Vladimir Putin, the Russian president [AFP]

Vladimir Putin, the Russian president, has said that his country could take "retaliatory steps" if Washington goes ahead with plans to build a missile defense system in Europe.

His remarks are the latest in a series of harsh rhetorics between the two countries over this thorny issue.

Polls show that more than 60 per cent of Czechs are against plans to station a radar system southwest of Prague, and surveys in Poland - where 10 interceptor missiles would be based - show strong opposition there as well.

Both countries are still negotiating with the US over whether to host the shield.

Bush has sought to play down Russia's response, which has overshadowed his European trip.

So, is it the beginning of a 'new cold war'?

And what will the fallout be for Europe? 

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This episode of Inside Story aired on 4 June 2007

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