U.S. President George Bush withdrew the deal from U.S. Congress amid international condemnation of Russia's actions in the recent Georgian crisis.
"We view the steps made by the U.S. administration as a straightforward breach of its commitments, which harms our partnership relations and closes the route to mutually beneficial cooperation on many issues in the sphere of civilian nuclear power," the statement said.
It said Washington's attempts to impose its actions on other countries in their relations with Russia were "unacceptable," adding that the withdrawal "will be interpreted as 'punishment' or 'control' with regard to Russia."
The news was announced on Monday by U.S. Secretary of State Condoleezza Rice who said in a statement, "We make this decision with regret. Unfortunately, given the current environment, the time is not right for this agreement."
And U.S. State Department spokesman, Sean McCormack said that the U.S. had "deep concerns about Russian behavior."
The withdrawal comes as Russia announced it would be taking part in upcoming Venezuelan-Russian naval exercises in the Caribbean in late November.
The agreement would have opened up possibilities for widespread commercial nuclear trade, technology exchange, and joint nuclear research between Washington and Moscow. It would also have cleared the way for Russia to make headway with importing and storing spent nuclear fuel from U.S.-supplied reactors - a highly profitable business.
Bush's letter to Congress said that the deal could not go through at present in light of Russia's actions which were "incompatible with peaceful relations with its sovereign and democratic neighbor Georgia."
The move comes shortly after the U.S. announced a $1 billion aid package for Georgia, and on the same day that French President Nicolas Sarkozy held talks in Moscow with Russian President Dmitry Medvedev on Georgia.
After the talks it was announced that Moscow had promised to pull all troops out of Georgia, but not South Ossetia or Abkhazia, within one month.
The current crisis began when Georgian forces launched a military offensive on the South Ossetian capital, Tskhinvali, on August 8. Most of the residents of the republic are Russian passport holders, and Russia subsequently launched an operation to "force Georgia to accept peace."
Two weeks after the conclusion of the operation, Russian recognized South Ossetia and Abkhazia as independent states, despite warnings by Western leaders not to do so. So far, only Nicaragua has followed suit, although Belarus seems likely to do so later this month.
Both South Ossetia and Abkhazia broke away from Georgia in the early 1990s. Thousands were killed in the ensuing conflicts.
