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Defense Minister Ehud Barak said Thursday he favored the use of diplomatic pressure and sanctions against Iran's nuclear program but cautioned that Israel was "not afraid to take action".

"Currently, the focus is international sanctions and vigorous diplomatic activity, and these avenues should be exhausted," Barak said during his speech at a Labor Party meeting, adding: "Israel is the strongest country in the region and has proved in the past it is not afraid to take action when its vital security interests are at stake."

Barak's remarks came hours after Iran test launched a second round of missiles in the Persian Gulf before dawn Thursday. On Wednesday, the Islamic republic tested nine ballistic missiles it claimed were capable to striking Israel.

Wednesday's tests prompted the United States to declare that it would defend its allies at all costs. Meanwhile, Israel said Thursday it would exhibit an advanced aircraft capable of spying on Iran.

The Israel Aerospace Industries has planned an in-house exhibit Thursday of its Eitam airplane, unveiled a year ago and equipped with sophisticated intelligence-gathering systems.

On Thursday, Iranian state radio reported: "Deep in the Persian Gulf waters, the launch of different types of ground-to-sea, surface-to-surface, sea-to-air and the powerful launch of the Hout missile successfully took place." Iranian satellite channel Press TV said Hout was a torpedo.

Israeli experts have said that the missile launched as part of large-scale military exercise in Iran on Wednesday is not a more capable version of the Shahab-3 ballistic missile.

Revolutionary Guard Commanders said that the nine missiles tested were medium and long-range weapons including some that are capable of striking Israel.

General Hossein Salami, head of the Revolutionary Guards Air Force, claimed on Iranian television that a Shahab-3 long-range ballistic missile had been tested, which is capable of traveling longer distances, with greater accuracy, and with a larger payload.

"Our finger is always on the trigger, and our missiles are always ready to launch," he said.

However, Uzi Rubin, who was a program director of Homa, under which Israel developed the Arrow anti-missile system, is convinced that this was not a new version of the Iranian ballistic missile.

"From what I saw, this is an old version of the Shahab-3, and contrary to their claims, it is not capable of reaching 2,000 kilometers, only 1,300 kilometers," he said on Wednesday.

Rubin raised the possibility that a version of Shahab-3 with a 2,000 km range has still not been tested or is still not operational.

"Without being hasty, I note that the Iranians have a tendency to exaggerate to a certain extent the capabilities of their missiles," he said.

The test-firing of missiles was aimed at showing Israel and the U.S. that Tehran is capable of responding to threats against its nuclear installations.

Experts say that the Shahab-3 is based on a liquid fuel rocket that requires fueling prior to launch, a time consuming process that leaves the weapon vulnerable to beingidentified from the air.

But Dr. Nathan Farber of the Technion in Haifa says that the Iranians are in the process of developing a more advanced version of the Shahab, known as the Ashura, with a range of 2,000 km. According to Farber's assessment, the new missile uses solid propellants, which makes it easier to launch, although unlike the Shahab-3, its flight time to Israel is estimated at 14 minutes, compared to 11 of the older missile.

Intelligence analysts estimate that Iran has several hundred Shahab-3 in its arsenal, but a much larger stockpile, of several thousand shorter range missiles (up to 400 km) capable of targeting U.S. forces in Iraq or their allies in the Persian Gulf.

In Israel, even though the heads of the defense establishment do not often detail in public their preparations to counter a possible Iranian attack, a number of recent developments received center stage in Western media.

Most recently, a large-scale air force exercise, comprising approximately 100 aircraft, carried out a sortie to a distance of 1,500 kilometers over the Mediterranean - the same distance from Israel to some of Iran's nuclear installations in Isfahan. The air armada included fighters, aerial tankers, electronic warfare aircraft, and search and rescue helicopters.

On a number of occasions in recent months, defense officials stressed the need to bolster the "long arm" of the IDF through the air force. Recently retired air force chief Major General Eliezer Shkedi has called for the procurement of advanced strike aircraft, and Israel is expected to acquire F-35 stealth fighter bombers. Israel has asked the U.S. to consider moving forward the delivery date for such aircraft.

In parallel, Israel is preparing to carry out significant upgrades to the Arrow anti-missile system. The Arrow-3, which is funded in a multi-year program entitled Tefen, will be capable of intercepting ballistic missiles higher and further away from Israel.

One area in which Israel does not seem to be altering its preparations is on ways of preparing the home front for the possibility of missile strikes from Iran. A senior officer in the Home Front Command explained this week that plans for dealing with Iran's ballistic missiles are identical to the possibility that rockets or shorter-range missiles will strike Israel from Syria or Lebanon.

Defense officials to meet with U.S. counterparts on Iran threat

Senior defense officials will head to the United States over the coming weeks for talks with their American counterparts on the Iranian threat.

On his visit to the U.S. next week, Defense Minister Ehud Barak may meet with President George Bush and other senior members of the dministration. Talks are already planned between Barak and U.S. Defense Secretary Robert Gates.

IDF Chief of Staff Gabi Ashkenazi will also visit the U.S. in the near future, and according to recently released reports, Mossad chief Meir Dagan visited Washington this week.

U.S. Secretary of State Condoleezza Rice on Thursday warned Iran that the United States would not back down in the face of Iranian threats against Israel.

Rice also stated that the Iranian missile tests showed the need for the United States to develop a missile defense system.

Iranian officials have strongly suggested the country's missile test on Wednesday was itself a warning to Israel not to attack Iran's nuclear facilities. Israel has left that option open.

Rice said Thursday, at the close of a three-day Eastern European trip, that the U.S. would defend its interests and allies.

Study urges long-term policies to influence Iran

A military strike on Iran would be unlikely to force changes in Tehran's nuclear policy, the Rand research organization said on Thursday in an analysis recommending long-term policies to deal with the country.

The United States is leading international efforts to rein in Iran's suspected effort to develop nuclear weapons. Tehran says its nuclear program is for purely civilian energy purposes.

"If Iran's facilities were to be bombed, public support for any retaliation its government took would likely be widespread," the Rand report concluded.

"Attacks on Iran proper would generate a great deal of ill-will and, in our view, would be unlikely to change Iranian policy," said the report by the independent research group.

It added that "U.S. policy should focus on creating conditions for effective relations over the long haul."

The report recommended an expansion of contacts and exchanges with Iranian citizens; muting U.S. policy statements advocating "regime change" and penalizing the Iranian government and its officials for pursuing policies that harm U.S. interests.

"The U.S. government has some ability to foster favorable trends in Iran, but these policies will take time to come to fruition," the Rand report concluded.