The new arms race is deadly because Russia is so fragile

Fraser Nelson says that Putin's bellicose strategy — spending his oil millions on a deadly new arsenal — is more dangerous than the actions of his Cold War predecessors because Russia is so vulnerable to economic and social collapse Alittle over a week ago, Vladimir Putin tested a weapon deadlier than anything developed by the Soviet Union. A missile launched from a submarine in the White Sea entered the stratosphere and returned precisely on target 3,800 miles away in the Russian Far East — the other side of the world. Such tests are meant to send messages. The target could just have easily been Tehran, Los Angeles or London. It signalled that Russia means business. After a hiatus of two decades, the arms race is back.

While Britain has been fixated with the Middle East and Iraq, it has paid insufficient attention to the increasingly aggressive noises emanating from the Kremlin. Mr Putin was never very enthusiastic about Russia becoming a part of the West — but now, flush with gas and oil revenues, he has left its orbit altogether. The Russian military is once again treating Nato as the glavny protivnik, the primary enemy, and drawing up plans for a nuclear war. And Putin's explicit aim is to challenge, and then counter, America's world dominance As recently as six years ago, such an ambition would have been laughable. Then, Russia was an economic basket-case which had been admitted into the G7 group of industrialised nations only as an act of charity. The main security issue in Russia was how to stop its nuclear fuel being sold for scrap to rogue states. But, in those days, oil was $17 a barrel. Now it is $75 and rising. For a country which pumps out more oil than any on earth, save for Saudi Arabia, the consequences could scarcely have been more dramatic. Russia now has a huge surplus, has banked £25 billion in a 'stabilisation fund' and has the third-largest currency reserves in the world.

Rather than invest this bounty in Russia's crumbling infrastructure or its imploding health service, Mr Putin has gone on an arms spending spree. In 2001, the defence budget was 140 billion roubles; today it stands at 870 billion (£16.7 billion) — a sixfold increase, and the fastest in Russia's peacetime history. Last year, he added six new intercontinental missiles to his arsenal, 12 launch vehicles, 31 battle tanks and seven Mi-28N night attack helicopters. And this is but a small taste of what is to come.

The missile tested last week takes off so fast that no missile defence system could detect it in time. The new variant of the Topol-M missile will have multiple warheads, which splinter so they cannot be shot out of the sky. America's floundering missile defence system cannot hope to offer protection. Washington struggles to keep up: two months ago, another interceptor missile fired off Alaska fell into the Pacific having failed to recognise, far less hit, its target. America is losing the ballistic missile game.

Meanwhile, Mr Putin has learnt to use energy as a weapon. Russia is sitting on the largest stretch of gas reserves in the world and Europe already depends on Russia for a quarter of its gas. The Kremlin knows that energy security is intimately intertwined with national security, and tested its strength the winter before last when it temporarily suspended gas supply to Ukraine in an argument about prices. Germany is expected to rely on Russia for 80 per cent of its gas within a decade.

Precisely what Mr Putin intends to do with this muscle was made astonishingly clear in February when he delivered a speech at the Munich security conference. It was a Taccuse' to America, serving notice that Russia had moved from ally to adversary. The United States has overstepped its borders in all spheres — economic, political and humanitarian, and has imposed itself on other states,' he declared. 'This is the world of one master, one sovereign.' And his objective is to challenge such hegemony.

To Britain, all this sounds almost quaintly absurd. The recent debate about renewing Trident reckoned without a nuclear confrontation with Russia. Yet this is precisely what Mr Putin's troops are being trained to expect. The view in London is fundamentally different from the view in Warsaw, which is watching the Kremlin's assertiveness with alarm. In Moscow much of the Cold War mindset is returning (minus the communist ideology) — whereby Nato is the enemy, and perceived as a growing threat.

The irony, of course, is that by many of its own members, Nato is seen increasingly as an anachronism. It played no role after the attacks of 11 September 2001 — other than a routine invocation of Article 5 — and its peacekeeping efforts in Afghanistan have been a testimony only to the reluctance of its members to share an even burden or agree a clear set of priorities. The phrase 'coalition of the willing' became popular in Washington partly because expectations of Nato solidarity are so low.

In this context of slow decline the admission of former Warsaw Pact countries into the club is seen simply as an act of friendship. Yet within the paranoid confines of the Kremlin such gestures are seen as new and sinister manifestations of Western imperialism. When Mr Putin is called upon to explain his extraordinary arms build-up, he points to the expansion of Nato.

The architect of the new Russian military is Sergei Ivanov, for six years defence secretary, now promoted to Deputy Prime Minister and favourite to succeed Mr Putin next March. 'In the mid-1990s, we counted on the fact that the collapse of the Soviet Union would lead to the end of the Cold War — that Nato would not move to the east,' he said in a recent interview. 'But now we see everyone deceived us.'

Washington now hopes to position missile defence interceptors in eastern Europe. Congressional funding for the scheme is far from secure, and, seven years ago, Mr Putin said quite explicitly he was happy for a shared anti-missile system to proceed. Yet his response last month was incendiary. If the interceptors were mobilised, the Russian President declared, `then we disclaim responsibility for our retaliatory steps, because it is not we who are the initiators of the new arms race which is undoubtedly brewing in Europe'.

In the Kremlin's eyes, there already is an arms race — the only question is how quickly it can respond. Inside Russia, there is regular talk of how its missiles might penetrate any American defence. The military is already on Cold War alert. Three months ago, for example, the Vladimir Missile Army held a fiveday exercise simulating full-on nuclear war with America. It practised moving its TopolM missile under camouflage, to fool Western satellites. The army commander then gave details in an interview to the Krasnaya Zvezda newspaper — in full knowledge that translated versions would instantly arrive on the desks of Western intelligence agencies. It was the nearest thing to writing the CIA a `from Russia with love' memo.

These are not the clandestine methods of the Cold War. All this missile testing, ostentatious war-gaming and tub-thumping is clearly designed to draw attention to Russia. It is consistent with a bid to lead a new power axis — perhaps based upon the gas cartel which Russia is discussing with Iran, Qatar and Venezuela. Mr Putin visited the Middle East soon after making his anti-American outburst as if preparing the ground for a new coalition of aggrieved states hostile to America.

Whatever his intentions, it is now clear that democracy and liberalism have long been dumped from Russia's priorities. Security, order and centralisation of power are Putin's key objectives, and the oil revenues have brought wealth which earlier attempts at economic diversification and general entry to Western free markets did not. The old KGB ways are returning — a recent study of the 1,016 most senior officials showed a quarter were ex-KGB. Among Mr Putin's inner circle, this figure rises to three quarters. These are Soviet-era men, with Soviet-era approach to the toleration of dissent.

The murder of Alexander Litvinenko, the ex-Russian spy poisoned in London last November, is just the most spectacular example of what goes on all the time in a Russia where broadcasters are now controlled by the Kremlin or Mr Putin's allies. A number of independent, critical journalist critics have been found dead in suspicious circumstances. Mikhail Khodorkovsky, former head of Yukos Oil, remains in jail after a show trial. The West protests strongly, but Mr Putin makes it equally clear he could not care less. He has a legacy to think of, too.

Slowly, the West is beginning to realise what is happening. Angela Merkel, the German Chancellor and current President of the European Union, has been strikingly robust in criticising Mr Putin — a stance which won her many fans among the new EU members. Yet Tony Blair was deeply reluctant to accept that things were so bad. He invested much personal time with Mr Putin and visited Moscow during the last presidential election to lend his support.

This is an area where the Conservative party is well ahead of the government. Liam Fox, the shadow defence secretary, has for months been raising the alarm about Russia and delivered a speech on the subject in Washington on Tuesday. The Tories already regard their defence policy as being intrinsically linked to energy policy, a view which Mr Blair came around to very belatedly in his final months in No. 10. Gordon Brown's views on Russia, in common with much of his foreign policy, remain a mystery.

Yet for all this, Russia knows it can never again become a true superpower for reasons that no ballistic missile will ever be able to reverse. Its rampant drug abuse, alcoholism, rate of HIV infection and other problems add up to a demographic picture worse than that of any non-African country. Russia's population is expected to keep falling by 730,000 a year until at least 2015. Its defence budget is less than 5 per cent of America's — for all the damage its missiles would cause, it would end up second-best in any nuclear war. A country dependent on oil money for a third of its budget is also hugely vulnerable to a drop in oil price.

Yet it is precisely this fragility that makes Russia so dangerous at the moment. It is North Korea's weakness that has led it to militarise so heavily, and instruct its army to prepare for war with America. Mr Putin may be stepping down, but he is clearly trying to set Russia on a clear, aggressively military and nationalist trajectory. As Britain sets its defence policy in 2007, it must ask what kind of Kremlin will emerge in ten years' time. And the trends are not encouraging. The more desperate Russia becomes, the less predictable it will be.

The military is not waiting around. In January, Russia's military chiefs met to discuss security and deliver keynote speeches. One after the other, they asked for the governing military doctrine of their nation to be redrafted, explicitly naming America and Nato as the primary enemy. In March, the Russian Security Council duly announced that it no longer considered terrorism to be the greatest threat, and instead unveiled a new strategy based upon 'geopolitical realities' — namely that rival military alliances were becoming stronger, 'especially Nato'.

Six years ago, when George W. Bush first hosted Mr Putin at his ranch in Texas, he famously claimed to have seen into his soul. At the time he phrased it slightly differently to an adviser, unaware that his microphone was still live and his remarks were being broadcast over the speaker system in the next room. 'I've got him eating out of my hand,' the President whispered. 'You give these Russkies some cake and they'll give you their souls.'

How things have changed. In Mr Putin's trip to Maine last week, it was Mr Bush who was doing the back-pedalling, agreeing to ditch the Pentagon's plans for the missile interceptors in Poland. They joked, shared a speedboat, ate lobster and played fetch with their dogs. But it is now time for realpolitik. The free market has perished in Russia, and a petro-economy has taken its place. Russia is no longer a junior partner for the West, but a growing adversary. Mr Putin will smile — but rearm Russia as he smiles. And the new arms race continues apace.