Wow, talk about losing the PR battle. This is a new low for the failure of Vladimir Putin's foreign policy. The Financial Times reports:

Why Putin's Rule Threatens both Russia and the West

At least he made the trains run on time. That was said of Benito Mussolini, Italy’s fascist dictator from 1922 to 1943. Much the same is now said of Vladimir Putin, Russia’s authoritarian president. He may have crushed the fragile shoots of democracy, but he has at least restored the economy, the state and his country’s place in the world.

This view is shared by Mr Putin himself. He stated only last week that: “We have worked to restore the country after the chaos, economic ruin and breakdown of the old system that we saw in the 1990s.” But it suffers from a drawback: it is false, as Michael McFaul and Kathryn Stoner-Weiss of Stanford University argue in a powerful article*.

True, between 1999, the year before Mr Putin became president, and 2007, the Russian economy expanded by 69 per cent. But the economies of 11 of the 15 former republics of the Soviet Union expanded by more than Russia’s. Indeed, only Kyrgyzstan did markedly worse. A number of the former Soviet republics did, it is true, benefit from an oil and gas bonanza. But so, too, did Russia: its oil and gas exports jumped from $76bn in 1999 to $350bn last year. Even so, the Russian economy expanded by less than Ukraine’s.

Like all post-communist countries, Russia’s economy suffered a steep initial decline, which reached its trough in 1998. Countries that reformed more decisively, such as Poland, bottomed out more quickly and are now far ahead. Again, Russia’s recovery is in no way exceptional: tiny Estonia has done far better. Maybe this is why the Kremlin hates the Baltic state so much.

It is simply wrong to assign credit for the upswing to Mr Putin. Not only did it begin with the devaluation of 1998, but nearly all the reforms that underlay the improvement were initiated, if not brought to fruition, under Boris Yeltsin’s despised rule. Under Mr Putin little progress has been made on structural reforms. That is one of the central points made by Anders Aslund, a distinguished scholar, in a superb new book**.

In important respects economic reform has gone backwards, particularly with the ever-growing role of the state in vital segments of the economy. This reversal is directly related to the second false claim about Mr Putin, that he has restored the state. This is true only if one accepts his definition of a strong state: a behemoth subject neither to law nor to political competition.

Mr Putin has eliminated all independence in television and most of it in the press; he has destroyed the autonomy of regional government; he has emasculated parliament; and he has eliminated competition for power. The political divergence between Ukraine, increasingly free, and Russia, increasingly despotic, is as clear as it is disturbing.

The result is not an effective state, but an overweening one. Corruption is rife. Mr Putin himself tells us so: “The state system is weighed down by bureaucracy and corruption and does not have the motivation for positive change, much less dynamic development.” But this is inevitable when so much unaccountable power is concentrated in one person’s hands. By destroying independent institutions, the state has mutilated itself: it is a blind and crippled giant.

In 2006, Russia ranked a mediocre 96th out of 175 in the World Bank’s “ease of doing business” index, its worst ever position. In the World Bank’s governance indicators for 2006, the effectiveness of Russia’s government was ranked in the 38th percentile from the bottom. Its rule of law ranking was in the 19th percentile, well behind Ukraine’s 27th and Poland’s 59th. If one judges a state by its ability to serve the people and protect them from the powerful, including itself, Russia’s is ineffective. That vast numbers of Russians like such a state makes this no less true, merely more depressing.

Russia’s neighbours – at least those in which the people may express their opinions – are more hostile. The KGB-state is unable to understand that fear and respect are antitheses, not synonyms. Mr Putin has made no secret of his regrets about the collapse of the Soviet empire and his resentment at the subsequent expansion of the European Union and, even more, of Nato. What seems absent from his discourse is why these countries, so familiar with beneficent Russian rule, should have handed over their futures to bodies whose central powers are Germany and the US, respectively. Why, too, as Edward Lucas of The Economist notes, are Russia’s friends a “rogue’s gallery” of tinpot despotisms?***.

In place of erstwhile hopes for the emergence of a pro-western Russian democracy, we have proto-fascism: aggrieved nationalism; bullying of smaller nations; a cult of the strong leader; suspicion of enemies within; and resentment of foreigners.

Yet Russia is also a nuclear-armed state with vast energy resources. That makes this development worrying, as well as depressing. Russia has chosen the statecraft of fear over the promise of freedom. No doubt, mistakes by the west helped bring this about. I agree with Mr Aslund that the biggest error was the decision to focus on the ridiculously insignificant issue of post-Soviet debt, in late 1991 and early 1992, instead of the challenge of assisting the political and economic transition. But this is now history. It was, in any case, the decision of Mr Putin and associates to turn Russia from the aspiration for a law-governed democracy towards autocracy.

Mr Putin then is a failure, not a success. But he is a dangerous failure. The regime he has created is unpredictable: nobody can know how the post-election duumvirate will work. But it is unlikely to provide sustained improvements in prosperity.

The west must again form a concerted policy: it must resist efforts to divide westerners against themselves; it must insure itself against over-dependence on Russian energy; and it must make the price of revanchism high for Russia itself. But it must also repeat a powerful truth: the west is no enemy of the Russian people. On the contrary, nothing would be more desirable than for a vibrant and self-confident Russian democracy to take its place in the world of western values. And, yes, that must include membership of Nato.

Let us rid ourselves of illusions. This is no new cold war, not least because Russia offers no enticing new ideology. But it is a cold peace. That is a tragedy. It is also a reality. It is one the west must live with, probably for a long time to come.

*The Myth of the Authoritarian Model, Foreign Affairs, January/February 2008; **Russia’s Capitalist Revolution (Peterson Institute for International Economics), 2007; ***The New Cold War (Bloomsbury), 2008