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Iran’s rogue regime has significantly advanced its cyber military capabilities over the last couple of years, now flaunting it as a “source of national pride,” according to a cyber security expert.

Experts fear Iran, already pursuing nuclear weapons as its leaders amp up their rhetoric against Israel, could mount a digital attack against the West or Israel in retaliation for crippling economic sanctions. Austin Heap, executive director of the Censorship Research Center, said the cyber buildup has gone on even as the world focused on Tehran’s drive to acquire nukes.

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“Since (the Green Movement of) 2009, they made technology their priority,” said Heap, who also works on developing technologies for increasing Internet freedom.

Shortly after the 2009 elections, in which democracy-minded Iranians mounted a doomed effort to topple their government at the ballot box, Heap, a 28-year-old programmer living in Northern California, instructed Iranians on how to run proxy servers to access government-blocked Internet sites during the so-called “Twitter Revolution.”

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The uprising was ultimately – and brutally – crushed. But it demonstrated the Iranian people’s ability to use the Internet and social media sites to organize and voice disenchantment against the regime.

“The government realized how behind their technology was, and since then, they have invested heavily in both their domestic network censorship and surveillance to boosting their offensive cyber capabilities to launch against their enemies,” Heap said.

Only recently, the Iranian regime denied involvement in a round of cyber attacks in which a virus infected servers and erased files in 30,000 computers at Saudi oil company Aramco. Oil pumped by Aramco has helped the West compensate for a drop in Iranian oil exports caused by Western-imposed sanctions.

A similar virus shut down banking sites across the U.S., preventing online activity, exposing vulnerabilities here. Defense Secretary Leon Panetta warned that the U.S. was at risk of a “cyber-Pearl Harbor,” at a speech discussing the cyber sabotage.

"Before September 11, 2001, the warning signs were there,” Panetta said. “We weren't organized. We weren't ready. And we suffered terribly for that lack of attention. We cannot let that happen again. This is a pre-9/11 moment."

While not directly accusing the Iranian regime, he called the banking attack “the most destructive attack that the private sector has seen to date,” citing that Iran has “undertaken a concerted effort to use cyberspace to its advantage,” according to the AP.

Iran was on the other end of a mysterious and powerful cyber attack in 2010, when the computer worm known as Stuxnet infiltrated Iranian servers and destroyed nearly 20 percent of Iran’s nuclear centrifuges. Stuxnet is widely believed to have been designed by Israel and the U.S. With the Aramco and U.S. banking attacks, Iran is fighting back in kind, said Heap.

“It seems like Iran is just trying to show that they can play with the big boys,” Heap said. “A smart hacker doesn’t want to get caught. The longer you can remain undetected, the longer you can focus on your adversary. I think these attacks were designed to prove a point and get attention.”

Iran has denied the allegations.

"One of the main aims of the United States is to make itself look like the victim," Mehdi Akhavan Beh-Abadi, director of Iran’s National Center of Cyberspace, said this week, dismissing U.S. accusations that the Iranian regime was behind the attacks.

Suppressing the free flow of ideas and censoring popular sentiment are nothing new for the Islamic Republic, which has engaged in a “soft war” against Western ideas, influence and infiltration since the 2009 uprisings.

To beef up its cyber capabilities both at home and abroad, Iran has been investing in its Cyber Police Unit, organized by the country’s Islamic Revolutionary Guard Corps between 2009 and 2011 mainly to shadow Iranian social media activity inside the country.

A task force of 250,000 cyber police currently monitors the Internet, specific sites, blogs and individuals suspected of using circumvention tools. Roughly $76 million of the total $11.5 billion allocated to the Islamic Revolution Guard Corps has been spent on cyber warfare, a battle “against old enemies using new strategies,” the government once said about combating cyber dissidents in a hard-line newspaper.

The government announced plans last year to disconnect Iran from the rest of the world and run a parallel “Islamically permissible” or “halal” internal network that would automatically censor material and block popular global sites and search engines, such as Facebook, Google and Wikipedia.

“The government has been able to cut us off from the most common sites such as Facebook. I’m sure they’d use their cyber capabilities to weaken its opponents,” a blogger wrote this week, in response to Western accusations against the Iranian regime for recent attacks.

Another blogger wrote, “If the Iranian regime feels that its existence is threatened and or if a foreign military attack is launched, Iran will use its cyber capabilities to preemptively strike against these nations.”

“This will be the harbinger of war!” she wrote.

Heap said the distinction between cyber war and conventional fighting is rapidly blurring.

“We are getting closer and closer to the line where web attacks will lead to bullets, and no one knows where the end zone is. It’s a game that’s being figured out in real time,” Heap said. “This is the arms race of our lifetime. The missiles are now on the Internet. There’s nothing anyone can do to contain the Internet war.”