The U.S. has called Russia's proposal on the joint use of the Gabala radar station in Azerbaijan “a constructive move ahead”. It is seen by Moscow as a compromise alternative to the U.S. plans on deploying elements of its ABM system in Europe.

The proposal was made by Russian President Vladimir Putin to his U.S. counterpart George W. Bush on the sidelines of the recent G8 summit in Germany.

U.S. officials have stressed they see the region as the best location for pre-empting missile threats from Iran, something that Russia doubted, saying Iran does not possess such missiles.

The Russian military says the U.S. initiative could threaten Russian security and even launch a new arms race. Washington so far has withheld judgment on Vladimir Putin's offer, saying it needs time to study it.

Meanwhile, talks continue on the deployment according to the original plan. But the White House said the U.S. and Russia now have a basis for conversation.

Vladimir Putin and George Bush will discuss the issue at the Bush family ranch in July.