Russia has threatened to place missiles in the EU's backyard if the US continues with its plan to set up a missile defence shield in Poland.
Russia's first deputy Prime Minister Sergei Ivanov says Russia could place missiles in Kaliningrad, which is surrounded by Poland and Lithuania, signalling a fresh surge in tensions between the west and Russia, UK newspaper The Times reported.
The US wants to place ten interceptor missiles in Poland and a radar station in the Czech Republic to counter possible attacks from countries such as Iran. Russia says the plan is a threat to its own security, and has responded with threats to target missiles at the EU if the US continues with its plans.
Russia has presented several alternative plans to the US, including the creation of a joint Russia-Nato early-warning centre to analyse data on missile launches, which President Bush says are 'very innovative' and has promised to study them.
"If our offers are accepted, Russia will not consider it necessary to deploy rockets in the European part of the country, including Kaliningrad, to counter the threat," Mr Ivanov says.
"If our proposal is not accepted, we will take adequate measures. An asymmetrical and effective response will be found. We know that we will do this."