Syria's president warned that Europe "will pay a price" if it delivers weapons to rebels fighting to topple him, saying in an interview published Monday that arming them would backfire as the "terrorists" return to their countries with extremist ideologies.
Bashar Assad also dismissed the U.S. administration's findings that the Syrian army used chemical weapons in the civil war.
Assad's comments were his first since Friday's decision by President Barak Obama to authorize weapons and ammunition shipments to Syrian rebels, after confirming that Assad's regime used chemical weapons against them.
The Syrian pound plunged to a new low on Monday, apparently over news of the U.S. decision to arm the rebels.
The European Union has also allowed a weapons embargo against Syria to expire, allowing members of the 27-nation bloc to arm the rebels. France and Britain are moving in that direction, but the German government opposes such a move.
Assad's interview with the German daily Frankfurter Allgemeine Runschau appeared aimed at reinforcing German skepticism.
"If the Europeans ship weapons, Europe's backyard becomes a terrorists' place, and Europe will pay a price for it," Assad said in Arabic comments translated into German.
Chaos in Syria would result in "the direct export of terrorism to Europe," he warned. "Terrorists will return to Europe with fighting experience and extremist ideologies."
Assad also insisted that European efforts to distinguish between good and bad rebels when it comes to shipping weapons amounts to "differentiating between `good' and `bad' Taliban a few years ago, or a `good' and `bad' al-Qaida."
The interview was conducted in a government building in Damascus last week. Following the U.S. decision on Friday, the president answered a few more questions via email Sunday, the newspaper said.
Assad disputed the U.S. administration's findings that at least 150 people have been killed in chemical weapons attacks in Syria, noting that Western countries have yet to unveil evidence to prove their claim.
"Weapons of mass destruction are capable of killing hundreds, thousands at once. That's why they are used. That's why it is not logical to use chemical weapons to kill a number of people that can be achieved through conventional weapons," Assad said.
"If Paris, London and Washington had only one piece of evidence backing up their allegations, they would have unveiled it to the world," he added.
At least 93,000 people have been killed in Syria's conflict since it erupted in March 2011, according to a recent U.N. estimate. Millions have been displaced.
The civil war is increasingly being fought along sectarian lines, pitting Sunni Muslims against Shiites. It is also threatening the stability of Syria's neighbors, including Lebanon and Iraq. Sunnis dominate the rebel ranks, while the Assad regime is mostly made up of Alawites, an offshoot sect of Shiite Islam.
Sectarian divisions deepened a few weeks ago, when Lebanon's Iran-backed Shiite militant Hezbollah openly joined the fight inside Syria on the Assad's side.
Earlier this month, Assad's troops dealt a major blow when they pushed the rebels out of the strategic town of Qusair near the Lebanese border, with Hezbollah's help.
Assad denied that Hezbollah is taking a prominent role, saying it had "only a few hundred men" in Syria.
Assad warned that once the conflict spills over into neighboring countries, blurring borders, that would set off a domino effect.
"Nobody can imagine how the region would look like in case of a redrawing of the map. That will be a map for uncounted wars in the Middle East and possibly elsewhere, that nobody can stop," he said.
The Palestinian militant group Hamas on Monday urged Hezbollah to withdraw its fighters from Syria and accused it of stoking sectarian tensions, in unprecedented public criticism against its former ally.
In a statement, Hamas, a Sunni movement, called on Hezbollah to "withdraw its forces from Syria and keep its weapons directed at the Zionist enemy (Israel)." Hamas also said that sending forces to Syria "contributed to the sectarian polarization in the region."
The Hamas statement came as the region's Sunni and Shiite Muslims are lining up on opposite sides of Syria's civil war.
The fall of Qusair shifted the balance of power on the battlefield in favor of the Damascus regime, which is now looking to keep the momentum and aims to take back control of Aleppo, the country's commercial hub. The rebels captured parts of the city last summer during an offensive in the north along the border with Turkey.
Troops clashed with rebels inside Aleppo and in the city's outskirts on Monday, activists said.
In addition to arming the rebels, Washington has also been contemplating other options, including imposing a no-fly zone over Syria, though no decision has been made.
Assad's air force has been his most lethal weapon, relying on it to prevent rebels from holding on to territory won on the ground.
A spokesman for Russia's Foreign Ministry, Alexander Lukashevich, said in a televised news conference Monday that "there are no conditions and no need for a no-fly zone" in Syria, adding that such measures by the U.S. and other would be "counterproductive."
The host of the G-8 meeting, British Prime Minister David Cameron, conceded Monday there is a disagreement on Syria, but said Russia, like all G-8 governments, has a responsibility to push opposing factions in the civil war to the negotiating table as rapidly as possible and not to back a government that "butchers" its citizens.
Russia supplies Assad's army with weapons and has its only Mediterranean port in Syria.
In a related economic development, the Syrian pound tumbled to a new low on Monday, diving from 170 pounds a dollar to 210 in a single day.
Syrian Prime Minister Wael al-Halqi rushed to calm nerves, saying the government has large reserves of foreign exchange and would put in place a package of economic measures to enhance the economy.
The premier referred to the support of "friendly countries," including Iran, citing its willingness to finance Syrian imports and requirements of the industrial and agricultural production.
The governor of the central bank of Syria, Adib Mayaleh, told reporters that the bank would continue its policy of intervention to prop up the value of the pound.
Associated Press writers Juergen Baetz in Berlin, John Heilprin in Geneva, Nataliya Vasilyeva in Moscow and Mohammed Daraghmeh in Ramallah contributed to this report.