WASHINGTON - President Barack Obama on Thursday overhauled plans for a missile defense shield in eastern Europe, promising instead stronger, swifter defense systems to protect U.S. allies against any threat from Iran.

In a move that may ease tensions with Moscow but spur regional fears of resurgent Kremlin influence, Obama said he had approved recommendations from U.S. military leaders to shift focus to defending against Iran's short and medium-term missile capabilities.

This new approach will provide capabilities sooner, build on proven systems and offer greater defenses against the threat of missile attack, Obama said in a brief statement on scrapping plans for ground-based interceptors in Poland and a related radar site in the Czech Republic.

Moscow said it would welcome the decision to drop the program, which had complicated U.S. efforts to enlist Russian support over Afghanistan, Iran and nuclear arms control.

But critics accused the White House of going soft on defense by dropping the project, which had raised hopes of huge contracts among U.S. defense giants.

Senator John McCain, the Republican presidential candidate who lost to Obama in 2008, blasted the move as seriously misguided and former U.S. ambassador to the United Nations John Bolton, once a leading hawk under the Bush administration, was scathing.

It's just unambiguously bad decision, he said. Russia and Iran are the big winners. I just think it's a bad day for American national security.

The Bush administration had proposed the system amid concerns Iran was trying to develop nuclear warheads it could mount on long-range missiles.

The shield was intended to defend against any long-range missile launches from rogue states such as Iran and North Korea. Russia saw it as a threat to its missile defenses and its overall security.

Outlining the new approach, Defense Secretary Robert Gates said on Thursday the United States would deploy Aegis ships equipped with interceptors to defend European allies and U.S. forces against any threats.

Gates said land-based defense systems would be fielded in a second phase starting in about 2015.

We have now the opportunity to deploy new sensors and interceptors in northern and southern Europe that near term can provide missile defense coverage against more immediate threats from Iran or others, he said.

Shares of U.S. companies involved in missile defense, including Boeing Co, Lockheed Martin Corp, Northrop Grumman Corp and Raytheon Co, were little changed in early trade on the New York Stock Exchange.

The decision had been widely anticipated, with the contractors likely to benefit from the administration's revised missile-defense plans.

EASTERN EUROPEAN FEARS

It was unclear, however, if the renewed promises of U.S. support would ease fears in Eastern Europe states, many of which had seen the large-scale missile plan as a symbol of U.S. commitment to the defense against any encroachment by its former Soviet rulers 20 years after the end of communist rule.
Obama informed the Czech and Polish governments of his decision just hours before the announcement, officials said.

Some European analysts said the U.S. move could help the traditionally pro-American region to build a more pragmatic relationship with both Washington and Moscow.

I think we have to approach this decision with calm. The U.S. president has changed and so has U.S. foreign policy. I don't think the enemy is just outside our gate, said Iwona Jakubowska-Branicka of Warsaw University.

Pentagon officials said the decision to move away from the shield was based on intelligence indicating Iran is focused on developing short- and medium-range missiles rather than the long-range intercontinental missiles originally feared.

The decision comes as Obama administration seeks to reset battered ties with Russia so that the two former Cold War foes can cooperate on Iran, on fighting Taliban insurgents in Afghanistan and on cutting their nuclear arsenals.

Washington has won permission to move trains carrying supplies for U.S. forces across Russia via Central Asia to Afghanistan, avoiding routes through Pakistan that had come under frequent attack from the Taliban.

Diplomats in Moscow say Russian hardliners could read the move as a sign of U.S. weakness and then press for further gains to shore up Russian power in the former Soviet bloc, where Russia already engaged in a brief war with Georgia last year and periodic clashes with Ukraine over gas supplies.

Ignoring U.S. assurances that the system was not targeted at Russia, President Dmitry Medvedev threatened last year to station missiles in a Russian enclave near Poland if the United States implemented the plan.

Democratic Senator Charles Schumer said Washington would now await Moscow's response.

The Russians should return the gesture. It is time for Russia to join our push to impose stricter sanctions on Iran in order to halt its nuclear weapons program, he said in a statement.

A senior Iranian government source said the move could signal a move away from what he called 'threats and confrontation' over Iran's nuclear program.

There could be two reasons behind such a decision; either the U.S. has reached the conclusion that Iran is not a threat, or the Russians may have convinced the Americans that there is no need for such a defense shield.

(Additional reporting by Jan Lopatka in Prague, Conor Sweeney in Moscow, Jim Wolf in Washington and Ross Colvin in Baghdad, Tim Hepher; Writing by Andrew Quinn; Editing by Patricia Wilson and Jackie Frank)

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