JERUSALEM — Russian Defense Minister Pavel Grachev and Prime Minister Shimon Peres have signed a military cooperation pact aimed at boosting Moscow's relations with Israel.

Peres and the visiting Grachev signed a memo of understanding Friday of last week that seeks to enhance military ties during the next two years.

The pact calls for exchanges of military officials and visits to Israeli and Russian military sites.

Grachev, whose visit here was the first by a Russian defense minister, said the agreement also opened the way for cooperation on the design and modernization of weapons.

But he denied reports that the agreement included secret provisions enabling Russia to sell weapons to Israel.

"We are not hiding anything," he said during a tour of northern Israel. "Russia and Israel have not signed any secret accord in addition to what has already been published."

During his stay, Grachev proposed the establishment of a regional security system for the Middle East and the Persian Gulf, offering Russia's help in setting it up.

Russia, a co-sponsor of the Middle East peace process, re-established ties with Israel in 1991 after 24 years.

Grachev's visit to Israel reflected efforts by Moscow to pursue a more balanced policy in the Middle East, after years in which Moscow was the chief arms supplier to some of Israel's Arab neighbors.

"For Russia, this is not a simple step, since we have military relations with several Middle Eastern countries, but we recognize Israel's uniqueness and special position in the region and the world," Grachev said.

Peres welcomed Moscow's spirit of cooperation when he met with Grachev.

"Your coming to Israel symbolizes, more than anything, the end to the sad chapter in relations between us," Peres said. "We expect to move forward in deepening cooperation with the large country that you represent."

During their meeting, Peres briefed Grachev on Israel's peace policies and also voiced concerns about the threat of Islamic fundamentalism to regional stability.

Peres also said Israel was worried about Russia's plans to build a nuclear reactor in Iran. Grachev countered by saying that the reactor would be for civilian purposes only.

Grachev also toured the Yad Vashem Holocaust Memorial and visited the grave of Prime Minister Yitzhak Rabin, where he laid a wreath.