The one-minute video on state television showed parliament speaker Ali Larijani receiving a tour from the Iranian Revolutionary Guard Corps (IRGC) of the newly-inaugurated underground facility, complete with mobile "Emad" long-range ballistic missiles, Tasnim news agency, known to be close to the IRGC, reported on Tuesday.

The United States and its western allies have said an October test-firing of the Emad missile violated UN Security Council resolution 1929, as the missile could be used to carry a nuclear warhead.

In response, the US Treasury said it was mulling further sanctions on Tehran's missile program, but the Obama administration has delayed in the face of threats from Iran that such measures could scuttle a nuclear deal.

The public airing of the underground facility is a major challenge to the United States and its European allies as a landmark nuclear accord reached in July nears "implementation day.'

Iran has largely abided by the nuclear deal, under which it agreed to dismantle its nuclear program and subject it to monitoring in exchange for an end to sanctions related to its nuclear program.

The UN resolution authorizing the nuclear deal also prohibits Iran from testing ballistic missiles until the accord goes into effect - possibly as early as this month. It also "calls upon" Iran for eight years thereafter to not to carry out work "designed to" deliver nuclear warheads.

However, Iran says the ballistic missiles are conventional weapons, not "designed to" carry nuclear warheads even if they are "capable of" delivering them. Since Iran is not pursuing nuclear weapons and is giving up its program, Tehran argues, the UN resolutions do not apply to its ballistic missiles.

A UN expert report requested by the United States, France, Germany and Britain found that the October missile test violated the UN Security Resolution.

Expanding ballistic missiles

Supreme Leader Ayatollah Ali Khamenei would view new sanctions as violating the nuclear pact, according to Iranian officials.

Iran, which has one of the largest missile programs in the Middle East, has vowed to expand its capability.

"As the US government is clearly still pursuing its hostile policies and illegal meddling ... the armed forces need to quickly and significantly increase their missile capability," President Hassan Rouhani wrote in a letter to Defense Minister Hossein Dehghan in late December, only days after news broke that the US was considering new sanctions.

"The defense ministry, with the support of the armed forces, is tasked with putting in place new programs by all available means to increase the country's missile capability," he added.

Hossein has said Iran tested the Emad "to show the world that the Islamic Republic will only act based on its national interests and no country or power can impose its will on us."

A message to Saudi Arabia?

The public display of the new underground missile facility also comes amid mushrooming hostility between regional rivals Saudi Arabia and Iran following the execution of a top Shiite cleric.

Last week's execution of Nimr al-Nimr has set off a chain of events, including the severing of relations between Tehran and Riyadh following the ransacking of the Saudi embassy and consulate in Tehran and Mashad, respectively.

Saudi Arabia and Iran are locked in proxy wars in Yemen and Syria, and competing for influence across the Middle East, where the Riyadh has sought to create Sunni coalitions to counter Shiite Iran.

Iran's growing influence across the region has stoked concern in Saudi Arabia, which has used its vast oil wealth to stock up on expensive western weaponry over the past several years. It's also driven oil prices down along with other OPEC members, partly in anticipation of Iran's sanctions being lifted.

Those weapons purchases come as Saudi Arabia's chief backer, the United States, is reaching out to Iran as the two long-time foes find a convergence of common interests, particularly over the "Islamic State" in Syria and Iraq.

Equally troubling from Riyadh's perspective is the prospect that Iran's international isolation will come to an end following implementation of the nuclear accord. With "implementation day," Iran could receive tens of billions of dollars in windfall funds from blocked accounts. Saudi Arabia says these funds will empower Iran and its proxies.

cw/msh (Reuters)