Russia-West relations took a downturn this week when Moscow warned that any stationing of military equipment along its border with Europe could have "dangerous consequences" and President Vladimir Putin announced that Russia would add more than 40 ballistic missiles to its nuclear arsenal this year. At a military and arms fair on Tuesday, Putin announced the addition of the intercontinental ballistic missiles which, he said, were able to overcome "even the most technically advanced anti-missile defense systems." After the announcement, Jens Stoltenberg, the secretary-general of the North Atlantic Treaty Organization (NATO), said that Putin's statement was one reason why the international military alliance was upping its deterrence measures.

Kirill Kudryavtsev | AFP | Getty Images

The Russian Foreign Ministry issued its warning on Monday against military presence on its western border after the New York Times and other media organizations reported that the U.S. had offered to store military equipment for up to 5,000 troops—including battle tanks and heavy weapons—in allied eastern European countries. "The emergence of such information confirms that the U.S., in cooperation with its allies, apparently has serious sights on ultimately undermining key provisions in the 'NATO Russia Founding Act' of 1997, in which the alliance pledged not to deploy substantial combat forces on the territory of the countries mentioned in the permanent basis," the ministry said in a statement on its website.

"We hope, however, that reason will prevail and that the situation in Europe will be able to keep from sliding to a new military confrontation that could have dangerous consequences." An U.S. Pentagon official told the NYT that no decision had yet been made and that NATO, to which many European countries belong, would have to ratify such a move.

"The U.S. military continues to review the best location to store these materials in consultation with our allies," said a Pentagon spokesman said, cited by the NYT. "At this time, we have made no decision about if or when to move to this equipment."

Propaganda and Phobia

Eastern European and Baltic states sharing a border with Russia—which include Finland, Estonia, Latvia and Ukraine—have become increasingly nervous about recent, seemingly provocative military exercises by Russia. This follows Moscow's annexation of Ukraine's Crimea region last year, role in the pro-Russian uprising in Ukraine and subsequent sanctioning by the West.

Read MoreIs Finland really getting ready for war with Russia? Nonetheless, the Russian Foreign Ministry said the proposed move by the U.S. to station military equipment along the border was part of a propaganda plot to turn Europe against Moscow. "Washington says the planned measures are needed to 'increase the confidence' of European allies in the face of the 'Russian threat,'" the ministry said. "In fact, capitals in both Washington and in Europe are aware that the 'Russian threat' is nothing more than a myth."

The countries where military equipment could be stored include Bulgaria, Latvia, Lithuania, Poland, Romania, Estonia and possible Hungary. The plans could be decided upon when defense ministers from the 28 NATO member countries meet later in June. A Russian defense official was also quoted on Monday as saying that any U.S. plan to station tanks and heavy weapons in NATO states on Russia's border would be an "aggressive step," news agency Interfax reported. Read MoreWatch out for this Russia downgrade risk "If heavy U.S. military equipment, including tanks, artillery batteries and other equipment really does turn up in countries in eastern Europe and the Baltics, that will be the most aggressive step by the Pentagon and NATO since the Cold War," Russian defense ministry official General Yuri Yakubov said. He was also quoted as saying Moscow would retaliate by building up its own forces "on the Western strategic front."

All about Ukraine

With the war of words between the U.S. and Russia threatening to descend into something nastier, Ian Bremmer, president of risk consultancy Eurasia Group, said the geo-political tension was very much focused on Ukraine.

"We have seen a ceasefire in Ukraine that has not held, we have seen an escalation in Russian war material in east Ukraine, we've seen casualties in the last few weeks and expanded Russian military exercises on the border as well as more Russian troops," he told CNBC Europe's "Squawk Box." "From the western perspective it does seem laughable that Russia would talks about the greatest escalation by the Americans potentially putting tanks in the Baltics, which still hasn't been approved by NATO as a whole, when Russia is putting tanks in countries that don't want those tanks there. This is very much about Ukraine." Moscow has also accused the U.S. of being responsible for the political uprising in Ukraine in 2014 that preceded the annexation of Crimea, in which the pro-Russian leader Viktor Yanukovych was ousted. "It is convenient to use propaganda to cover up the responsibility of the U.S. for the anti-constitutional coup in Ukraine and in Kiev," said the Russian Foreign Ministry in its statement. "The U.S. has assiduously nurtured an anti-Russian among its European allies in order to take advantage of the current difficult moment for the further expansion of its military presence."