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The New Cold War
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The first edition of The New Cold War was published to great critical acclaim. Edward Lucas has established himself as a top expert in the field, appearing on numerous programs, including Lou Dobbs, MSNBC, NBC Nightly News, CNN, and NPR.

Since The New Cold War was first published in February 2008, Russia has become more authoritarian and corrupt, its institutions are weaker, and reforms have fizzled. In this revised and updated third edition, Lucas includes a new preface on the Crimean crisis, including analysis of the dismemberment of Ukraine, and a look at the devastating effects it may have from bloodshed to economic losses. Lucas reveals the asymmetrical relationship between Russia and the West, a result of the fact that Russia is prepared to use armed force whenever necessary, while the West is not. Hard-hitting and powerful, The New Cold War is a sobering look at Russia's current aggression and what it means for the world.

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West

THE NEW COLD WAR

Putin’s Threat to Russia and the West

EDWARD LUCAS

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To Cristina

CONTENTS

Map

Preface to the 2014 Edition

Introduction

1. Putin’s Rise: How the KGB Seized Power in Russia

2. Putin in Power: The Winners and Losers of the New Regime

3. Sinister Pretence: The Kremlin’s Use of State Power Against Dissent

4. Why Money Is Russia’s Greatest Strength and Our Greatest Weakness

5. The ‘New Tsarism’: What Makes Russia’s Leaders Tick

6. How Eastern Europe Sits on the Front Line of the New Cold War

7. Pipeline Politics: The Threat and the Reality

8. Sabre-rattling, or Selling Sabres? Russia’s Foreign Policy Unpicked

9. How to Win the New Cold War: Why the West Must Believe in Itself

Afterword

Notes

Acknowledgements

Index

Preface to the 2014 Edition

Authors are normally pleased when their books prove prescient. I am alarmed. Writing in 2007, I argued that Vladimir Putin’s background and views heralded repression in Russia and aggression abroad, and that he was weakening the West’s ability to resist him. If we did not do something about him soon, he would do something nasty to us later – by which time the odds would be tilted against us. Those warnings have not just been vindicated: if anything, they have proved too cautious.

Since The New Cold War was first published in February 2008, Russia has become more authoritarian and corrupt, its institutions are weaker, and reforms have fizzled. In March of that year Mr Putin nominally stepped down from the presidency – but continued to run the country during the next four years. He is now once again in the Kremlin and, if he chooses to stay for a second six-year term, he will be in office until 2024. Abroad, Russia has waged war with Georgia, conducted large and menacing military exercises against Poland, the Baltic States and other neighbours, and – as I write the foreword to this new edition – has, in effect, invaded and occupied part of Ukraine.

After two decades of peaceful if grumpy relations between Russia and the West over the past two decades, the events of 2014 have been shocking to many. But with hindsight, they should hardly come as a surprise. They are the latest turn in a geopolitical conflict which has its roots in a fundamental difference of opinion about the collapse of the Soviet empire. For the former captive nations of central and eastern Europe, and for most people in the West, the years 1989–1991 marked a triumphant liberation. They buried the one-party state and the planned economy, and entrenched freedom and the rule of law in their place.

They also – they believed – set in stone a new European security order. Henceforth, borders would be unchallenged, the era of geopolitical tussles was over, and ethnic, linguistic and minority-rights problems would be settled by peaceful dialogue, in the framework of international bodies such as the Council of Europe and the Organisation for Security and Cooperation in Europe. That was a comforting and uplifting prospect, which survived even the wars in ex-Yugoslavia. But for many in Russia the lesson of 1991 was quite different. Communism had indeed failed, but the collapse of the Soviet Union was a humiliating geopolitical setback, whose reversal was only a matter of time.

Ignoring that view led the West to misread Russian actions again and again, with now calamitous results. The danger is not just the dismemberment of Ukraine, with the bloodshed, suffering, refugees, chaos and economic losses that it may involve. The truly terrifying prospect is that the Kremlin may believe it can make more such moves in other parts of the former Soviet empire.

That could, for example, mean outright military confrontation in the Baltic region between NATO and Russia – a scenario taking us to the verge of World War Three. Despite its rapid military modernisation, Russia, unlike the Soviet Union, is no global threat. But whereas the Kremlin has shown that it is quite prepared to use armed force where necessary, the West has shown that it is not. That creates an asymmetrical relationship in which Russia, militarily weaker but mentally more resolute, has a decisive advantage. That encourages over-confidence by the Kremlin, with all the concomitant dangers of miscalculation and escalation.

Though the big picture painted by this book in 2008 remains true, some details have changed. I never thought I would be guilty of underestimating Mr Putin, whom I portrayed as a cold and sinister ex-KGB man, nostalgic for the Soviet past and with a deep belief in Russia’s historical destiny. But I did not foresee the spectacular growth of the Putin personality cult – something which barely deserved a mention then, but is now the dominant feature of Russian politics. The modest, taciturn man who took power in 1999 is barely a memory. Instead the reverent Russian media portray the president as the country’s top celebrity – a man who poses topless, with his chest waxed, for photo-shoots which depict him as the epitome of Russian masculinity (though others find the camp undertones startling).¹ Mr Putin has piloted a microlight to guide migrating cranes, stunned a Siberian tiger which was supposedly menacing a female journalist, flown a fighter plane, and dived down to the Black Sea seabed to ‘find’ two antique amphorae (which turned out to have been borrowed for the occasion from a museum).

His domestic life has changed too. The long-suffering Lyudmila Putin, his wife for 30 years, has been airbrushed from public life like a disgraced commissar in the Soviet era. The Moscow rumour-mill has portrayed Mr Putin as romantically involved with Alina Kabaeva, an Olympic gold medallist in rhythmic gymnastics – and the greatest exponent of the ‘back split pivot’. He has vehemently denied this, and rumours that he has fathered a child with her. Yet Mr Putin has not aged well. His face bears the signs of plastic surgery and heavy use of botox. He suffers from a bad back, walking and sitting awkwardly. Some wonder if he takes too many powerful painkillers. A press conference during the attack on Ukraine was rambling and at times incoherent – a far cry from the clipped tones and masterful behaviour which bewitched Russians when he first took power.² Angela Merkel, the German leader, complains that he seems to live in a ‘different world’.

I also underestimated the growth of Russia’s ideology (outlined in Chapter Five).

Many in the West scoffed even at the idea that Russia’s rulers believed in anything of the kind. Surely ideology died with the Soviet Union? This view has proved as complacent as the idea that Russia was willing to live with the post-1991 political order in Europe. From the outside, the notions pushed by the regime’s spin-doctors are truly bizarre: for example that the Byzantine Empire of 600 years ago is a model for contemporary Russia.³ But this chimes neatly with the idea that Russia is a different (and higher) civilisation, under attack both from the east (then Seljuk Turks, nowadays Islamists) and an ignorant, arrogant and amoral West (the Fourth Crusade then, NATO now).⁴

Mr Putin takes such ideas increasingly seriously. A Kremlin reading list for regional governors includes works such as Nikolai Berdyaev’s Philosophy of Inequality, Vladimir Solovyov’s Justification of the Good and Ivan Ilyin’s Our Tasks. These contain what David Brooks of the New York Times neatly described as ‘melodrama, mysticism and grandiose eschatological visions ... a quasi-theocratic nationalist autocracy destined to play a culminating role on the world stage’.⁵ The reality of this vision may not come to pass, but Mr Putin already inhabits it.

Certainly Russian politics has long parted company with the European mainstream. As Radek Sikorski, Poland’s foreign minister, observes, the Kremlin ‘has brainwashed people into thinking that Europe stands for gay marriage, licentiousness, an amoral lifestyle’.⁶ In mid-2013 Mr Putin signed into a law a prohibition of the distribution of ‘propaganda of non-traditional sexual relations’ among minors. This enjoys wide popular support – but it has also stoked hate crimes against gays and lesbians. Mr Putin and other prominent public figures habitually conflate homosexuality with paedophilia. Speaking in the run-up to the Sochi Olympics, Mr Putin said that gay athletes and spectators from abroad had could feel ‘relaxed and calm’ at the games – but they should ‘leave children alone please’. A leading Russian television presenter, Dmitri Kiselyov, claimed Swedish sex education encouraged nine-year-olds to masturbate, blamed gays for provoking hate crimes, and said that they should be prevented from donating blood or organs, because their bodies are ‘unsuitable for extending the life of another’. In its media attack on protestors in Ukraine, the Kremlin explicitly linked closer ties to the European Union with the onset of gay rights.

The nominal cause of the Ukrainian crisis was a row over the EU’s Eastern Partnership: an attempt, conceived in 2009, to woo six ex-Soviet republics with free trade, advice and visas, in exchange for reforms of the kind that might one day make them suitable candidates for EU membership. The Eastern Partnership was better than the policy vacuum that preceded it: it was an explicit acknowledgement that the Union needed some way of dealing with its eastern neighbourhood, in the absence of any willingness among member states to offer poor, ill-run countries such as Ukraine a clear path to membership.

But the Eastern Partnership was misconceived from the outset. It lumped together small countries and big ones, democracies and dictatorships, eager reformers and obstinate hold-outs. Expecting one policy to suit countries as diverse as Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine was one kind of wishful thinking.

Another was assuming that the Kremlin would see the benefit of having stable and prosperous neighbours. Western policymakers failed to appreciate the deep conviction among many Russians that the West was bent on encircling and subverting their country. European leaders could not see why their efforts could be interpreted this way. It was Europe, after all that had in 2008 blocked America’s plan to try to bring Georgia and Ukraine into NATO. Nor had Europe anything to do with the American-sponsored, ‘colour revolutions’ which had toppled autocratic regimes in those countries (in Georgia in 2003 and Ukraine in 2004–5). Europe’s approach was quite different: the gentle promotion of higher standards of public administration and economic integration, which would surely benefit everyone.

That ignored the Putin regime’s innate anti-Westernism: since 1999 the desire to tease, provoke and menace the West has grown to become the chief determinant of Russian foreign policy. It also ignored the profound ideological challenge that successful ex-communist countries pose to the Kremlin. It is bad enough that places such as Estonia and Poland are doing well. It is far worse when counterparts from the core of the old Soviet Union follow suit. If countries such as Ukraine and Georgia start having real elections, an open economy and media freedom, Russians may ask why they can’t have the same. Just as the Prague Spring in Czechoslovakia in 1968 presented an existential threat to the authoritarian communism of Leonid Brezhnev, the prospect of prosperity, freedom, the rule of law and European integration in Georgia and Ukraine potentially challenge the authoritarian capitalist model in Russia.

Russia fears the West’s soft power, but not its will power. Moscow perceived the Eastern Partnership as part of a dangerous Western intrusion in its front yard; it also – rightly as it turned out – believed that Brussels was not serious in pursuing the policy. The Eastern Partnership therefore achieved the worst of both worlds. It was provocative in Russian eyes, yet vulnerable to pressure. Its biggest vulnerability was that it was unattractive in the eyes of the Ukrainian leadership. The EU demanded that the authorities in Kyiv (among the most incompetent and corrupt rulers in Europe) embark on painful reforms up front, but in exchange for only modest and delayed benefits. Crucially, the ‘partnership’ did not offer ultimate membership of the EU. That would have been a vital ingredient: a kind of ‘magnetic West’, an orientation point for all political forces in Ukraine. Without it, the political compass span wildly.

Then, as the Kremlin flexed its muscles in the summer of 2013, the EU failed to appreciate the danger. First the Kremlin strong-armed Armenia into shunning the EU’s deal, opting instead to be part of Russia’s rival project, a customs union. Then the Kremlin launched economic warfare against Ukraine, brandishing both sticks (trade sanctions) and carrots (the promise of cheap gas and soft loans). Mr Putin presented the deal to his counterpart, president Viktor Yanukovych, in the starkest manner, including threats to his physical safety. Mild-mannered Eurocrats could scarcely match such language and terms. The EU never seemed to appreciate that regarding geopolitics as out-of-date and deplorable is little help when dealing with a large and powerful country that thinks differently.

Russia’s aggressive and opportunistic policy towards Ukraine is only part of the problem. It must be framed in the context of Ukrainian weakness, and of the outside world’s inattention and complacency. Following the Orange Revolution of 2004–5, supposedly pro-European and reformist leaders in Kyiv squandered every chance to run their country properly, paving the way for the election in 2010 of the dismal Mr Yanukovych. It is a striking fact that in the more than twenty years after Ukraine gained independence, under governments and presidents of many different stripes, the country has not yet installed meters on its border to monitor the flow of gas from Russia. This is like running a shop where deliveries are not checked against invoices, and where prices vary depending on customers’ political ties to the owner. The sump of corruption and rent-seeking – the collection of unearned income from bureaucracy and natural resources – thus created has poisoned Ukrainian politics for years.

In practical terms, Russia’s squeeze on Ukraine was a series of bold tactical moves, each ending in a strategic failure. It did succeed in persuading Mr Yanukovych to dump the Eastern Partnership. But it did not foresee that Ukrainians would mobilise in their hundreds of thousands – and later millions – in protest. Anger at the regime’s kow-tow to Moscow was mixed with outrage at its brutal treatment of demonstrators, beginning with beatings and abductions, and ending with the use of live ammunition by snipers.

The protestors’ permanent occupation of the Maidan – Kyiv’s central square – became an extraordinary example of communal resistance, complete with church services, European flags, soup kitchens, field hospitals, impromptu academic lectures, rousing speeches and rock concerts. The Euromaidan, as it was renamed, was the only place in the world where the notoriously low-key British politician Cathy Ashton, visiting in her capacity as the EU’s foreign policy chief, could be met by huge cheering crowds, invoking her name as a battle-cry in the struggle for democracy and freedom.

Russia demanded that the Ukrainian regime disperse the protestors by force. That failed too. Mr Yanukovych, a man of notably limited intellectual and emotional resources, fled. The protestors inspected his estate outside Kyiv, and found not only grotesque luxury, epitomising the waste and theft associated with his regime – but also a large cache of incriminating documents, which had been hurriedly dumped in a lake as he made his last exit.

Even if it came at the price of dismemberment and invasion, Russia’s actions have at least led to a crystallisation of Ukrainian national consciousness, on the basis of opposition to Kremlin interference. Whatever Mr Putin gains in the short term, that change in sentiment is the gravest of defeats for Russia in the long term.

The real story in Ukraine was of a democratic revolution – chaotic in places, with some admittedly troubling fringe elements whose murky backers remain a source of speculation (intelligence sources believe that some far-right groups were in fact financed by the regime, and by Russia, in order to taint the protests with extremism). The Kremlin’s propaganda machine portrayed it differently: the revolution was a putsch, in which the heirs to the Nazis’ wartime collaborators, along with drug addicts, pederasts, foreign provocateurs and other riff-raff, had toppled an elected government. The Maidan represented not an inspiring miracle of self-organised democratic protest, but mob rule. Following Mr Yanukovych’s departure, Ukraine was in chaos. Only outside intervention could protect Russia’s ‘compatriots’ (a slippery term which the Kremlin applies as widely as is convenient) from a fascist revanche.

That set the scene for the incursion into Crimea – an autonomous region of Ukraine which is home to Russia’s treaty port at Sevastopol, a naval base complete with 25,000 troops. Though Crimea has deep historical significance for Russia (it was conquered by Catherine the Great in 1783) it has another history too. Its native Tatar population was deported en masse by Stalin in 1944; half of them died within a year (survivors have since straggled back, but have yet to receive recompense). Crimea became part of Soviet Ukraine in 1954, at a time when the borders of the Soviet republics were merely internal administrative boundaries. It is the only region of Ukraine with a majority population of self-declared Russians, many of them retired military pensioners with strong sentimental attachments to the former Soviet Union.

Crimea’s symbolic role in Russian minds, the presence of Russian forces, and the disgruntled majority population have proved a fateful combination. The Kremlin has whipped up a propaganda storm involving invented atrocities and the presence of ‘fascists’ in the interim Ukrainian government which took office following the collapse of the Yanukovych regime. Ukraine’s modest military presence in Crimea was harried and besieged by Russian troops. A poll staged by the pro-Kremlin authorities on 16 March provided an overwhelming vote in favour of incorporation into the Russian Federation (see page 330).

Yet Russia’s central idea, that ‘compatriots’ are in need of protection, is flimsy. ‘Russian-speaker’ is no more a political category than ‘English-speaker’. People speak Russian for all sorts of reasons which may or may not be connected to their birth, citizenship, political affiliation or self-declared ethnicity.

Some Western politicians have likened Russia’s invocation of the woes of ‘compatriots’ to Hitler’s justification for protecting Volksgenossen in Czechoslovakia. That (a phrase you may rarely read) is unfair to Hitler. It is true that the Nazi propaganda cynically whipped up the grievances of the Sudeten Germans (using radio, just as the Russian authorities have used television), and that Hitler’s dismemberment of Czechoslovakia was an outrage. But the authorities in pre-war Prague had given the Germans within their borders genuine reason to complain. German was not an official language (for example in state radio broadcasting). Czechoslovakia’s identity was based on Czech and Slovak ethnic and linguistic pre-eminence, which gave little space for Germans (or Hungarians) to feel loyal or included.

Ukraine is different. It offers ‘Russian-speakers’ (however defined) far more recognition and rights than pre-war Czechoslovakia did to its Germans. Ukraine is a genuinely bilingual country (something that citizens of the Russian Federation, along with Britons and Americans, find hard to imagine). Russian is widely and freely spoken; it is a language of education at all levels. Indeed many Ukrainian politicians are audibly more at ease in Russian than in the nominal national language. The only ethnic Russian killed during the upheavals of early 2014 was a protestor on Maidan, killed by the regime’s snipers.

The historian Timothy Snyder has highlighted other contradictions in the Kremlin’s approach. It claims that Ukraine is in the grip of a Nazi revanche. Yet some of the leading figures in the interim government are Jewish (and it enjoys the emphatic support of all local Jewish leaders). On the surface, that seems a contradiction: how can there be Jewish Nazis? Yet anyone with knowledge of Soviet propaganda would find this familiar. The Soviet Union regarded Nazism as the ultimate evil, and painted its own opponents as tacit collaborators and apologists for the Third Reich. Yet the Soviet Union was also profoundly anti-Semitic and had no diplomatic relations with Israel for most of the two nations’ joint history.

As Mr Snyder notes, propaganda is not meant to depict reality: it is meant to create it. It is a script, aimed at motivating the public and setting the terms of debate: ‘not a version of the world in which we live but rather a representation of the world to come’.⁷ The Kremlin’s propaganda reflects its ideology, in which Russia is the champion of cherished, age-old values, beset by a sinister and decadent West.

Though ideology has developed in Russia, political processes and institutions have decayed. On the surface, politics in Moscow has never looked so closed and stagnant. A law requiring anyone in receipt of grants or funds from outside Russia as ‘foreign agents’ has crippled human-rights campaigns and other pressure groups. Punitive fines and jail sentences have cowed the opposition, as have restrictions on internet use. The only significant change in the regime of ex-KGB men and their business cronies which took over Russia in 2000 is that its members have become a great deal richer. Behind the scenes, plots swirl. Some of the richest Russians have a lot to lose from sanctions. The decision to attack Ukraine was taken by Mr Putin in consultation with a small handful of his ex-KGB friends. Power in Russia revolves around a troika: a business model, a regime and the personality of Vladimir Putin. The business model has been based on the looting of rents (unearned income) from natural resources and the bureaucracy, and its investment in the West. The regime is the caste of ex-KGB officials and their business and criminal friends. Both of those are unlikely to change

But at its centre is the enigmatic ex-spy, who is now both the acknowledged master of the Kremlin and its prisoner. He has left an indelible mark on Russian history – but it is hard to see how he can safely depart with his laurels. Once he is out of power, what is to stop someone raising dangerous questions outlined in Chapter One, such as the mysterious blowing up of apartment buildings? Or someone might question the fortunes of firms such as Gunvor and RosUkrEnergo, the beneficiaries of financial flows that could in in other circumstances (to put it mildly and non-libellously) have flowed to Russian taxpayers and shareholders. Just imagine the television news in a post-Putin Russia carrying a small item that prosecutors in Ryazan had decided to reopen their investigation of the non-bomb there; or that Swiss police, acting on a tip-off from their Russian colleagues, had raided the offices of Gunvor and questioned staff there about money-laundering. From such minor-sounding events, it would be a very short step indeed to questions that lead to the heart of the Putin presidency.

For all the woes that Russia has inflicted on its neighbours, it should not be forgotten that the biggest victims of the Putin years have been Russians themselves. Critics of my books try to present me and my allies as Russophobes (often coupled with the adjective ‘pathological’). I reject that at every opportunity. To my mind the real Russophobes are the people who misrule and loot Russia, treating the Russian people with a mixture of fear and contempt, killing and jailing those who stand in their way. Mr Putin and his colleagues have spectacularly failed to modernise the country’s public services and infrastructure, or to diversify the economy away from natural resources. It has fewer allies now than at any time in its history.

The optimists’ case remains chiefly that Russia is still on a bumpy ride to normality. A new middle class is growing, which will eventually demand choice and excellence in public and private goods alike. I share that optimism – in the long term. But in the mean time Russia is getting worse not better. The best example of the regime’s hostility to its own people is the case of Sergei Magnitsky, an auditor at a Moscow law firm who uncovered a $230m fraud perpetrated by Russian officials against their own taxpayers. It involved systematic abuses of the tax and legal system to create phoney tax refunds. I outline it in detail in my book Deception (published in 2011).

When he exposed this fraud, Mr Magnitsky was arrested on trumped-up charges. He died a year later, having been held in dreadful conditions in pre-trial detention; on the day of his death he received a severe beating. The Russian authorities’ response has been not to investigate the wrongdoing, but to bully and bluster. In a grotesque twist of legal procedure, they even blamed Mr Magnitsky himself for the fraud he uncovered – and then put him on trial posthumously.

Russian views on their rulers remain as ambivalent as I described in 2008. They regard their public services, criminal justice system, infrastructure and bureaucrats with dismay and disdain. A majority supports an international campaign to deny Western visas to those involved in the Magnitsky affair, and to freeze their foreign assets. Paradoxically, although most agree that their country is corrupt and badly run, and decry the poor quality of public services, Mr Putin’s personal popularity rating remains high.

Hopes for liberalisation under the four-year presidency of Dmitri Medvedev proved illusory, though some of the political prisoners mentioned in the book are now free. The best known of them, the billionaire Mikhail Khodorkovsky, was released before the Sochi Olympics and promptly left Russia to pursue a powerful campaign against the Putin regime. He made a notable appearance at the Maidan during Russia’s invasion of Crimea. Mr Gutseriyev, the owner of Russneft, has returned to Russia from his exile in London.

The energy picture described in Chapter Seven has changed too. Corruption has reduced the Kremlin’s room for manoeuvre. When Mr Putin came to power, the Russian budget balanced with oil at $20 a barrel. Now the price needs to be $115. Shale gas – not even a blip on the horizon in 2008 – may in the long term reduce Europe’s dependence on imported gas. Russia’s attempts to set up an international gas cartel have got nowhere. The European Union has shown commendable firmness in dealing with Gazprom’s market-abusing behaviour; though the Nabucco pipeline project, which would have brought gas from central Asia and the Caucasus to central Europe, has failed, many other pipelines have been built. These ‘interconnectors’ mean that it is far harder for Russia to cut off supplies to individual European countries. Gas pumped through Russia’s Nord Stream pipeline to Germany can be sent on to Poland, the Czech Republic, Slovakia and elsewhere. It is even possible to send gas from the EU to Ukraine.

The EU has pushed member states to ‘unbundle’ their gas industries. This boring-but-important measure means that anyone who owns a pipeline must offer it to gas from any source: in one deft move, that demolishes Gazprom’s business model. Another huge threat to Kremlin revenues is cutting the link between the gas price and the oil price – an artificial connection which has kept gas prices in Europe artificially high. In response to the Ukraine crisis, the EU also laid down far tougher conditions for the Kremlin’s pet South Stream pipeline.

Russia continues to try to wield its energy weapon, with great effect in countries that have no alternative source of supply. The pipelines that carry gas also carry money – a potent source of influence peddling and political leverage. But overall the gas weapon is increasingly ineffective.⁸ Each politically motivated cut-off highlights the risk to every other European country of doing business with Russia. Even Germany, once Russia’s most loyal customer in Europe, now sees Russia as an expensive and unreliable source of gas.

That highlights a broader and welcome shift in European security. Germany – a villain of the piece when Gerhard Schröder was chancellor – has become a champion of the interests of the east Europeans. Mrs Merkel loathes Mr Putin. ‘She senses evil’ says a senior politician from a neighbouring country, approvingly. On their first meeting, he took care to bring his labrador, in the knowledge that the German chancellor has a childhood terror of dogs. The animal sniffed Mrs Merkel’s legs. She did not respond to this typical piece of KGB psychological pressure. But she and her advisers have never forgotten the insult.

Instead of a special relationship with Russia, Germany has developed a remarkable friendship with Poland. Germany’s foreign trade with Poland has rocketed – as of 2013 it exceeded foreign trade with Russia. This has profoundly shifted the political centre of gravity in Germany. The Russia lobby in German business is still strong – but it is no longer overwhelming. Among the German left, distaste for the chauvinism and heavy-handedness of the Russian regime has outweighed the anti-Americanism which previously tilted opinion in favour of Russia. Overall in Germany, trust in Mr Putin has plummeted. Nearly three-quarters of Germans trusted him in 2003. Less than a quarter did in 2013. After the initial crisis in Ukraine, 62 per cent of Germans said they were in favour of increasing political pressure on Russia (though only a minority supported economic sanctions).

While ties with Russia have weakened, the links between Mrs Merkel and her Polish counterpart Donald Tusk are among the closest between any European heads of government. The foreign minister, Mr Sikorski even gave a speech in Berlin in November 2011 in which he said the gravest threat to Polish security was not Germans in action, but German inaction in the euro crisis. Terming Germany Europe’s ‘indispensable nation’, he said: ‘I demand of Germany that, for your sake and for ours, you help [the euro zone] survive and prosper. You know full well that nobody else can do it. I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity.’ Fears of a two-speed Europe, in which Russia would be able to play divide and rule, have proved unfounded.

By contrast Britain, which froze relations with the Kremlin after the murder of Alexander Litvinenko in 2006, has buckled under the weight of Russian money. The country’s most important company, the energy giant BP, is now a 20 per cent shareholder in Rosneft, a company founded on stolen property: Chapter Two details how it feasted on the corpse of Yukos, Mr Khodorkovsky’s oil company. Without its Russian investment, BP, and the many pension funds which depend on its dividends, faces disaster – a consequence of the ruinous lawsuits arising out of the fatal oil-well disaster in the Gulf of Mexico in 2010.

This creates easy leverage for Russia: if British foreign policy troubles the Kremlin, then Rosneft just needs to tell BP of certain difficulties (tax, technical, or regulatory) that may be approaching, BP will then go howling to Downing Street where worried politicians, mindful of the company’s role in the wider economy, back down. For its malign influence on British politics, I have dubbed BP ‘Britneft’.

But perhaps my biggest omission in 2008 was to discount any military dimension to the Russian threat. My initial shorthand definition of the ‘New Cold War’ was that Russian banks, not Russian tanks, were the problem. Military aggression might be a thing of the past, but we needed to worry far more about Russian penetration of our financial system, and the constraints it might create on our freedom of action in future.

The second part of that message was right. But the first part was wrong. From being a non-issue, hard military security in Europe has gone shooting back up the agenda, in a way that few if any foresaw in the early years of the past decade. Russia’s rearmament is continuing apace, whereas Western defence capabilities have shrivelled. Western governments are scrambling to react. NATO, once seen as moribund, is back in business. So is the transatlantic relationship. Europe cannot defend itself against Russia: it lacks the conventional arms, and the nuclear arsenal to do so.

That credibility gap was a potentially fatal weakness during the old cold war. And it remains one now. The best way of avoiding World War Three, as in the past, is the clear communication of NATO’s deterrent capability. The Kremlin – even in its most messianic, resentful and aggressive frame of mind – must be in no doubt that any incursion or provocation in any NATO country will bring an immediate, unambiguous and painful response.

Worryingly, this is not now the case. Part of the fault lies with Europe’s unwillingness to spend money on defence. Part also stems from the West’s failure to send clear signals to Russia in the past, chiefly during the cyber-attack on Estonia in 2007, or after the war in Georgia in 2008 (when the EU imposed the mildest possible sanctions, and ended them as soon as it could). But the biggest gap in European security stems from Washington. The harm started under the Bush administration, which neglected its European friends during its pursuit of the ‘war on terror’. Loyal allies spilled blood and treasure in Iraq and Afghanistan. Some – such as Poland and Lithuania – were also strong-armed into providing secret prisons (so-called ‘black sites’) for the detention, and allegedly the torture, of terrorist suspects. From a narrow military point of view, the participation in foreign missions stoked trust and interoperability. But from a wider perspective, the transatlantic relationship came under strain. Moreover, NATO countries in old Europe such as France and Germany began to feel that the new member states of the alliance were overly and uncritically enthusiastic about America. These countries’ worries about Russia met a correspondingly unresponsive audience.

Barack Obama has only partially put this right. At the start, his administration followed its predecessors in blaming bad relations with the Kremlin on past mistakes, and trying to put them right with goodwill and personal diplomacy. It explicitly dropped the promotion of democracy, and concentrated on low-key practical cooperation on matters of mutual interest. This resulted in the ‘reset’ of 2009, marked with the presentation by Hillary Clinton to her Russian opposite number, Sergei Lavrov of a red button marked Peregruzka. The aim was to separate issues on which the United States and Russia were bound to disagree (such as human rights, and the security of the countries of the former Soviet empire) with those where agreement was possible and even pressingly needed, such as transit of military materiel to Afghanistan, arms control, a legal regime in space, etc. Unfortunately the State Department Russianists seem to have been off-duty when the central gimmick was being created. The Russian word on the button means ‘Overload’; the correct term for ‘reset’ would have been