The meeting between Presidents Bush and Putin on the sidelines of the G-8 Summit in the Baltic Sea coastal resort of Heiligendamm is not going to be a happy event.

Like sharks, those around the globe who desire America's decline smell blood in the water. Sources in Moscow say that, with the war in Iraq going awry, Russian intelligence assessments (of which Putin is an avid reader) view the United States as bogged down, isolated and unable to sustain a strong coalition.

Moscow officials recall what Mikhail Gorbachev called "the bleeding wound" in Afghanistan, where more than 15,000 Russian soldiers died over 10 years. They believe that the United States and NATO will be defeated in Iraq and Afghanistan just like the USSR was. The Russians gleefully say, "We told you so."

In April 2003, I was in Moscow and heard Mikhail Margelov, chairman of the Foreign Affairs Committee of the Russian Parliament's upper house, warn the United States about Iraq. Margelov knows -- he spent a great deal of time in Iraq, knew Saddam personally and taught Arabic at the KGB Academy.

The Kremlin considers the results of the November elections of the Democratic Congress a repudiation of Bush's policies, which Moscow often calls "unilateral," "aggressive" and, using an epithet harking back all the way to Lenin, "imperialist."

Russian elites are unhappy with the U.S. military bases in Central Asia. Last year, they enticed Islam Karimov, the local dictator, to kick the U.S. Air Force out of an airfield in Uzbekistan.

Moscow views Bush administration policies - from spreading democracy by supporting revolutions such as the one in Ukraine, to placing limited missile defenses in Poland and the Czech Republic - as directed against Russia. 

The bottom line is domestic insecurity: If America can bolster a Rose Revolution in Tbilisi, Georgia, why not a vodka-and-caviar revolution in Moscow?  The elites fear that the oil bonanza will disappear overnight, together with their villas on the French Riviera and Swiss ski vacations.

Since the Cold War ended, the United States has remained Russia's obsession, its "principal adversary." Putin now severely criticizes U.S. foreign policy in numerous speeches and interviews -- just as his Soviet predecessors did.   He recently announced that Russia will aim ballistic missiles again at Europe, but squarely blamed the United States for turning the old continent into the powder keg and starting a new Cold War.

In fact, the Cold War was exactly when Putin earned his spurs as a spy in Dresden, East Germany. It was a happy place where Russia (then still the Soviet Union) was not just respected but feared. The intelligence services and the military got the lion's share of the budgetary pie. The dissidents were in the camps, not in parliaments. If Russia enters into a time warp and goes back, this will be Putin's "Great Leap Backward."

Bush had better take heed. After a 20-year hiatus, Russia is forcing its way back on the global scene as an adversarial actor. It's assembling a coalition of fruits and nuts, including the malcontents in Caracas and in Tehran.

Bush must design better strategies for coping with this old/new Russian geopolitical challenge in Eurasia and beyond. If America is perceived as weak, Russia may continue bullying her neighbors and supporting rogues. 

U.S. strategies should include hefty carrot-and-stick components, and not be limited to rhetoric. Thus far, President Bush has held a big carrot out to Putin -- a visit to his father's estate in Kennebunkport, unprecedented even for the closest U.S. allies. He may also need to remind Putin that it is the Islamists, and in the long run, the Chinese, who may have designs on Russia's territory and even threaten its survival. Bush should offer Putin a realistic option to save the relationship with the U.S. and prevent a new Cold War from erupting.

At the end of the day, Bush should remember that Russia respects power. It's time for Bush to reassure his Russian counterpart the United States has plenty.

Ariel Cohen is senior research fellow at the Heritage Foundation.