TEHRAN, 21 October 2004 — Iran said it test fired yesterday a more accurate version of its Shahab-3 missile, the latest in a series of vaunted upgrades to the weapon thought capable of hitting Israel and US bases in the Gulf.

Iran announced earlier this month it had increased the missile’s range to 2,000 km, which includes parts of southern Europe. Military experts had previously reckoned it was only capable of hitting targets within 1,300 km.

“We test fired a more accurate version of the Shahab-3 in the presence of observers,” Defense Minister Ali Shamkhani said after a weekly Cabinet meeting. Based on the North Korean Nodong-1 and modified with Russian technology, the Shahab-3 was first deployed to Iran’s Revolutionary Guard in July 2003.

“Iran’s policy of announcing its missile tests is a matter of orchestrated saber-rattling,” said Israeli defense expert Uzi Rubin, former head of the Jewish state’s “Arrow” missile defense program.

“What is interesting here is the absence of any mention of the Shahab-3’s increased range. By focusing instead on its accuracy, the announcement reflects a growing uneasiness in Tehran at the implications of an increased-range missile vis-à-vis the European Union,” he added.

EU diplomats are trying to strike a deal with Iran to encourage it to give up uranium enrichment to defuse a dispute over whether Tehran is seeking nuclear arms. Washington wants to haul Iran before the UN Security Council in November for possible sanctions after a meeting of the UN nuclear watchdog.

Meanwhile, Iran offered Europe a compromise plan to resolve a standoff over its nuclear program, a senior official said yesterday, as the president vowed to continue developing Iranian nuclear technology. Vice President Gholamreza Aghazadeh would not provide any detail about the Iranian offer, which he disclosed a day before Iranian diplomats are to meet representatives of Britain, Germany and France in Vienna, Austria.

The Europeans have been working on a package of economic incentives in the hope of persuading Tehran to permanently give up uranium enrichment, a technology that can be used to produce nuclear reactor fuel or weapons. “We have submitted proposals to the Europeans. Now we are waiting for their reaction to our plan,” Aghazadeh told reporters. He said the plan would not compromise Iran’s right to enrich uranium. Aghazadeh made clear that enrichment was a red line for Iran. “We have some very important principles. These principles can’t be altered. Nuclear technology has become a local technology now,” Aghazadeh said.

President Mohammad Khatami said his government was prepared to negotiate ways of assuring the world that Iran’s nuclear program would not be used to make nuclear bombs. “We don’t want anything against the law,” Khatami said.

“We are fully prepared for an understanding with the world and cooperation with the International Atomic Energy Agency to assure that our activities won’t be diverted toward weapons,” he said.