MOSCOW- NATO's failure to build a joint European missile shield with Moscow may force Russia to deploy new offensive weapons and trigger a new arms race, Russian President Dmitry Medvedev said Tuesday in a stern warning reflecting the deeply rooted Kremlin distrust of Western intentions.

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Some experts downplayed the threat, saying that Russia lacks money and technologies to mount a military buildup.

NATO leaders have approved a plan for a missile defense in Europe at a summit in Lisbon earlier this month and invited Russia to join. Experts from both sides will analyze the issue and report to defense ministers in July.

"In the next 10 years, the following alternatives await us - either we reach agreement on missile defense and create a full joint cooperation mechanism, or, if we don't reach a constructive agreement, a new phase of the arms race will begin," Medvedev said in his annual address to both houses of parliament that burst into the loud applause. "And we will have to make a decision on deploying new means of attack. It's quite obvious that such a scenario would be extremely grave."

Medvedev, who attended the Russia-NATO summit in Lisbon, was receptive of NATO's proposal but didn't make a definitive commitment. He warned then that Russia might decide against joining the US-led effort if it doesn't feel it is being treated equally as a partner.

Medvedev's aide Arkady Dvorkovich told reporters Tuesday that the president views that scenario as "undoubtedly negative." "We will have to do everything to come to an agreement," he said.

Russia was strongly critical of the previous US administration plan to deploy missile defense sites in Poland and the Czech Republic and hailed President Barack Obama's decision to scrap it. But Moscow has remained concerned about the revamped US missile defense plans, seeing them as potentially dangerous to its security.

The New START nuclear arms reduction treaty that Obama and Medvedev signed in April doesn't prevent the US from building new missile defense systems, but Russia has stated it could withdraw from the treaty if it feels threatened by such a system in the future. The pact's future look bleak now after a key Senate Republican said earlier this month that he does not want to vote on the treaty during the current session.

In Moscow on Tuesday, some experts viewed Medvedev's warning about the possibility of a new arms race with skepticism, saying that it could be part of muscle-flexing aimed at speeding up talks with the West and emphasizing that Moscow can't afford a Cold War-style arms race anyway.

"This is sheer nonsense," Alexander Konovalov, director of the Moscow-based Institute for Strategic Assessment, an independent think tank, told The Associated Press. "Russia won't have the finances, technologies and industrial assets for any arms race."

Pavel Felgenhauer, an independent Moscow-based military analyst, also noted that despite the Kremlin's recent efforts to modernize military arsenals, Russia's current scientific and financial capabilities are far weaker than the Soviet military machine. "Because of Russia's technological backwardness, a real build-up is impossible," he said.

Despite such limitations, some observers say that Russia's hawkish military officials and defense corporations have been pushing for more spending on new weapons.

"We have enough corporations, groups and institutions that would push for the development of a multitude of new arms systems," foreign policy analyst Alexei Arbatov was quoted as saying by RIA Novosti news agency.

Apart from the technological weaknesses, the Russian military also faces a manpower shortage. The problem is partly related to the demographic plunge Russia has faced after the Soviet collapse.

Medvedev dedicated part of his 72-minute address to the problem, exhorting lawmakers to make improving the lives of children Russia's top task and proposed giving free land to families with three or more children.

Because of high mortality rates and a declining birth rate, Russia's population shrank some 7 million people from its 1991 high. However, the country reported a small population increase last year, to 141.8 million.