MOSCOW -- Russian President Vladimir Putin warned that Moscow would take "retaliatory steps" if Washington proceeds with building a missile defense system for Europe, in an interview released Monday.

Speaking to foreign reporters days before he heads to Germany for the annual summit with U.S. President George Bush and the other Group of Eight leaders, Putin assailed the White House plan to place a radar system in the Czech Republic and interceptor missiles in neighboring Poland. Washington says the system is needed to counter a potential threat from Iran.

Putin said neither Iran nor another pariah state, North Korea, have the rockets that the system is intended to shoot down, suggesting the system would be used instead against Russia.

"We are being told the anti-missile defense system is targeted against something that does not exist. Doesn't it seem funny to you, to say the least?" an irritated Putin said.

He added that the planned missile shield would cover Russia's territory up to the Ural Mountains.

"It would be funny if it wasn't so sad," he said.

Putin lamented that the planned system would be "an integral part of the U.S. nuclear arsenal" in Europe -- an unprecedented step. "It simply changes the entire configuration of international security."

He said he hoped that U.S. officials would change their minds regarding the missile plan, warning that Moscow was preparing a tit-for-tat response.

"If this doesn't happen, then we disclaim responsibility for our retaliatory steps, because it is not we who are the initiators of the new arms race, which is undoubtedly brewing in Europe," Putin said.

"The strategic balance in the world is being upset and in order to restore this balance without creating an anti-missile defense on our territory we will be creating a system of countering that anti-missile system, which is what we are doing now," Putin said.

Last week, Russia tested a new ballistic missile capable of carrying multiple nuclear warheads and a new cruise missile. While Western analysts said the system has probably been under development for several years, Putin has described the test as part of Moscow's response to the U.S. anti-missile plan.

In an interview published by Italy's Corriere della Sera on Sunday Putin also suggested that Russia could respond to the threat by aiming its nuclear weapons at Europe.

Asked whether the planned U.S. missile defense shield in Eastern Europe would compel Moscow to target its own missiles on U.S. military sites and other locations in Europe, Putin replied, "Naturally, yes."

"If the American nuclear potential grows in European territory, we have to give ourselves new targets in Europe," he was quoted as saying. "It is up to our military to define these targets, in addition to defining the choice between ballistic and cruise missiles. But this is just a technical aspect."

Putin also suggested that in the absence of a real threat from Iranian and North Korean missiles, the U.S. plan could be an attempt to spoil Russia's relations with Europe.

Relations between Moscow and Washington have soured in the past year. The two former Cold War foes are at odds over Washington's missile plans, over Russia's conflicts with former Soviet nations -- including Ukraine, Georgia and Estonia -- and over U.S. concerns of democratic backsliding in Russia.