Europe should not put Russia down again because it is weakened itself
During the gas crisis the Kremlin, the Russian Government and Gazprom recklessly ignored the balance between Russia's real and imagined power. In the eyes of Moscow's partners, that balance determines the economic significance and political reliability of Russia, which in the last eight years saw its influence grow.
Russia probably reached the peak of its power in September 2008, when it defeated Georgia and the price of oil had topped $100 per barrel. The sense of power led Russia to underestimate the degree of its diplomatic isolation and the negative impact of the financial crisis on the Russian economy.
Although its doctrine proclaims Russia's "own path" of development, its economy has never been so closely integrated in the world economy and so dependent on foreign trade. Like other developing countries, Russia faced a dramatic change in the attitude of its partners, who overestimated Russia's potential.
A psychological shift occurred in the second half of October, when political and economic leaders admitted that economic illusions had vanished, that there was a grave liquidity crisis and the rouble faced devaluation. Simultaneously, the last three months of the last year saw a major change in the way Russia demonstrates its might as embodied in Prime Minister Vladimir Putin.
Formerly Mr Putin used two main levers. First, the energy policy based on the renationalisation of assets in order to quickly increase the country's wealth. Second, restoration of the Armed Forces designed to banish memories of the ignominious defeat in Chechnya. The combination of these two factors fueled a quest for prestige, which became something of an obsession in domestic and foreign policy.
The fall of oil prices deprived Mr Putin of the first lever by imposing budgetary constraints. (The 2009 budget assumed that oil would cost $70 per barrel). The war with Georgia, in spite of an easy victory, revealed major operational flaws. After September 2008 the chase of prestige in the world was replaced with a profound sense of strategic isolation of the country.
Things went from bad to worse: the gas crisis revealed the true priorities of the leadership that was ready to sacrifice trade relations with the EU over its differences with Ukraine. Along with other negative consequences of that crisis, Russia lost much of its appeal in the eyes of the Europeans.
The quick change of Russian policy led the Europeans to draw two conclusions. First, Europe should expect a redistribution of wealth in Russia, which would cause instability but at the same time open investment opportunities. These investments would be even more attractive than in the past (due to devaluation of the rouble - NG).
The redistribution of assets and political struggle are intimately interconnected. One can already observe the struggle in the top echelons of power: The fact that President Dmitry Medvedev recently criticised the Government reveals nervousness and fear of the social consequences of the crisis. That lends great symbolic significance to the devaluation of the rouble.
Secondly, the Europeans should not try to put down Russia because they have become weakened themselves. Moscow still has some room for manoeuvre in the financial sphere, a potential for development and - contrary to Western perceptions - recent experience in combating the crisis. Even if the growth forecasts have been revised downward (to less than 2%) the situation cannot be compared with the 1998 crisis. Besides, the situation will quickly improve as soon as oil prices rise.
It is important to note that the Russian authorities expect oil prices to rise in the medium term because its supplies in the world are running short. However, Moscow should be aware that it is not enough to declare economic diversification; that process needs partners.
That is why the Europeans should stay the course in the relations with Russia, its third biggest trade partner, and constantly revise their assessment of Russia's potential. This is the best way to stay cool in the face of a country that is certainly far less rational than it thinks itself to be.
Thomas Gomart is the head of the Russia/New Independent States Centre at the French Institute of International Relations (IFRI).
Thomas Gomart