UPDATE 2-Russia confirms Syria-bound ship carried helicopters
* Russia says repaired aircraft were aboard cargo vessel
* Lavrov says Russia will continue to fulfill arms contracts
* Says Russia has not changed its position on Syria (Adds quotes, context, changes sourcing)
By Thomas Grove and Steve Gutterman
MOSCOW/ST. PETERSBURG, Russia, June 21 (Reuters) - Russia acknowledged on Thursday that it was trying to send repaired combat helicopters to Syria and said it would continue to carry out arms contracts with President Bashar al-Assad's government despite Western and Arab criticism.
Foreign Minister Sergei Lavrov also made clear Russia and the United States remain at odds over a solution in Syria after a meeting between Presidents Barack Obama and Vladimir Putin, saying Assad's exit cannot be a precondition for a political process.
On the sidelines of an economic forum in St. Petersburg, where Putin courted foreign investment, Lavrov said that the Alaed, a cargo ship that changed course this week after losing its insurance cover off Scotland, was carrying weapons to Syria.
Britain's foreign minister Williams Hague said on Tuesday that the Curacao-flagged vessel had apparently headed back toward Russia after a London-based insurer withdrew coverage when informed of allegations it was carrying weapons.
Lavrov defended the abortive delivery and lashed out at the West over the incident, saying that the weapons could not be used against civilians protesting Assad's rule and that the insurance company had no right to withdraw coverage.
"The ship was carrying air defence systems, which can be used only for repelling foreign aggression and not against peaceful demonstrators, and it was carrying three repaired helicopters," Lavrov told Ekho Mosvky radio.
U.S. officials have called Russian arms deliveries to Syria reprehensible, and a senior Arab League official was quoted as saying in Russia on Thursday that "any assistance in aiding violence should be stopped".
"When you deliver military equipment you are helping to kill people. That should be stopped," Interfax quoted the League's deputy secretary general Ahmed Ben Helli as saying in response to a question about Russian military cooperation with Syria.
There is no full U.N. embargo of Syria, in part because Russia holds veto power as a permanent U.N. Security Council member.
"I will repeat: We are not violating anything, and we will continue to fulfill our contractual obligations," Lavrov said.
He said the helicopters, made in the Soviet era, had been repaired under a 2008 contract and shipped in dismantled form, adding that it would take at least three months to assemble them.
"And so to say that the Russians were bringing helicopters that could be used against peaceful demonstrators is a rather slanted position aimed to whip up passions and cast Russia in a bad light," Lavrov said.
Syria is Moscow's firmest foothold in the Middle East, buys weapons from Russia worth billions of dollars, and hosts the Russian navy's only permanent warm water port outside the former Soviet Union.
Russia has used its Security Council veto to dilute Western efforts to condemn Assad and secure his exit from power, arguing that it is not up to outsiders to decide the political matters of sovereign states.
Putin and Obama agreed during their first meeting as presidents on Monday that the violence in Syria has to end but they offered no new solutions and showed no signs of healing a rift over whether to impose tougher sanctions on Damascus.
British Prime Minister David Cameron, who also met Putin at a G20 meeting in Mexico, later said Putin had shifted his view of Assad and that discussions were now focused on a transition of power in Syria, but both Obama and Putin contradicted that.
"When David Cameron ... said that Russia had changed its position, that is the purest untruth," Lavrov said.
"It's clear that a blueprint under which President Assad must go away somewhere before anything happens in terms of an end to violence and a political process will not work, because he won't go," Lavrov said.
He said external players should press Assad and his foes to stop fighting and sit down for talks but not set conditions. (Additional reporting By Alissa de Carbonnel; Editing by Diana Abdallah MacSwan)