Iran and Russia sign $1 bln defense deal: reports

MOSCOW (Reuters) - Russia plans to sell more than $1 billion worth of tactical surface-to-air missiles and other defense hardware to Iran, media reported on Friday.

Moscow is already at odds with the West over its nuclear ties with Tehran but has sought to use its warm relations with Iran to be recognized as a key mediator between the West and the Islamic Republic.

U.S. Under Secretary of State Nicholas Burns, visiting Moscow, told Ekho Moskvy radio he had raised the issue of arms sales to Iran with Russia's Foreign Ministry.

"For the past 25 years, in our opinion, Iran has supported terrorists in the Middle East, in the United States, and that is why we have very bad relations with them. You can understand why we do not support the sale of weapons to such a country," he said in comments simultaneously translated into Russian.

The Vedomosti business daily cited military sources as saying Iran would buy 29 TOR-M1 systems designed to bring down aircraft and guided missiles at low altitudes.

The paper, calling it the biggest sale of Russian defense hardware to Iran for about five years, said Moscow and Tehran had already signed the contract.

Interfax news agency separately quoted a source as saying the deal, which would also include modernizing Iran's air force and supplying some patrol boats, was worth more than $1 billion.

The move, likely to irritate Israel and the United States, could strain Moscow's efforts to broker a deal between Iran and European negotiators aimed at breaking a deadlock over Tehran's nuclear programme.

Israel in particular is nervous about Iran's military potential after President Mahmoud Ahmadinejad said in October that Israel should be "wiped off the map" -- comments condemned by Russia at the time.

WEST SUSPECTS IRAN

Russia's Defense Ministry declined to comment on the deal. Officials at state arms exporter Rosoboronexport, Russia's state defense supplier, were not available for comment.

Western countries suspect Iran of seeking nuclear weapons under the cover of a civilian atomic programme, which Tehran denies, saying it wants only to generate electricity.

Russia is helping Iran build its first nuclear reactor and is preparing to launch it next year. Some in the West fear that Iran could use Russian know-how to make sensitive weapons.

The defense industry source told Interfax there were no international restrictions on selling weapons to Iran.

"Moreover, practically all the weapons that Russia is delivering to Iran in the coming years are defensive rather than offensive in character," the source said.

One Western diplomat who closely watches Russia-Iran dealings said news of the deal was alarming and would further increase tensions.

"Russia has long positioned itself as a major peace broker between Iran and the West -- and all of a sudden they are throwing this bombshell. It just does not make any sense," said the diplomat, who asked to remain anonymous.

(Additional reporting by Maria Golovnina)