Defense Minister Ali Shamkhani stressed that Iran`s recent test of shahab-3 missile was successful, saying his ministry is ready to test it again 'in the presence of observers'. Iran said last month it carried out a successful test firing of an upgraded version of its shahab-3 medium-range ballistic missile. Shamkhani stressed that the Defense Ministry was confident of the successful test even before it was conducted. He said, "Given that an effective deterrent policy does not halt at a certain point, the Islamic Republic of Iran continues upgrading its defensive capability. Being powerful does not necessarily means war-mongering, neither do the roads of peace lead to concession," Shamkhani added.

Shamkhani said last month that Iran has now achieved an 'effective deterrent power' to confront its enemies in the region. "Today by relying on our defense industry capabilities, we have been able to increase our deterrent capacity against the military expansion of regional enemies," he said. "The Defense Ministry has put its capabilities in the ground, air, sea and missile domains in the three categories of fire, maneuver and precision into a race with their foreign rivals," Shamkhani added.

Military experts have said the shahab-3 missile is capable of striking Israel or any other enemy target in the region. The test came as Israel`s Arrow missile defense system, designed to counter threats such as the shahab-3, passed its first live test in July by downing a Scud missile off the coast of California. The Arrow-2 missile system, however, failed to destroy the detachable warhead of an incoming missile fired by a US Air Force aircraft in a test off the coast of California. News agencies said an advanced Israeli spy satellite meant to boost the Zionist state`s surveillance over Iran plunged into the sea Monday after a malfunction on liftoff.

Reuters said the Israeli Defense Ministry had blamed a failure in the third stage of the rocket launch for the loss of the $50 million Ofek-6 satellite. Ofek-6 -- the latest in an Israeli line of spy satellites first put into orbit in 1988 -- was destroyed when it crashed into the Mediterranean Sea, the news agency said. Reuters quoted Ephrain Sneh, head of the parliamentary defense subcommittee as saying that `the damage in terms of intelligence, financing, and prestige caused by the botched launch are unacceptable`.

The crash is seen a major setback to Israel`s attempts to upgrade methods of gathering intelligence on Iran. Iran has stressed that its missile program is defensive, while Iranian military commanders have warned of grave consequences if the Zionist state attacks the country. Tehran, however, has repudiated US Defense Secretary Donald H. Rumsfeld`s allegations that Iran may be working to develop missiles capable of reaching the United States.

"Acquiring missiles which could have a range to reach America is a new issue which we hear," Foreign Ministry spokesman Hamid Reza Asefi said last month. "Such a program is not on our agenda and this propaganda of certain American officials is only for media consumption," he said. Rumsfeld has named Iran among countries which were allegedly working to develop and deploy missiles capable of reaching the United States.

Tensions have been heightened by the US campaign to organize international pressure on Iran to halt its nuclear program, which Tehran says is strictly peaceful. Iran says the program is in accordance with the country`s bid to produce 7,000 megawatts of electricity in the next 20 years, when the country`s oil and gas reserves become overstretched. The United States, however, claims that Tehran`s nuclear program is a prelude to building an atomic bomb. Meanwhile, Iranian officials have dismissed threats against the country`s nuclear facilities as a `political and psychological warfare`.