Iran is set to upgrade its nuclear reactor capability by replacing its 5-megawatt reactor in Tehran with Arak's 40-megawatt heavy water research reactor, the Tehran Times reported.

The Iranian newspaper quoted the Atomic Energy Organization of Iran's Director Reza Aqazadeh as saying that "Tehran's reactor will be turned off by the time that Arak's reactor is started up."

Heavy water nuclear centers can be used to convert uranium into plutonium, for use in the production of nuclear weapons.

The "Arak research reactor is due for completion in 2009 and will make isotopes for medical, industrial, and other peaceful uses," the Tehran Times claimed.

Iran has asked the International Atomic Agency for aid in setting up the Arak nuclear site, but Aqazadeh was quoted as saying that "the work on the Arak research reactor will continue whether the agency provides technical assistance or not."

"It will be more harmful to the agency if it refuses assistance," he warned.

Meanwhile, in Jeddah, Saudi Arabia, Iran's Foreign Minister Manouchehr Mottaki urged Arab and Muslim countries to "cut their diplomatic ties with Israel and avoid having any economic ties with Israeli corporations" on Saturday, the Iran Daily newspaper reported.

"A fair peace will not materialize in Palestinian territories, unless its original inhabitants take control of their country," the Iranian foreign minister said.