President Vladimir Putin's outburst when he threatened to aim Russian nuclear missiles at European cities is a reversion to old Russian ways of behaving which deserve the firmest – and a wholly united response – from Europe.

The proximate cause is laughable. Putin complains that two sovereign states in Europe – Poland and the Czech Republic – have elected to talk with the United States about the establishment of a radar site, and not more than a dozen rockets, that are aimed at protecting Europe against a rogue missile attack from one of the unstable non-democratic countries now getting nuclear and missile know-how.

Russia, herself, has a fully equipped anti-missile defence system around Moscow with much more powerful weapons than the pea-shooter missiles proposed for east Europe. These missiles – if they are installed and if they prove to work – are kinetic, not nuclear.

They are designed to hit an incoming enemy missile and blow it up before it enters the atmosphere to deliver its deadly pay-load. A quick look at the curve of the globe will show that one of Iran's planned medium-range missiles would come over east Europe en route to any target further west .

But to argue, as does Mr Putin, that Europe has no right to experiment with even limited defence against missile attack is taking to absurd heights Russia's belief that it can dictate security matters to Europe.

The idea that the tiny Czech Republic, or even the larger Poland, could be able, or would even dare to turn themselves into a military threat against Russia, is nonsense. Spain is currently negotiating with Washington to buy Tomahawk cruise missiles, offensive weapons which can carry nuclear warheads.

But Mr Putin is not interested in Spain. He is now on an all-out offensive to break apart the coherence and unity of the European Union and to seek to drive wedges between Europe and the United States.

One by one, EU member states are bullied, insulted, or patronised by Russia. Go into Morrisons or Tesco's and British shoppers can enjoy that fine Polish delicacy, the thin kabanos dried sausage. Russians cannot, as Moscow bans imports of meat from Poland – just as Georgia's fine wines and brandies are banned in order to put pressure on the Black Sea nation.

Shell and BP thought they had signed binding deals with Russian partners to exploit on a win-win basis Russia's gas and oil resources. Now the Russians have discovered an environmental protection agency which says the British energy firms are breaking Russian rules and so they have to watch as their firms are effectively re-nationalised.

The British Ambassador hosts a reception, as British Ambassadors do all over the world, for the democratic opposition in Russia. His reward is to have an ugly mob called Nashi – a kind of Putin Youth movement – screaming abuse at him, jostling him whenever he goes out for a walk.

Last week in Portugal, I witnessed the new Russian arrogance first-hand. It happened at the Parliamentary Assembly of Nato countries – a gathering of veteran politicians with long experience in defence and foreign affairs. Nato has opened its doors to Russia and bent over backwards to encourage partnership with Moscow. As a result, a large delegation of Russian parliamentarians attend such meetings.

A minister from Georgia, which has been under pressure to accept Putin's hegemony over the former Soviet republic, made her speech. She was followed by a senior Russian MP who announced: "We have a saying in Russian that you cannot have a discussion with a radio or a woman." There was a gasp in the room as people heard the insult translated through their earphones.

Another Russian called the amiable veteran British MP and former chair of the Commons Defence Select Committee, Bruce George, a "lunatic".

When I tried to discuss privately the assassination of Anna Politkavskaya, the fearless investigative journalist, I was treated to a torrent of abuse about her writing and her newspaper.

Putin's chilling indifference to the requests from British legal authorities for help over the investigation into the murder of Alexander Litvinenko is further evidence of Russia's contempt for European norms of rule of law.

On Estonia, on the status of Kosovo, on the withdrawal of troops from Moldova, or on using energy to threaten its neighbours, Russia has decided to revert to language and tactics that are reminiscent of the 1930s and 1940s or Khrushchev banging his table with his shoe at the UN as he threatened to "bury the West".

Europe must stand united and firm. At this week's G8 in Germany there must be no division between Europe and North America, nor within the EU itself. Russia wants to divide and rule, to bluster and bully. Tony Blair has to stiffen the resolve of Angela Merkel and make sure Nicholas Sarkozy does not repeat the error of previous French presidents and seek to cut a Paris-Moscow deal over the heads of the EU and Nato.

No-one wants a new cold war or even a cold front with Russia. Europe has held out the hand of friendship, trade, investment, travel and joint diplomatic work with Russia. And, to be fair, Mr Putin has reciprocated in some areas in the past.

But, so far this year, Russia thinks Europe's hand of friendship is something to bite or spit upon. It is time to say clearly, politely and consistently that aggression against any EU member state will be resisted by all 27 members of the EU.

Russia can choose the European road or return to the behaviour of its Soviet or Tsarist past. Europe must be united and stand firm and make clear that its values are the right ones for the 21st century not the language and threats that awaken shadows from Russia's past.
Denis MacShane is Labour MP for Rotherham and was Europe Minister until 2005.