* Assad says Syria crisis did not block arms contract
* EU arms embargo on Syria lapses on June 1
* Israel concerned S-300 could reach deep into Jewish state
Russia has yet to send advanced anti-aircraft missiles to Syria, a source close to the Russian defence ministry said on Thursday, but President Bashar al-Assad said Moscow was still committed to the contract to deliver them.
A Lebanese newspaper had earlier quoted Assad as saying in an interview that Moscow had already sent a first shipment of S-300 missiles. When the actual interview was broadcast, however, the Syrian leader stopped short of saying the missiles had arrived.
"Everything we have agreed on with Russia will take place, and part of it has already taken place," he said, without giving further details.
The arrival of the missiles would be seen as a major worry for the Western and regional countries that oppose Assad.
The advanced missiles would make it far more dangerous for Western countries to impose any future no-fly zone over Syrian air space, and could even be used to shoot down aircraft deep over the air space of neighbours like Israel or Turkey.
Russia has promised to deliver the missile system despite Western objections, saying the move would help stabilise the regional balance.
Moscow is a staunch ally of Assad and it has appeared to grow more defiant since the European Union let its arms embargo on Syria expire as of June 1, opening up the possibility of EU countries arming the Syrian rebels.
Asked in his interview with Lebanon's Al-Manar television about delivery of Russian S-300 air defence missiles, Assad said: "The contracts with Russia are not linked to the crisis and Russia is committed to implementing these contracts."
A source close to the Russian Defence Ministry said the missile "hardware itself" was not in Syria yet but that "certain measures or parts of the contract may have been fulfilled", without giving further details.
The source said Moscow initially had qualms about delivering on the 2010 contract because of fighting in Syria, but decided to go ahead after NATO moved to deploy its own surface-to-air weapons - Patriot missiles - in Turkey near the Syrian border.
"We put it on hold for a certain period of time, but as we saw there was no good will (from NATO), we decided to fulfil the contract."
The United States, France and Israel have all called on Russia to stop the missile delivery.
More than 80,000 people have been killed in Syria since peaceful protests against four decades of Assad family rule spiralled into a civil war, pitting the president's forces and his ally, Hezbollah, against Syrian rebels and a flow of Sunni Islamist militants who have come to help them from abroad.
Moscow says the expiry of the EU embargo complicates U.S. and Russian-led efforts to set up a peace conference between the Syrian government and its opponents, who demand an immediate end to Assad family rule.
GENEVA 2 CONFERENCE
Assad said his government planned to go to the "Geneva 2" conference, though he was unconvinced of a fruitful outcome and pledged to continue fighting the uprising.
Asked whether Syria had any preconditions for attendance, he said: "The only condition is that anything to be implemented will be submitted to Syrian public opinion and a Syrian referendum."
By taking part in the peace talks, Syria would effectively be negotiating with its international foes backing the opposition, he said.
"When we negotiate with the slave, we are actually negotiating with the master."
Officials in Israel, the main U.S. ally in the region, say the S-300 could reach deep into the Jewish state and threaten flights over its main commercial airport near Tel Aviv.
Assad also stressed the importance of ties between his forces and Lebanon's Shi'ite militia Hezbollah, now openly fighting on the Syrian side of the frontier on his behalf.
"Why is Hezbollah on the border inside Lebanon or Syria? Because the battle is a battle with the Israeli enemy or its agents in Syria and Lebanon," he told Al-Manar, which is Hezbollah's television channel.
He said hundreds of thousands of Syrian troops were battling tens of thousands - possibly 100,000 - "terrorists" across the country, but the balance of power had shifted because rebels were losing sympathy among their own people.
Assad's forces have waged a series of counter-offensives in recent weeks around the capital Damascus, in the southern province of Deraa and in Qusair, close to the Lebanese border.