A conspiracy theorist would think that Vladimir Putin was trying to help sales of my book. The thesis that we are entering a new and sinister era in our relations with Russia seemed a bit outlandish when I started writing “The New Cold War” (as the book is called in English) in June last year. But every bit of news has helped confirm it. Blatant election rigging, bullying of dissidents, muzzling of the media, intimidation of Georgia, and the venomously chauvinist tone of official propaganda since then have made me feel that, if anything, I may have understated the case.

The extraordinary thing is that Vladimir Putin hardly seemed worth a footnote to Russian history when the ailing Boris Yeltsin named him prime minister in 1999. Few realised that the taciturn bureaucrat with a taste for judo was the harbinger of a silent putsch that would put the old KGB in charge of the Kremlin, with chilling consequences not only for Russia, but for the world. The “siloviki” (literally “men of power”), as the spooks are called, have transformed Russia. They took over a country which for all its faults was both open and profoundly pluralist—so pluralist, in fact, that it seemed to be risking outright disintegration. Many at home and abroad hoped that a few years of heavy-handed rule by sinister strongmen would be the price of freedom and security.

They were wrong. The costs of Putin’s KGB putsch have been colossal. Russia today is the epitome of thuggishness and crookedness. The independent media have shriveled, with television in particular coming almost completely under the authorities’ control. Almost every channel for complaint and dissent is blocked. Judicial and bureaucratic harassment, as well as physical threats, deter all but the bravest from speaking out. Forcible incarceration in psychiatric hospitals, the most loathsome weapon in the Soviet arsenal of repression, is making a comeback.

Yes, living standards in Russia have soared, and most Russians believe they are living in a golden age. This is hardly surprising, given the soaring price of oil and a slavishly supportive media that insists that wise rulers are bringing great results.

In truth, Russia is being run by a corrupt, incompetent and despotic regime, and the huge windfall of high oil prices is being squandered. The most devastating account of this comes from two former government insiders, Boris Nemtsov and Vladimir Milov. Their explosive pamphlet, “Putin: the bottom line” is available only at one kiosk in Pushkin Square at the heart of Moscow; distributors find it too hot to handle. Vast sums assigned in the budget are at best stolen, and at worst simply wasted. After eight years of rule by the “Chekists”, the number of bureaucrats has soared, while the paved road network has actually shrunk. The so-called golden age is as phoney as those elections Mr Putin and his cronies win time after time. Russia’s boom is fuelled by natural resources, not brainpower.

The KGB regime in Russia is more than just a missed opportunity; it also threatens the outside world. This is not the military menace of the old cold war. Russia’s newest warplanes may be formidably manoeuvrable, its submarines super-silent, its torpedoes terrifyingly fast, but even colossal increases in the defence budget have not allowed it to produce these weapons in any quantities.

The real threat is elsewhere. The Kremlin can now afford to be contemptuous of our values. It has explicitly abandoned political freedom, the rule of law and multilateral security, in favour of “Sovereign democracy”: a mixture of xenophobia, nationalism, autocracy, self-righteousness and nostalgia for the Soviet - and Stalinist - past. It is not international Communism. But it is still a fundamental threat to our political and economic system. The New Cold War is fought with cash, natural resources, diplomacy and propaganda. Having cast off the dead weight of ideology, the former KGB men in the Kremlin are presiding over a Russian Klondike, a source of irresistible temptation for greedy outsiders. Russia is exploiting the West’s increasingly desperate shortage of energy. We in Europe face growing dependence on scanty and expensive Russian gas, with little chance of alternative supplies. The Kremlin wields the energy weapon to bully its enemies and bribe its allies, and uses its financial clout to buy friends and influence.

The growing business and financial lobby tied to Russia represents a powerful fifth column of a kind unseen during the last Cold War. Once it was Communist trade unions that undermined the West at the Kremlin’s behest. Now it is pro-Kremlin bankers and Western politicians who betray their countries for 30 silver roubles. Western investment in Russia has already created a lobby for good relations with the Kremlin in the City, in German big business and in the energy industry across Europe.

It would have been impossible to imagine only ten years ago that the Kremlin’s central tactic of “divide and rule” would prove so successful. But today’s Russians can rest easy that their hard-man tactics and their cash carrots will find little if any opposition from a divided and greedy west. The bullying of Georgia has brought only the most ineffectual bleats of protest from the European Union and NATO. As the NATO summit in Bucharest illustrated so dismally with its divisions over what to offer Ukraine and Georgia, Germany has become Russia’s Trojan Horse in the western camp. Silvio Berlusconi’s Italy and Nicolas Sarkozy’s France adopt the same stance: gladly accepting the riches of trade with Russia, while ignoring the political cost. America and Britain are too distracted. Only Lithuania, one of the smallest and poorest countries in Europe, is bravely challenging the consensus, insisting that the EU toughens its stance before starting talks on the new Partnership and Cooperation Agreement with Russia..

Similarly, few would have believed ten years ago that a former German leader, Gerhard Schröder, would have taken a lucrative post as chairman of a Kremlin-backed gas venture within months of leaving office. For that matter, few would have believed that Russian money would have such a corrosive effect on western institutions. Yet the mighty audit firm PWC snivellingly withdrew its audit of the Yukos oil company at the merest whiff of Kremlin displeasure. The City of London, once the epitome of propriety in the financial world, saw nothing wrong in handling the initial public offering of Rosneft, the Kremlin oil company that gobbled up Yukos assets in a rigged auction. A respectable western bank conceals the beneficial ownership of RosUkrEnergo—a multi-billion dollar gas company that owns no reserves, storage or pipelines, but enjoys excellent political connections in Russia.

The main battleground so far — and one where the West is losing hands down — has been in the once-captive nations between Russia and the rich half of the continent. For all its weakness, Russia is like an aggressive man on crutches — no threat to the ablebodied, but still a menacing bully for someone in a wheelchair. That means a tussle in Central Europe, the Balkans and the Caucasus.
Russia is putting the Baltic states under an energy squeeze, cutting off oil supplies to Latvia and Lithuania. It has incited riots in Tallinn, the Estonian capital. Now it is menacing Georgia with barely veiled military threats. In Bucharest, last month, Mr Putin threatened to dismember Ukraine if it dared to pursue its ambition of joining NATO.

Mr Putin, who says the collapse of the Soviet Union was the “greatest geopolitical catastrophe” of the 20th century, believes the history books written in the Yeltsin years paint the past in too bleak a light. The Molotov-Ribbentrop pact is being rehabilitated. The Cold War is portrayed as a simple geopolitical tussle, not a struggle between freedom and totalitarianism. Russians are told that their country is like a besieged fortress, surrounded by malevolent hypocrites.

Our attitude to Russia over the past ten years has been marked by extraordinary complacency and wishful thinking. Russia is not in “transition” towards “democracy”. Instead, the hard men of the Soviet security services are running the country, partly for their own financial benefit, and partly to restore what they see as a glorious past. They are consolidating power at home, restoring Russia’s dominance in eastern Europe, and Finlandising the West.

Why should it change? The “stealing machine” created by the hard men in the Kremlin in the past eight years, which loots Russia’s natural resources and shovels money to the West, is not going to disappear overnight. Remember that Mr Medvedev spent eight years at the helm of “Kremlin Inc (Gas Division)” alias Gazprom, which epitomises the overlap between business and politics that he affects to dislike.

Nor is there any sign that Mr Medvedev will change Russia’s prickly relations with the west, and its bullying stance towards former captive nations such as Georgia. His supporters stress that he likes rock music, yoga, and spending time on the internet. But such clues are easily spun into an illusory but comforting blanket of good intentions. Those who have met Mr Medvedev speak of a pedantic, querulous figure, a nervous nitpicker ill-at-ease with the limelight. He has described America as a “financial terrorist” for seeking to impose its accounting standards on the rest of the world.

He may change. I remember how Mr Putin became prime minister in 1999, looking more like Dobby the House Elf from Harry Potter than a future world leader. Many thought the third-rate spy with a taste for gutter slang would last months, not years.

How wrong they were. Maybe Mr Medvedev will grow into the job, gradually benefiting from the institutional clout that the Kremlin enjoys in Russia’s top-heavy political system. Maybe Mr Putin really does want a graceful exit from politics, and will trust his successors to shield him from embarrassing questions about his personal fortune, or about the mysterious and bloody bombings of 1999 that turned him from a political zero to a national hero in a matter of months. If Mr Medvedev truly wants to impress the west, he can: expressing a public wish that the Pope visit Russia in the next few years would be a stinging reverse for the corrupt authoritarian bigots who run the Russian Orthodox Church. Ensuring that no new politically motivated charges are brought against Mikhail Khodorkovsky, the founder of Yukos, when he becomes eligible for parole, would be a sign that the era of ruthless politicisation in the criminal justice system is waning. Encouraging Gazprom to spin off its media holdings into a publicly traded independent company would reverse one of the most deplorable trends of the Putin era.

But it hardly seems likely, with the lowering presence of Mr Putin still so firmly in the centre of Russia’s political stage.

So it is hard to see a change of course. The Russian people delight in the stability and high living standards that the past eight years have brought. They are pleased too that their country is respected (or at least feared) by its neighbours. A muzzled, sycophantic media disguises the threadbare record of the Putin years: colossal corruption, shambolic public services, crumbling infrastructure, soaring inflation, grotesque abuse of power, sprawling bureaucracy, and overweening state intervention in the economy.

Every new man in the Kremlin enjoys a honeymoon with the West. And in each case that is followed by bitter disillusion: Mikhail Gorbachev caved in to Kremlin hardliners and proved pitifully ineffective; Boris Yeltsin succumbed to alcohol and the corruption of his cronies; Vladimir Putin turned into a menacing autocrat. Now Dmitri Medvedev, Mr Putin’s handpicked successor, has charmed at least some in the west with his talk of freedom and legality, and a blitz on corruption. How long before we learn our lesson?

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