Russia has taken a “principled” decision to sell Iran an improved version of the S-300 air defence missiles and to build a second nuclear reactor at Bushehr, a Russian newspaper reported.

President Vladimir Putin instructed the government to prepare the two proposals for his meeting with his Iranian counterpart, Hassan Rouhani, on Friday on the sidelines of a Shanghai Cooperation Organisation summit in Bishkek, Kyrgyzstan, the Kommersant daily said on Wednesday quoting a source close to the Kremlin.

The source said Russia is ready to supply five batteries of the S-300VM long-range air defence system, also known as Antei-2500.

The offer comes three years after then President Dmitry Medvedev cancelled a 2007 contract to supply five batteries of S-300PMU-1 to Iran, even though the move was over and above the sanctions imposed on Tehran by the U.S. Security Council.

The deal is conditioned on Iran withdrawing a $4-billion damages suit it filed with the International Court of Arbitration in Geneva against Russia for backing out of the earlier deal, the Kommersant said.

“The Antei-2500 system suits Iran even better than the S-300PMU-1, for it is more effective in intercepting missiles. If Iran is attacked, it will be primarily with missiles,” said military expert Vladimir Yevseyev of the Centre of Sociopolitical Studies.

Experts said Russia is cementing ties with Iran in response to recent U.S. push for regime change in Syria.

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