For the past two years, the Obama Administration has touted its Russia “reset policy” as one of its great diplomatic achievements. The President spent an inordinate amount of time cultivating Russian President Dmitry Medvedev and making him his principal diplomatic interlocutor—despite the fact that Medvedev is Prime Minister Vladimir Putin’s appointed protégé with no political base of his own.

To uphold the “reset,” the Administration agreed to cut U.S. strategic nuclear forces under New START, abandoned missile defense deployment in Poland and the Czech Republic, engaged Russia in missile defense talks, pursued a policy of geopolitical neglect in the former Soviet Union, and toned down criticism of political freedom violations in Russia. However, Putin remains Russia’s “national leader” and the real power behind—and on—the throne. Top White House and State Department officials now privately recognize that they bet on the wrong horse, as it is unlikely that Medvedev will wield any real power beyond the spring of 2012. However, the Administration cannot publicly admit that this bet failed, as it would undermine the very notion of this over-personalized “reset.”

Yet the reality that Medvedev has a limited capacity to deliver and is unlikely to continue in office means that the U.S. should rethink its strategy for engaging with Russia’s leadership.

Putin: No Friend of America

U.S.–Russian relations include issues such as human rights and Islamist extremism in Russia, the energy and sovereignty concerns of U.S. friends and allies, Iran, and nuclear nonproliferation. The Obama Administration cannot address these issues by pretending that Medvedev and his narrow circle of supporters wield the real power. In fact, it is the Putin group—which includes the key energy, military and security services officials, businessmen, and the leadership of the United Russia ruling party—that exercises the ultimate power.

Now Putin, no great friend of America, is likely to move back from the Prime Minister’s office to the Kremlin in the spring of 2012, raising tough questions about Obama’s Russian policy.

Putin publicly disagreed with Medvedev, his handpicked successor, on a number of key policy issues, many of them vital to U.S. interests. These included the role of freedom in the country, the legacy of Joseph Stalin (Putin called him “an effective manager”), and the collapse of the Soviet Union. The two also argued on modernization, Libya, and persecution of the former oil magnate Mikhail Khodorkovsky.

Putin also supports “friendship” with China and Venezuela and good relations with Iran. At various points Putin accused the U.S. of supporting Islamist terrorists in North Caucasus in order to dismantle Russia, illegally intervening in Iraq, being responsible for the global economic recession, and toppling regimes in the Middle East through promotion of social media. Putin views modernization as primarily boosting military technology, pays lip service to the fight against corruption, and directly intervenes in prominent court cases.

Putin formed his worldview in the KGB and by reading Russian nationalist philosophers. He famously considers the collapse of the Soviet Union “the greatest geopolitical catastrophe of the 20th century.” He also does not like or trust the United States.

Ideological Chasm

Beyond the two men’s competition for power lies a deep ideological chasm, which reflects a 150-year confrontation between the “Westernizers” and the authoritarian “Slavophiles”/Eurasianists, who want to make Russia a linchpin of a global confrontation with the Euro-Atlantic world. Without recognizing this schism, it is practically impossible for Western decision makers to understand the two Russian leaders, their worldviews, and their ambitions.

Pro-Putin elites include the top officers of security services and the armed forces, the military-industrial complex, state company bosses, and a part of the business class. They are a mix of statists, imperialists, and nationalists. They support a future for Russia that is rooted in the imperial past and Christian Orthodoxy.

Last month, worried about his own and his party’s declining popularity and anxious to outmaneuver Medvedev, Putin launched Popular Front, a political contraption that would consist of United Russia, women’s and environmental organizations, sympathetic businessmen, and trade unions. Determined to control the next Duma, Putin may allow communists and possibly Vladimir Zhirinovsky’s ultra-nationalists in the next Parliament. This may spell the end of the feeble multi-party system in Russia.

Too Late for Damage Control

While the White House has yet to publicly realize its errors regarding policy toward Russia, any damage control may be too little, too late: This April, while on a trip to Moscow, Vice President Joseph Biden invited Putin to visit Washington. As of this writing, Putin has not committed to a visit. Furthermore, naming Michael McFaul—an openly pro-Medvedev Putin critic and architect of the “reset” policy—as the next U.S. Ambassador to Moscow may not improve the relations with the Putin circle.

Even before Putin returns to his Kremlin office, Russia is likely to demand U.S. concessions: joint controls and technology transfer for European missile defenses, the withdrawal of U.S. tactical nuclear weapons from Europe, refusing to abide by Conventional Forces in Europe Treaty, and sabotaging sanctions on Syria and Iran. Its relentless pressure on Ukraine continues. In the near future, the clampdown on political expression and the media are likely to exacerbate, while corruption and trampling of the rule of law will continue unabated.

Reset the “Reset”

The Obama Administration and Congress need to recognize that the “reset” with Russia, which requires huge payoffs for small results, is in dire need of a reassessment. The U.S. should pursue its national interests in relations with Moscow instead of chasing a mirage. The U.S. and Russia have mutual interests in opposing Islamic radicalism and terrorism, nonproliferation, counter-narcotics, boosting trade and investment, and expanding tourism, business, and exchanges.

Russia can benefit from access to U.S. science—especially health sciences, technology, and investment—if Moscow improves its foreign and domestic policies. However, Congress and the Administration should not tolerate Russian mischief, either domestic or geopolitical. The U.S. should not shy away from articulating its priorities and values to its Russian partners—and play hardball when necessary.

Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Policy in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. The author thanks Anton Altman, Heritage research volunteer, for assistance with this paper.