Is the ice breaking?
Bush, in a one-on-one meeting with Putin during the G-8 summit in Heiligendamm, called it an "interesting proposal" and said "let's let our experts have a look at it," according to White House National Security Adviser Steve Hadley, who was in the hour-long meeting, the Associated Press reported.
Putin said through a translator that if Washington and Moscow cooperate transparently on missile defense "then we will have no problems."
Putin also said Russia had considered very thoroughly a US proposal for cooperating on US plans to develop a missile shield in Poland and the Czech Republic, but said Russia had its own ideas. He did not give details.
It was the two presidents' first one-on-one meeting since Putin launched an attack on the US government at a conference in February, where he accused Washington of trying to force its will on the world and become its "single master."
Putin has been infuriated by Washington's plan to deploy 10 interceptor missiles in Poland and a radar system in the Czech Republic to fend off nuclear attacks from Iran or North Korea. Putin has said the system will upset the global strategic balance and could be used to launch attack missiles or to spy on Russia.
After weeks of increasingly acrimonious rhetoric from Moscow, Putin's proposal to put the system in Azerbaijan came as a surprise. He said the facility, built during Soviet times, is still available for Russia's use under a continuing agreement between Russia and Azerbaijan.
Appearing together before reporters, Bush spoke before Putin and did not mention the alternative presented by his Russian counterpart.
The two leaders agreed to further discuss the issue when Putin visits Bush in Kennebunkport, Maine, at the Bush family's oceanfront compound, in early July. Lower-level officials in both governments also plan to explore it.
"We both agreed to have a strategic dialogue," Bush said. "This is a serious issue."