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Moscow will respond to NATO's expansion by modernizing its military, Russia's leader says.

President Vladimir Putin accused the West of military expansion and laid out an agenda for his successor in a major address Friday.

With less than a month before the presidential election, the speech signaled that Putin's doctrine of assertive economic and military policies and unwavering centralized power would continue under his chosen successor, First Deputy Prime Minister Dmitry Medvedev.

Medvedev is expected to win the March 2 vote easily, and he has indicated he will name Putin as his prime minister.

In what may be his final major address before he leaves the Kremlin, Putin spoke strongly against NATO's expansion into former Soviet bloc states of eastern Europe and said Moscow would respond by modernizing its military and weapons systems.

He said the West has failed to respond to Russia's security concerns about U.S. plans to deploy missile defense sites in Poland and the Czech Republic and new military bases in Romania and Bulgaria.

"We haven't seen any real steps toward compromise," Putin said in his televised speech to government officials, cultural figures and religious leaders. He warned that a new arms race is under way. "It is not our fault because we did not start it," he said.

Washington says its plan to place 10 missile defense interceptors in Poland and a radar station in the neighboring Czech Republic is not aimed at Russia, but is part of a system to protect against any missile attacks by Iran.

Listing the domestic successes of his tenure, Putin noted the country's rising birth rate and growth of the middle class. He said the rule of law had been restored after what he described as the chaotic years of the 1990s following the collapse of the Soviet Union.

Putin also laid out a plan for the development of the country over the next 12 years. He said Russia's economy is "extremely inefficient" and had harsh words for the government's bloated bureaucracy.

Information from the Washington Post was used in this report.