Leader Ayatollah Ali Khamenei speaks live on television after casting his ballot

Iran's Supreme Leader Ayatollah Ali Khamenei speaks live on television after casting his ballot in the Iranian presidential election in Tehran June 12, 2009. REUTERS/Caren Firouz 

(By Michelle Moghtader and Mehrdad Balali)

DUBAI (Reuters) - Iran's Supreme Leader described as "stupid and idiotic" Western expectations for his country to curb its missile development, striking a defiant tone ahead of a fresh round of nuclear talks.

Ayatollah Ali Khamenei called on Iran's Revolutionary Guards to mass produce missiles and said the nuclear negotiations were not the place to discuss Tehran's defense program or to solve the problem of sanctions damaging the Iranian economy.

"They expect us to limit our missile program while they constantly threaten Iran with military action," Khamenei was quoted as telling the IRNA news agency while on a visit to an aeronautics fair held by the Revolutionary Guards.

"So this is a stupid, idiotic expectation ... The revolutionary guards should definitely carry out their program and not be satisfied with the present level. They should mass produce. This is a main duty of all military officials."

Iran and the United States, France, Germany, Britain, China and Russia will reconvene in Vienna on Tuesday to try to iron out differences over how to end a long standoff over suspicions that Tehran has sought the means to develop nuclear weapons.

While missiles are not at the heart of the talks over Iran's nuclear work, which center on the production of fissile material usable in atomic bombs, Western countries would like them discussed at the nuclear discussions.

Iran has one of the biggest missile programs in the Middle East, viewing it as an essential precautionary defense against the United States and other adversaries such as Israel.

The United States and its allies fret that such missiles could potentially carry nuclear warheads.

"EVIL-MINDED" PEOPLE

The Islamic Republic denies accusations that it is seeking a capability to make nuclear weapons. It insists that the missiles are part of its conventional armed forces and rules out including them on the agenda of the nuclear discussions.

Khamenei's comments appeared at odds with more conciliatory remarks earlier by President Hassan Rouhani, who said he wanted Iran to do a better job of explaining its nuclear program to prevent "evil-minded" people misleading world opinion.

"What we can offer the world is greater transparency," Rouhani said in a speech at a ceremony celebrating Iran's scientific achievements.

Western powers have long demanded greater openness from Iran to address their concerns and head off a downward spiral towards a new Middle East war, with Israel threatening to attack its arch-foe if diplomacy does not succeed.

Rouhani is a relative moderate compared to his predecessor, conservative hardliner Mahmoud Ahmadinejad, who used strident rhetoric during his eight years in office, serving to shore up international resolve to curb Iran's nuclear program.

Khamenei, who has the last word on all matters in Iran, has backed Rouhani's cautious opening to the West and nuclear talks with world powers, but has also said he doubts the West is ready to bury what he sees as its hostility to Tehran.

On Sunday, he expressed further such misgivings.

"I have always been in favor of initiative and negotiation in foreign policy ... but one must not tie our country's needs and issues like sanctions to the (nuclear) talks," IRNA quoted Khamenei as saying. "Officials should tackle the sanctions issue in another way."

PAINFUL SANCTIONS

Iran in January halted its most sensitive nuclear operations under a preliminary deal with world powers, winning some relief from painful economic sanctions that have damaged its oil-dependent economy by forcing a sharp reduction in crude exports.

Rouhani said Iran if it so chose could resume enrichment of uranium gas to a fissile purity of 20 percent - its most sensitive nuclear activity because it is a relatively short technical step away from the level required for nuclear weapons.

"We wanted to tell the world that our activities are moving in the right direction: If we say we can enrich to 3.5 percent, we can do it. If necessary we will do (it to) 20 percent," he said.

Iran agreed under the November 24 deal to shelve enrichment to 20 percent. It has since diluted some of its 20 percent-enriched stockpile to a lower concentration and converted some into an oxide less suited to processing into bomb-grade material.

Iran has justified its 20 percent enrichment drive by saying it was meant to replenish the fuel supply of a Tehran medical research reactor. But Western officials are skeptical, saying Iran had refined far more than it required for such a purpose.

While Iran stopped 20 percent enrichment in January, it is allowed under the November pact to keep producing uranium refined to up to 5 percent, the level required for fuelling civilian nuclear power stations.

Senior Iranian nuclear negotiator Abbas Araghchi was quoted by IRNA on Sunday as saying Iran would discuss all areas of their nuclear program to come to a "quick" resolution.

He said the "drafting of the final nuclear deal" would begin in Vienna. Talks will start on Tuesday with a working dinner between EU foreign policy chief Catherine Ashton and Iranian foreign minister Mohammad Javad Zarif, according to IRNA.

(Editing by William Maclean and Rosalind Russell)