Russian President Vladimir Putin walks in to attend his annual end-of-year news conference in Moscow, December 18, 2014. Russia's rouble lost more ground against the dollar on Thursday before President Vladimir Putin's end-of-year news conference, expected to be dominated by what a government minister called a "perfect storm" hitting the economy. REUTERS/Maxim Zmeyev (RUSSIA - Tags: POLITICS BUSINESS)

In our sanitised, public relations-conscious age, Vladimir Putin’s chauvinistic bluster has been bizarrely compelling. For a while, that unaccustomed spectacle concealed the profound brittleness of his regime, at least from some. Now the cracks are showing. The immediate causes are western sanctions and the lower price of oil but Russia’s fragility runs much deeper.

Mr Putin came to power on the strength of a promise: that it was possible to rule like Joseph Stalin but live like Roman Abramovich. The arrangement suited almost everyone. Mr Putin and his KGB cronies were able to rebuild a softer version of the authoritarianism they had yearned for since the collapse of the Soviet Union.

Russia’s economic elites — Mr Putin’s coterie from the “power ministries” in Moscow and the oligarchs of the Boris Yeltsin era who were smart enough to play along — enjoyed vast wealth. Thanks to rising commodity prices, Russia’s urban middle class became richer, too.

Even the liberal intelligentsia, the only group that was openly disgruntled with its lot, could avail itself of a safety valve. In clever contrast with the Soviet Union, Mr Putin’s managed democracy kept its borders open, allowing potential dissidents to find homes in more congenial places..

Hawks who compare the west’s current stand-off to the cold war and Mr Putin’s Russia to Stalin’s Soviet Union miss the essentially cynical nature of the regime.

Mr Putin is an authoritarian ruler, to be sure, but he reigns without a governing ideology or an organised revolutionary party. His invocations of Russian nationalism have a certain rhetorical flair but they are merely the populist packaging for a system that Mikhail Kasyanov, Mr Putin’s first prime minister and now one of his opponents, described as “capitalism for friends”.

For almost a decade and a half capitalism for friends worked pretty well. So much so, in fact, that even many Russians were deceived.

As a Moscow think-tanker who is one of Mr Putin’s most effective apologists in the west explained in the spring: we are rich now, we wear Italian suits and Swiss watches, so we no longer have an inferiority complex when it comes to the west.

That calculation ignored the economic fragility at the heart of Mr Putin’s authoritarianism-lite. The comrades of yore were not as well dressed as Mr Putin’s pals, but they built a system which, for all its perversities, was largely self-sufficient.

Mr Putin’s crony capitalists, by contrast, did get rich, but they did so by looting Russia’s natural resources and borrowing against that booty with the help of accommodating western bankers. The double shock of western sanctions and a lower oil price has brought that arrangement to a halt. The greatest damage is internal. Russia’s kleptocrats and its upper middle class prospered during the Putin era, and most of these beneficiaries did not think too hard about the sources of their wealth.

It has now become clear to all of them how tenuous its foundations have always been. Mr Putin’s nationalist bluster is no consolation at all for these Russians who, over the past two decades, had come to take a rising standard of living and integration into the west for granted. The rouble crashed so precipitously in part because this group, which includes most of the country’s richest business leaders, is cashing out.

That is the problem with capitalism for friends — it earns you fair-weather allies. Their defection does not mean that Mr Putin is entirely declawed. Part of his appeal for the kleptocrats was his ability, in contrast with the politicians of the liberal intelligentsia, to craft a persona that appealed to poorer, older Russians and to those who live outside the big cities.

As the economic costs of Mr Putin’s Crimea gambit mount, he may try to pivot from kleptocracy to populist autarky. Such a shift would be economically ruinous in the long run, but in the short run it could make Russia even more aggressive and unpredictable.

So now is no time for the west to rest on its laurels. But as we negotiate what will certainly be a continuing, fraught relationship with Moscow, we should bear in mind one lesson of the economic debacle of the past few weeks: whatever the language we hear from the Kremlin, and no matter what Mr Putin’s short-term tactical gains, we are not dealing with a newly ascendant, domestically united world power.

Russia today is divided and in decline. The right parallel is not with the cold war. It is with the decaying Soviet Union of the 1980s.

The writer is a Canadian MP and former FT Moscow bureau chief

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Letter in response to this article:

We must ask if we want Putin’s Russia to collapse / From Patrick Schneider-Sikorsky

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