Russia may proceed with plans to sell advanced S-300 air defense systems to Iran under a secret contract believed to have been signed in 2005, a Russian analyst said on Monday.

Commenting on an article in the Sunday Telegraph newspaper saying Russia is using the plans as a bargaining chip in its standoff with America, Ruslan Pukhov, director of Moscow-based Center for Analysis of Strategies and Technologies, said: "In the current situation, when the U.S. and the West in general are stubbornly gearing toward a confrontation with Russia after the events in South Ossetia, the implementation of a lucrative contract on the deliveries of S-300 [air defense systems] to Iran looks like a logical step."

The U.S. and Israel were alarmed by media reports, which started circulating as early as 2005, on the possible delivery of S-300 surface-to-air missiles to Iran, as these systems could greatly improve Iranian defenses against any air strike on its strategically important sites, including nuclear facilities.

The advanced version of the S-300 missile system, called S-300PMU1 (SA-20 Gargoyle), has a range of over 150 kilometers (over 100 miles) and can intercept ballistic missiles and aircraft at low and high altitudes, making the system an effective tool for warding off possible air strikes.

The issue was again raised in December last year when Iranian Defense Minister Mostafa Mohammad Najjar said Russia had agreed to deliver to Iran an unspecified number of advanced S-300 air defense complexes under a previously signed contract.