The Iranian defense minister said Tehran intends to produce its own long-range missiles to provide air defense for the country, the Iranian Press TV news website reported on Friday.
"At present, Iran is on the path to designing long-range missiles used in passive air defense," the website quoted Ahmad Vahidi as saying, RIA Novosti reported.
His statement comes in the wake of Russia's refusal to supply Iran with S-300 surface-to-air missile systems.
Moscow said in mid-June it would freeze the delivery of S-300 air-defense systems following a new round of UN sanctions imposed on Tehran on June 9. Security Council Resolution 1929 imposed a fourth set of sanctions on Iran over its nuclear program, including tougher financial controls and an expanded arms embargo.
Russian daily Nezavisimaya Gazeta suggested earlier in the week that Russia's losses will amount to the value of the contract plus penalties for breach of contract.
The S-300 contract is worth some $800 million, while Russian experts estimate the penalty for breach of contract at $400 million.
Furthermore, Iran could refuse to buy any more military products from Russia, leading to an estimated loss of $300 million to $500 million a year.
Russia initially said the delivery of S-300 systems to Iran would not be affected by the new UN sanctions since they are not included in the UN Register of Conventional Arms, but experts from the Federal Service for Military and Technical Cooperation concluded the missiles did come under the new set of sanctions.
A Kremlin source echoed that opinion on June 11, while Foreign Minister Sergei Lavrov said it was up to the president to make the final decision.
Moscow signed a contract on supplying Iran with at least five S-300 systems in December 2005, but nothing has been delivered. The United States and Israel have urged Russia not to fulfill the contract.