Russian President Vladimir Putin proposed to U.S. President George W. Bush setting up a joint missile radar base in Azerbaijan to overcome a crisis between the two countries.
Putin said he had spoken to the president of Azerbaijan who had agreed that a base there could be jointly used by Russia and the U.S.
Russia has been angered by a U.S. plan to deploy a missile defense system in Poland and the Czech Republic.
Russia says it is the target of the shield, while the U.S. insists the system is to guard against an attack by countries like Iran or North Korea.
The dispute has brought Russian-U.S. relations to their lowest point since the end of the Cold War.
"We have an understanding of common threats but there are differences over the means for overcoming these threats," Putin was quoted as saying by Russian media.
"We have looked carefully at the United States' suggestions. We have our own ideas and I outlined these to President Bush in detail," he said.
"Firstly, would be to jointly use the radar rented by us in Azerbaijan," he said. "Yesterday I talked about this with the president of Azerbaijan and the existing agreement would allow us to do that."