President Vladimir Putin declared the onset of a "new arms race" yesterday and vowed to expand Russia's military strength to ward off predatory foreign powers.

In a televised address to the State Council in Moscow, Mr Putin delivered the belligerent rhetoric which has become his hallmark.

Appraising global events, the president said: "It is already clear that a new phase in the arms race is unfolding in the world."

He added that "no steps towards compromise" had yet been made on America's plan to station a missile defence shield in Europe.

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"There has been no constructive response to our well-founded concerns," said Mr Putin. Consequently, he has vowed to modernise Russia's armed forces.

"We are being forced to take retaliatory steps. Russia has and always will have a response to these new challenges. In the near future, Russia will start production of new weapons systems that will not be inferior and in some cases excel those held by other countries."

This was necessary to defend Russia from unnamed foreign powers who, he claimed, were bent on controlling the world's natural resources.

"Foreign policy actions and diplomatic moves smell of oil and gas," said Mr Putin.

Among his audience yesterday was Roman Abramovich, the billionaire owner of Chelsea football club, who attended in his capacity as governor of Chukotka region in the Russian Far East.

This speech may have been Mr Putin's last before he hands over power at the presidential election due on March 2. His chosen successor, Dmitry Medvedev, will become president while Mr Putin will move sideways to be prime minister.

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