MOSCOW, December 5 (RIA Novosti) - Russian Defense Minister and Deputy Prime Minister Sergei Ivanov said Monday that Russia was ready to supply Iran with modernized Tor-M1 anti-aircraft systems.

"A contract has been signed with Iran on supplying Tor anti-aircraft systems. This in no way affects the balance of forces in the region," Ivanov said following talks with Indian Prime Minister Manmohan Singh.

Ivanov said Russia strictly observed international law in supplying the Islamic Republic with armaments.

The minister said Tor-M1 systems were defensive short-range weapons.

"These systems can be used only to defend against aircraft at limited distances," Ivanov said. "They cannot strike at ground targets - they are strictly defensive systems."

Earlier, Russian newspaper Vedomosti cited unidentified sources in the Russian defense industry as saying that Russian and Iranian officials had signed contracts in November worth $700 million that would send 29 Tor-M1 missile systems to Iran in the next two years.

The TOR-M1 surface-to-air missile system is a fifth-generation mobile, integrated air defense system, designed for operation at medium, low and very low altitudes, against fixed/rotary wing aircraft, UAVs, guided missiles and other high-precision weapons.