Moscow - Russian President Vladimir Putin on Thursday insisted Moscow will not be dragged into an arms race by Nato as he accused the US-led alliance of tearing up the military balance in Europe. The Kremlin strongman warned that Russia "knows how to react adequately and we will" to Nato bolstering its forces in eastern European nations such as Poland and the Baltic states in moves he said were aimed at "undermining the military balance built up over decades"."We don't intend to give in to this militaristic frenzy, but it seems that is what they are pushing us to, to provoke a costly and pointless arms race," Putin told Russian diplomats in Moscow. "This will not happen. But we will also not be weak. We will always be able to defend ourselves reliably," he said. Relations between Russia and the West have slumped to their lowest point since the Cold War over Moscow's 2014 annexation of Crimea and its alleged masterminding of a separatist uprising in Ukraine. Fears of Russian expansionism have sent a chill through Nato members such as Estonia, Latvia, Lithuania and Poland and have seen the US-led alliance bolster its presence in eastern Europe.Nato announced this month that it would deploy four battalions to the Baltic nations and Poland to counter a more assertive Russia, ahead of a landmark summit in Warsaw on July 8-9. Russia bitterly opposes Nato's expansion into its Soviet-era satellites and has said it will create three new divisions in its southwest region to meet what it described as a dangerous military build-up along its borders.Putin has massively ratcheted up military spending since coming to power over 16 years ago in a bid to overhaul Russia's armed forces, which often rely on creaking Soviet-era weaponry. On Wednesday Russia's Defence Minister Sergei Shoigu vowed to counter the Nato build-up by sending two thousand units of new and modernised equipment to the country's western military district which borders several Nato member countries.Due in part to Western sanctions over Ukraine and the fall in oil prices, Russia is currently suffering its longest recession since Putin took power.