Russia will respond to any US deployment of short or intermediate-range nuclear weapons in Europe by targeting not only the countries where they are stationed, but the United States itself, President Vladimir Putin says.

In his toughest remarks yet on a potential new arms race, Putin on Wednesday (US time) said Russia was not seeking confrontation and would not take the first step to deploy missiles in response to Washington's decision this month to quit a landmark Cold War-era arms control treaty.

Putin with US President Donald Trump. Putin warned that Russia will retaliate if the US puts such missiles on the continent. Photo / AP
Putin with US President Donald Trump. Putin warned that Russia will retaliate if the US puts such missiles on the continent. Photo / AP

But he said that Russia's reaction to any deployment would be resolute and that US policymakers, some of whom he said were obsessed with US exceptionalism, should calculate the risks before taking any steps.

"It's their right to think how they want. But can they count? I'm sure they can. Let them count the speed and the range of the weapons systems we are developing," Putin told Russia's political elite to strong applause.

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"Russia will be forced to create and deploy types of weapons which can be used not only in respect of those territories from which the direct threat to us originates, but also in respect of those territories where the centres of decision-making are located," he said.

Putin said Russia wants friendly relations with the United States and remains open for arms control talks with Washington. He said Moscow hopes to mend ties with the US, adding that "we don't want confrontation, particularly with such a global power as the U.S."

At the same time, he criticised what he described as the "destructive" US policy of targeting Russia with sanctions.

He added that Russia will be ready to engage in nuclear arms control talks with the US when Washington is ready for that, but said Moscow will not initiate such negotiations.

Putin rejected the US claim that its withdrawal from the 1987 Intermediate-Range Nuclear Forces treaty was prompted by Russian violations of the pact.

He charged that the US made false accusations against Russia to justify its decision to opt out of the pact.

Putin arrives to deliver a state-of-the-nation address. Photo / AP
Putin arrives to deliver a state-of-the-nation address. Photo / AP

Putin reaffirmed that Russia will not be the first to deploy new intermediate-range missiles in Europe, but warned that it will retaliate if the US puts such missiles on the continent.

He said it will not only target the host countries, but field new weapons that will target US decision-making centres.

Putin also said that Russia needs to focus on raising living standards ad that the government will increase social payments to support young families.

He promised tax breaks, lower mortgage rates and housing subsidies for families with several children.

Russia's Poseidon nuclear-powered underwater drone is seen in a video taken somewhere in Russia. Photo / AP
Russia's Poseidon nuclear-powered underwater drone is seen in a video taken somewhere in Russia. Photo / AP

He said that the tax burden on developers will be eased to encourage them to expand housing construction.

Putin also emphasised the need to combat poverty, saying that 19 million of Russia's approximately 147 million people live below the official poverty line, currently the equivalent of around US$160 ($232) a month.