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U.S. President George W. Bush and his Russian counterpart Vladimir Putin
U.S. President George W. Bush and his Russian counterpart Vladimir Putin failed to overcome their differences on missile defense at their final summit in south Russia on Sunday.

However, the Russian leader called the talks generally positive, and said he was "cautiously optimistic" that the dispute, which has proved a major stumbling block in relations between Moscow and Washington, will be resolved.

At a news conference after the talks at his residence in Sochi, Putin, who will leave office in one month, said: "I won't hide the fact that one of the most difficult issues was and remains American missile defense in Europe... I want to be understood correctly: there has been no change in our fundamental attitude to the American plans."

Russia views a planned U.S. missile base in Poland and a radar in the Czech Republic as a direct threat to its security and has rejected Washington's assurances that they were designed as protection against Iran and other Middle East states.

Bush told the news conference: "The Russian side has made clear that it does not agree with the decision to establish sites in Poland and the Czech Republic and reiterated its proposed alternative."

Putin proposed in June last year that the U.S. use the Gabala radar station, which Russia leases from Azerbaijan. It has a range of about 6,000 kilometers (3,700 miles) and enables Russia's Space Forces to monitor launches of intercontinental ballistic and other missiles in Asia and parts of Africa.

The meeting produced a joint "strategic framework" agreement on bilateral relations, encompassing trade, counter-terrorism, nuclear non-proliferation, Russia's WTO membership bid, energy cooperation, and also ways to continue seeking a solution to the missile defense dispute.

The document said the countries would continue to work on a new Strategic Arms Reduction Treaty, and that both Moscow and Washington remain committed to reducing their strategic arms to a minimum.

The Strategic Arms Reduction Treaty (START-1) was signed by the United States and the Soviet Union on July 31, 1991, five months before the U.S.S.R. collapsed, and remains in force between the U.S., Russia, and three other ex-Soviet states. The treaty is set to expire on December 5, 2009.

However, Putin said key differences remained on the issue.

"As for strategic offensive armaments, some disagreements remain in our fundamental approaches," he said.

Bush also met in Sochi with Russian president-elect Dmitry Medvedev, who is set to take over in the Kremlin on May 7 when Putin steps down.

The U.S. leader called Medvedev a "straightforward fellow", and said he looked forward to working with him when he assumes office. Their next meeting is likely to be at the G8 summit in Japan on July 7-9, Bush said.

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