Story Highlights• Putin accuses U.S. of reigniting arms race in Europe
• Rice criticizes Russia's record on human rights, democracy
• Tensions come ahead of next week's G8 summit in Germany
• Putin to visit President Bush in Maine on July 1 and 2
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(CNN) -- Tensions between the United States and Russia ratcheted up another notch Thursday, with accusations flying over ballistic missiles and human rights.
Russian President Vladimir Putin accused Washington of touching off a new arms race with its plans to set up a missile defense shield in Europe.
Putin said Russia's testing of new intercontinental and cruise missiles earlier this week was "aimed at maintaining the balance of forces in the world."
"Our partners are filling Eastern Europe with new weapons," he told reporters in Moscow in a joint news conference with Greek President Carolos Papoulias.
"What are we supposed to do? We cannot just observe all this. In our opinion, it is nothing different from 'diktat,' nothing different from imperialism."
Washington is currently discussing deployment of parts of the system with Poland and the Czech Republic.
The White House denied that a new Cold War is beginning and said the system is designed to defend allies vulnerable to ballistic missiles. White House spokesman Tony Snow said Washington is trying to reassure Russia that the anti-missile system is a defensive -- and not aggressive -- deployment.
In Germany Thursday, Secretary of State Condoleezza Rice said the United States is confused by Russia's objections to the plans.
"I have to tell you that I find Russia's recent missile diplomacy difficult to understand, and we regret Russia's reluctance to accept the partnership in missile defense that we have offered," she said.
In an interview with CNN Wednesday, Rice said Moscow's fears are "ludicrous" and that the system is not aimed at gaining a strategic advantage over Russia.
"This is against smaller but nonetheless potentially very deadly places like Iran," she said in Berlin.
Russian Foreign Minister Sergei Lavrov retorted: "There is nothing ludicrous about it. The arms race is beginning again." (Watch the intercontinental missile blast off )
In Moscow, Putin also criticized the U.S. withdrawal in 2002 from the Anti-Ballistic Missile Treaty, which set strict limits on missile defenses.
"We warned them then that we would come out with a response to maintain the strategic balance in the world," he said, adding that Russia will continue to improve its missile capabilities.
Rice slams Russia's rights record
Rice, for her part, took aim Thursday at Russia's record on human rights and democracy under Putin.
Rice said the United States wants a strong Russia as a partner, but Russia needs to adhere to democratic norms, such as allowing an independent judiciary, a free press and free and fair elections.
"Democratic institutions and an open society are not a source of weakness," Rice said after accepting an award for promoting better relations between the United States and Germany. "Nor is freedom of speech and freedom of the press just a nuisance that the state can attack at will."
The German foundation Atlantic Bruecke (Atlantic Bridge) praised Rice for her work promoting German reunification in 1990, when she was a mid-level Soviet specialist at the White House under the first President George Bush.
U.S. plans for a missile defense system are likely to be discussed at next week's G8 summit in Germany. Other issues currently dividing Russia and the United States are the future of the former Yugoslav territory of Kosovo, and U.S. concerns that democracy and human rights in Russia are being eroded.
There is also disagreement about the implementation of a conventional forces treaty, which limits the deployment of heavy weapons between the Atlantic and the Ural Mountains. Russia has threatened to pull out of the treaty unless it is ratified by NATO countries.
The White House announced Wednesday that Putin will meet with President Bush in Maine on July 1 and 2.
The two leaders will meet at the home of the president's father in Kennebunkport, Maine.
Putin has been increasingly critical about the American role in the world since the 2003 invasion of Iraq, which Russia opposed. In February, he said the United States "has overstepped its national borders in every way," creating a world "where nobody feels secure."