Moscow and Washington are in all-out damage control mode to save President Obama’s “reset” policy with Russia – a policy which is hailed as his great diplomatic accomplishment.

But after the US Department of Justice arrested 10 of the 11 alleged Russian spies this week, that “reset” looks a little battered. The discovery of the spy network indicates that the current Russian leadership is still living in the past. To them, the US is still an intelligence target, not a partner.

While not yet charged with espionage, these individuals walked like spies and talked like spies – so they must be spies, right? The FBI apparently has videos to prove it.

But these were not the usual suspects acting under diplomatic cover, trying to recruit Americans at cocktail parties. The 10 seem to be long-term, deep-cover agents (termed nelegaly, or “illegals” in Russian).

The arrests came shortly after the Obama-Medvedev “Cheeseburger Summit” last week in Washington.

Though the White House and the State Department have said that relations with Russia will not suffer, soft-pedaling espionage is wrong: if not rebuffed, it will breed only more spying – especially since Russia, instead of apologizing, is blaming the US. Moscow experts, the Foreign Ministry, and politicians criticized the arrests. Prime Minister Vladimir Putin, himself a former intelligence officer, remarked that he hoped “that all the positive gains that have been achieved in our relationship will not be damaged by the recent event.”

This criticism is totally misplaced.

The long-term penetration started in the 1990s, when Russia was benefiting from tens of billions of dollars of US and Western aid. Today, espionage – not catching foreign spies – may thwart Mr. Obama’s “reset” policy. Furthermore, this fiasco raises the question of whether the Russian services were undermining their own rulers.

That Russia is continuing to spy on the US, just as other countries viewing America as a threat do, is not surprising. As early as 2007, it was widely reported that Russian (and Chinese) spy operations were “back at cold-war levels” in the US.

According to John Negroponte, then director of national intelligence, in the 2007 Annual Threat Assessment to the US, China, and Russia are “among the most aggressive in collecting [intelligence] against sensitive and protected US targets.” The 2010 assessment highlights Russia’s ongoing efforts. Unfortunately, with the Middle East and Afghanistan-Pakistan dominating the intelligence agenda, the US collection on Russia and China is slipping.

According to the complaint filed by the Department of Justice as part of this week’s arrest, the Russian foreign intelligence agency, SVR, utilized both modern and old (and sloppy) tradecraft. Some of it looks like a parody of an old spy novel.

This included dead drops, coded communications, burying information in “microdots” on websites, known as steganography; 27-character Web passwords; and some tweaked laptops, courtesy of Moscow Center’s tech mavens. Unfortunately for the agents, their laptop crashed repeatedly.

The Russian agents were easily tracked by FBI counterintelligence, although their handlers failed to spot it. This has led some old-timers from the intelligence community to speculate that the network is a decoy to mask a much more sophisticated espionage operation in the US.

Such deception is plausible. And if there is one cell, there are bound to be more. Oleg Gordievsky, a famous cold-war defector and former chief of the London KGB station, said recently that Russia may have as many as 50 deep-cover couples spying inside the US.

Moreover, this raises a sensitive question: What are other Russian intelligence agencies such as GRU (military intelligence) doing in the US, and what are the successes of the Russian (and Chinese) online spying, which is executed by a different agency altogether?

The operation was more than a decade-long effort to exploit the weaknesses of an open society. However, it looks as if the Russians used a lot of 20th century tradecraft for 21st century America. Unlike the 1930-1950s, today Moscow provides no ideological attraction. Russia’s “brand” is shot, while bickering between agents and their control over expenses, including mortgages in the New Jersey suburbs, suggests that the center’s pockets were not as deep as Russia’s newfound oil wealth may suggest.

It is also unclear why Moscow tolerated a network that seemed to produce so little. A prominent Moscow policy expert told me that “the bosses” value tidbits picked up by agents much more than what could be gleaned by sophisticated civilian analysts reading journals, talking to colleagues, or going to conferences. This reflects an ingrained cult of intelligence, which outlived its Soviet roots.

“Reset” or not, the discovery of the spy network in America indicates that the current Russian leadership is still living in the past, and continues to view America with fear and suspicion. Moscow still sees the US as an intelligence target, not a “partner,” as the Obama administration posits. The White House should recognize that much.

And it will take more than cheeseburgers, fries, and ketchup to change that.

Ariel Cohen, PhD, is a senior research fellow in Russian and Eurasian studies and international energy policy at The Heritage Foundation.