He will flash occasional glimpses of his wishes through the year but is unlikely to reveal his intentions until the last possible moment in December.

The year will be pivotal for Mr Putin after a decade in control of Russia. A decision to give President Dmitry Medvedev a second term next year will signify that the Putin era is entering its twilight, with perhaps two or three more years as Prime Minister before he gradually cedes power to a new generation.

But a decision to return to the Kremlin for up to two more six-year terms will signal to the leaders of the US and Europe plans to outlast all of them in power. US President Barack Obama and European Union leaders would have to recalculate their Russia policies, which are built on the assumption that Mr Medvedev represents the gradual ascendancy of a more "liberal" Western-friendly generation in place of Mr Putin's old KGB pals.

Mr Obama has based his "reset" with Russia almost entirely on relations with Mr Medvedev, to Mr Putin's evident irritation.

NATO and the EU have begun partnership initiatives with Mr Medvedev, from which a reinvigorated Mr Putin might seek to extract a higher price for co-operation. Missile defence, military supply routes to Afghanistan, and the threat posed by a nuclear Iran may all come into play again as Russia's election approaches.

Relations with Britain thawed briefly in the autumn when Foreign Secretary William Hague was received by Mr Medvedev at the Kremlin, but are now back in the freezer. The tit-for-tat expulsion of diplomats last month, the arrest of a parliamentary aide at Westminster as an alleged Kremlin spy, and friction over Russia's defeat of England for the right to host the 2018 World Cup have soured attempts at a new opening under Prime Minister David Cameron's government.

Russia will look to a visit to Moscow by Mr Cameron this year for a fresh start. Sources close to the Kremlin have told The Times that there is frustration at the inability to mend relations with London since the death of the dissident spy Alexander Litvinenko in 2006.

One adviser suggested that an easing of tensions would help to smooth Mr Putin's return to power. "Italy and Germany will accept it because of Putin's friendship with (Italian Prime Minister Silvio) Berlusconi and German interest in Russian energy, while France will not object," he said.

"But he needs understanding from the Anglo-Saxon world, from America and Britain, and the key to that is better relations with London."

Russia's dominance in its former Soviet backyard will strengthen. Ukraine returned to the pro-Russian fold last year after the election of President Viktor Yanukovych, and the Kremlin gave President Alexander Lukashenko a timely rap on the knuckles to remind him who was boss before he claimed a further five years in Belarus.

Only Georgia, under President Mikheil Saakashvili, continues to resist. Russia is counting on Mr Obama being too distracted by economic problems at home and too dependent on Moscow for help in Afghanistan to put much energy into defending Georgia's pro-Western leadership.

The Kremlin's greatest challenge this year is likely to be internal, however, as it confronts nationalism aimed at migrants from the North Caucasus. A riot in central Moscow, after the death of a football fan in a fight with a Caucasus group, exposed tensions that are being exploited by ultra-nationalists with a potent "Russia for Russians" message.

There are fears of more violence and of extremists taking seats in Russia's parliament, the Duma, in elections late this year.

With Russia having fought in Chechnya and other North Caucasus republics against separatists, the Kremlin cannot afford to let ethnic hatreds spread.

Some commentators are warning of a rise of Russian fascism among disaffected youth, with ultra-nationalist groups particularly active in recruiting among football fans. Mr Putin called a meeting this month with clubs from Russia's leading teams.

The Times

http://www.theaustralian.com.au/news/world/vladimir-putin-keeps-the-world-guessing/story-e6frg6so-1225979592645