OSPF over RED

I am trying to set up a link between a UTM 9.3 and XG 16.

I can ping over the RED tunnel from end to end, but when I try to set up ospf the link looks like this:

   Neighbor ID Pri State           Dead Time Address         Interface            RXmtL RqstL DBsmL
172.31.254.10     1 ExStart/DR        32.026s 172.31.2.225    reds7:172.31.2.226       0     0     0

OSPF seems to work OK over a direct Ethernet link.

Config:

ospf# show run

Current configuration:
!
hostname ospf
log stdout
!
!
!
interface GuestAP
!
interface PortA
!
interface PortB
!
interface PortC
!
interface gre0
!
interface gretap0
!
interface imq0
!
interface imq1
!
interface ip6tnl0
!
interface ipsec0
!
interface lo
!
interface reds7
 ip ospf cost 1
!
interface reds21
!
interface sit0
!
router ospf
 ospf router-id 172.31.254.251
 ospf abr-type standard
 network 172.31.2.216/29 area 0.0.0.1
 network 172.31.2.224/29 area 0.0.0.1
!
line vty
 no login
! 
end

Any ideas??