Iran said it will start making higher-grade reactor fuel on Tuesday and will add 10 uranium enrichment plants over the next year in a nuclear expansion sure to stoke tensions with the West. Iranian defense minister also announced launch of two production lines to build unmanned aircraft with surveillance and attack capabilities. It was also announced that Tehran would soon deploy a missile air defense system more powerful than the advanced Russian S-300 system it has ordered from Moscow in 2007 but has yet to receive. The state television quoted Defense Minister Gen. Ahmad Vahidi as saying the unmanned aircraft would be able to carry out surveillance as well as offensive tasks with high precision and a long range. The two types of aircraft, or drones, are named Ra'd (thunder) and Nazir (herald), with the former possessing offensive capabilities. Iran informed the UN nuclear agency in a letter Monday about its decision to enrich uranium at its Natanz plant to a level of 20 percent for use in the reactor producing medical isotopes, compared with the 3.5 percent it now makes. “Today we handed over the letter,” Iran's envoy to the International Atomic Energy Agency (IAEA), Ali Asghar Soltanieh, told Iran's Arabic-language Al-Alam state television. The letter said 20 percent enrichment would start on Tuesday with the aim of later converting it into fuel and it invited UN inspectors to monitor the process, Soltanieh told Reuters. The statement by Iran's Atomic Energy Organization head Ali Akbar Salehi followed orders from President Mahmoud Ahmadinejad Sunday for work to begin on producing atomic fuel for a Tehran research reactor. Salehi earlier told Al Alam: “Iran will set up 10 uranium enrichment centers next year.” The Iranian year starts in March. Iran mooted such a plan late last year but gave no time frame. The announcements raise the stakes in Iran's dispute with the West, although experts doubt Tehran has the technical ability to launch 10 new plants so soon and believe it is finding it harder to obtain crucial components due to UN sanctions. Analysts say it may be a negotiating tactic to prod the West into accepting Iranian terms for a nuclear fuel swap. But it could backfire if it only serves to make Western powers determined to push for more sanctions against Iran, the world's fifth-largest oil exporter, over its refusal to suspend enrichment. Ahmadinejad said Iran remained open to a proposed nuclear fuel exchange with world powers, which they hope would minimize the risk of Iran developing atomic bombs. Iran says it wants only to generate electricity from low-level enrichment. Salehi suggested production of the material would be halted if Iran could import 20 percent uranium, the degree of purity required for conversion into special fuel needed to run a Tehran nuclear medicine reactor, Iran's stated goal for the move. Ahmadinejad's contradictory signals over the last week - first expressing readiness to send LEU abroad and then announcing that Iran would start producing 20 percent fuel itself - also could be a sign of Iran's political turmoil.