MOSCOW (Reuters) - President Dmitry Medvedev warned on Tuesday that a new arms race would erupt within the next decade unless Russia and the West forged an agreement to cooperate on building a missile defense system.

Russia's President Dmitry Medvedev makes his annual state of the nation address at the Kremlin's St. George Hall in Moscow, November 30, 2010. REUTERS/Dmitry Astakhov/RIA Novosti/Kremlin

In his annual state of the nation address, Medvedev called for closer cooperation with the United States and the European Union, holding out the prospect of closer ties two decades after the Soviet Union’s collapse ended the Cold War.

He said tension would ratchet up fast, forcing Russia to bolster its military arsenal, if Western offers of cooperation on a system to defend against missile threats failed to produce a concrete agreement.

The warning appeared to reflect wariness in the Kremlin over uncertainty about Senate ratification of New START, the nuclear arms limitation pact Medvedev signed with President Barack Obama in April, centerpiece of the push for better ties.

“In the coming decade we face the following alternatives: Either we reach agreement on missile defense and create a full-fledged joint mechanism of cooperation, or ... a new round of the arms race will begin,” Medvedev said.

“And we will have to take a decision about the deployment of new offensive weapons. It is clear that this scenario would be very grave.”

The remarks, in a 72-minute speech to members of parliament and ministers, raised the stakes in sensitive discussions with the United States and NATO on missile defense. The issue has divided Moscow and the West since the 1980s.

Medvedev agreed to NATO’s offer of missile defense cooperation at a summit with the alliance that was hailed as a fresh start, but the plans are sketchy and Russia has warned it wants an equal voice in evaluating threats and responses.

Medvedev has pursued warmer ties with the West and particularly Washington since he was steered into the presidency by his predecessor, Vladimir Putin.

He has embraced Obama’s efforts to “reset” a relationship that hit post-Cold War lows during Russia’s war with Georgia in August 2008, months after he took office.

RESET UNDER THREAT?

After the address, Kremlin aide Arkady Dvorkovich told journalists the collapse of the New START pact “would mean nothing good and we are counting on ratification going through.”

Obama wants the treaty ratified before his Democratic Party’s majority decreases when the new Senate elected this month convenes early next year.

Medvedev’s comments also seemed aimed to assuage hard-liners and assure Russians steeped in decades of anti-Western rhetoric that Moscow will not open itself up to a threat.

When Medvedev said Russia might have to deploy more weapons, applause broke out after a brief pause before he went on to say that would be “very grave.”

Russia has emphasized it could withdraw from New START if a U.S. missile defense system becomes a threat to its security.

“Russia wants a legally binding agreement on missile defense because it sees potential threats,” said military analyst Pavel Felgenhauer. But he said Russia “does not have the capabilities” to hold its own in an arms race in the foreseeable future.

Fyodor Lukyanov, editor of the journal “Russia in Global Affairs,” said Medvedev’s message was that if Russia is shut out of meaningful missile defense cooperation, it “will try to take measures to counter that by modernizing its nuclear arsenal.”

The Kremlin’s pursuit of better ties with the West has been accompanied by calls for a stronger say across a broad swath of the globe including Europe, America and the ex-Soviet Union.

“I see significant potential in broadening cooperation with the European Union and the United States,” Medvedev said, though he underscored that Moscow wants concrete benefits such as help on Moscow’s bid to join the WTO.