Iran's nuclear programs have been a source of major controversy since the beginning of the year, as many countries suspect the Islamic Republic of pursuing a covert weapons program under the pretext of civilian research, despite its claims to the contrary.

The bilateral meeting between the presidents took place on the sidelines of an annual summit of the Shanghai Cooperation Organization in Shanghai where Iran is present as an observer. The summit is expected to bring some progress in the deadlocked talks over Iran's nuclear efforts.

According to RIA Novosti, Vladimir Putin told Mahmoud Ahmadinejad that Iran was aware of Russia's position on its nuclear program.

"We are probably the only country that proactively and openly cooperates with Iran in nuclear energy and completely honors its commitments," Putin said.

Ahmadinejad said the two countries' positions on the nuclear problem were clear and similar.

After Iran said it would resume nuclear research in January, Russia proposed setting up a joint venture with Iran on Russian territory for industrial uranium enrichment - the process that has caused most fears in the international community, as it can be used to produce weapons grade material.

"I think we must go even further than that," Putin told Ahmadinejad.

Putin called in January for the establishment of global infrastructure to give all interested countries access to nuclear energy with reliable non-proliferation guarantees. He said Russia was ready to build an international center to offer nuclear fuel cycle services, including uranium enrichment under the control of the International Atomic Energy Agency, the UN's nuclear watchdog.

The Russian leader Thursday urged his Iranian counterpart to express his position on a package of incentives that six countries negotiating on Iran's nuclear program - China, Russia, U.S., Britain, Germany and France - had agreed upon to persuade the Islamic Republic to abandon nuclear research.

EU foreign policy chief Javier Solana handed the offer to Tehran during a visit to Iran June 6.

"We would like to hear your opinion on the incentives," Putin said.

Ahmadinejad was similarly upbeat in reply to Putin's remarks about bilateral relations.

"[Iran] considers its ties with Russia to be long-term and very strong," he said. "We do not view Russia as a rival."

The Iranian leader also praised bilateral efforts in maintaining peace in the Middle East, saying that the situation in the region could have exploded long ago had it not been for Moscow and Tehran.

"Our cooperation in politics and security can seriously affect peace and security in the region," he said, adding that the situation remained volatile.

The Shanghai Cooperation Organization includes Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Iran holds observer status in the organization, along with Pakistan, India, and Mongolia.

"We can cooperate in the Persian Gulf, Central Asia and the Caucasus," Ahmadinejad said, adding that partnership would be oriented to peace and security.