.
Back then Iranians reacted angrily, saying that Washington, not Tehran, that was meddling in Yemen's affairs.
Many in Yemen would agree, our correspondent says - the US ambassador, who often describes the Yemeni government as "we", has been widely criticised for acting, in the words of one activist, "like a colonial master".
Washington also seems to have increased the number of drone strikes against militants.
The attacks have killed many civilians and have made the US widely unpopular in Yemen, our correspondent adds.
President Hadi has threatened to embarrass Iran with details of the alleged spy ring
Yemen's interior ministry has announced it has arrested members of an alleged Iranian-led spy ring.
The spy ring operated in the Horn of Africa with the
operations centre in Sanaa and was headed by a former member of Iran's
Revolutionary Guard, it said.Yemeni President Abdrabuh Mansur Hadi later warned Iran to "leave Yemen to mind its own affairs".
His warning echoes US claims that Iran is meddling in Yemen, which is still wrestling secessionism and rebellion.
Few details were given about the arrests, which appear mainly to have been of Yemeni nationals.
But in his later comments, President Hadi appeared to threaten to make details of allegations linking Iran to the spy ring public.
"We will embarrass them in front of the world," he was quoted as saying on state TV.
"I will take the necessary steps, and a heavy price will be paid if you continue with this manner."
He called on Iran to "take into consideration the delicate circumstances the country is passing through... We say from here to leave Yemen to mind its own affairs, and that is enough for now."
Saudi 'rivalry' President Hadi's message echoes that of the US ambassador to Yemen Gerald Feierstein earlier this year, says the BBC's Natalia Antelava in Sanaa.
He said that Iran was sponsoring Shia Muslims in northern Yemen and supporting secessionists in the south in an attempt to undermine Saudi influence in Yemen.
Back then Iranians reacted angrily, saying that Washington, not Tehran, that was meddling in Yemen's affairs.
Many in Yemen would agree, our correspondent says - the US ambassador, who often describes the Yemeni government as "we", has been widely criticised for acting, in the words of one activist, "like a colonial master".
Washington also seems to have increased the number of drone strikes against militants.
The attacks have killed many civilians and have made the US widely unpopular in Yemen, our correspondent adds.
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