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Speaking a week before he meets leaders of the Group of Eight (G-8) industrial nations in Germany, Putin said Russia's tests on Tuesday of two new missiles were a direct response to U.S. moves to create a missile defense system in Europe.

"We are not the initiators of this new round of the arms race," Putin told a joint Kremlin news conference.

"There is no need to fear Russia's actions: they are not aggressive," he said. "They are a mere response to harsh and groundless unilateral actions by our partners and are aimed at maintaining the balance of forces in the world."

Putin's comments, which will be popular among ordinary Russians in a year when there is a parliamentary election, are the latest in a line of harsh outbursts against the West.

On Tuesday, Russia test-fired a new intercontinental ballistic missile with multiple warheads and a new cruise missile, which Russian generals say are sufficient to ensure the country's security for the next 40 years.

"Our partners are stuffing eastern Europe with new weapons," Putin said. "What are we supposed to do? We cannot just observe all this."

Moscow has been alarmed by U.S. plans to deploy parts of its global missile defense system in Poland and the Czech Republic. Washington says it wants to avert attacks from "rogue states" such as Iran but Russia sees a threat to its own security.

"There is a clear desire by some international players to dictate their will to everyone without adhering to international law," Putin said. "International law has been replaced by political reasons."

"In our opinion it is nothing different from diktat, nothing different from imperialism," he added.

RUSSIA FORCED TO DESIGN NEW MISSILES

U.S. President George W. Bush said in an interview with a German newspaper that ties between the two countries were complex but he believed Russia was a friend of the United States.

In the interview conducted in Washington with the Frankfurter Allgemeine Zeitung and various other European newspapers, Bush was quoted as saying Russia was "not an enemy regime but a friend."

Relations between Russia and the United States are strained by issues that also include U.S. concerns that human rights and democracy are backsliding in Russia.

Putin and Bush have a chance to discuss their countries' differences at talks in the United States on July 1-2.

But on Thursday, U.S. Secretary of State Condoleezza Rice described the difficult relationship as a "mix of cooperation and competition, friendship and friction."

"But at times, Russia seems to think and act in the zero-sum terms of another era," she said in remarks prepared for a speech.

She said Russia's opposition to the missile shield was hard to understand. But Putin said Russia had to design new missiles after Washington quit the Cold War-era Anti-Ballistic Missile (ABM) treaty in order to pursue the shield project.

"We have warned them then that we will come out with a response to maintain the strategic balance in the world," he said. "We conducted a test of a new strategic ballistic missile with multiple warheads, and of a new cruise missile, and will continue to improve our resources."

In another move putting Russia at odds with the West, Putin has frozen Russia's commitments under the 1990 Conventional Forces in Europe (CFE) pact, which limits heavy weapons deployed between the Atlantic and the Urals mountains.