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* Defence system in place of S-300 Russia refused to sell

* Iran upgrading weapons systems, holding drills to show

defence readiness

* Israel warns time running out to halt Iran nuclear

programme

DUBAI, Sept 3 (Reuters) – Iran has built about 30 percent of

a missile defence system it is developing in place of the

Russian S-300 system Moscow refused to sell it, and hopes to

complete the system by next year, a senior military official

said on Monday.

Farzad Esmaili, commander of the army’s air defence force,

also reiterated that Iran will hold a large-scale air defence

exercise in the next two months covering the whole country, the

Iranian Students’ News Agency (ISNA) reported.

Iran, under mounting pressure from Israel and Western powers

over its controversial nuclear programme, has unveiled upgrades

to weapons systems and held several military exercises this year

to demonstrate its ability to defend itself.

Israeli Prime Minister Benjamin Netanyahu urged world powers

on Sunday to make clear to Tehran that they would not let it

obtain nuclear arms. Israeli rhetoric has stoked speculation

that Israel might attack Iran’s nuclear sites, some buried deep

underground, before the U.S. presidential election in November.

Western powers suspect Iran of trying to develop a nuclear

weapons capability and have imposed several rounds of sanctions

on it, but Tehran says its nuclear programme is for purely

peaceful purposes and refuses to suspend it.

ISNA quoted Esmaili on Monday as saying Iran would test its

air defence systems in mid-to-late October or early November.

“We will use whatever we have in order to defend Iran,”

Esmaili said. “Today the main threat is an air threat, because

it achieves quick results, therefore it was felt it was

necessary that air defences work independently.”

“One of our missions is being vigilant over sensitive

centres like refineries and nuclear sites,” Esmaili said.

“A new, more advanced system with higher capabilities than

the S-300 in detecting, identifying and destroying targets is

pending,” ISNA quoted Esmaili as saying. “About 30 percent of

the work related to building the Bavar-373 has been completed

and we will make efforts so that we can announce the completion

of this project by next year.”

Moscow refused to sell the sophisticated S-300 system to

Iran on the ground that it would violate expanded U.N. sanctions

imposed over Iran’s nuclear programme.

Iran announced in November 2010 that it had adapted another

Russian-made missile system to perform more like the S-300, a

precision, mobile, long-range air defence system that can

detect, track and destroy ballistic missiles, cruise missiles,

and low-flying aircraft.

Military experts have cast doubt on Iran’s claims of weapons

advances, especially regarding its missile programme, saying

they are often exaggerated.

On Sunday, deputy defence minister Mohammad Eslami said

plans were afoot to install missiles on long-distance unmanned

drones that featured in missile tests earlier this year.

Authorities say the Karrar drone, unveiled in 2010, has a

range of 1,000 kms (625 miles) and can carry a single cruise

missile or several smaller missiles.