How was Alexander Litvinenko murdered? We don’t know yet; we may never find out, but what is clear is his death marks the start of a new Cold War. The question is how to win it.

Vladimir Putin’s thuggish and arrogant rhetoric; the routine use of murder in business and politics; the bullying of neighbours such as Georgia; energy blackmail; authoritarian behaviour by the Kremlin — all have crystallised a growing unease with the wishful thinking that has marked outsiders’ attitudes to Russia in the past 15 years.

It is still possible — just — to argue that this is a messy but necessary transition period, and that stability will produce a middle class in Russia that will want liberal politics and friendly relations with Europe and the US. Those hopes hang on a thread: that the 2008 Russian presidential elections will bring a real contest, rather than a fixed coronation.

But the overwhelming likelihood is that Russia will get worse not better. The Economist recently cautioned that Russia was heading towards fascism: blustery, bossy and brutal. It will have particular Russian features too, chiefly extraordinary corruption, waste and incompetence.

So what do we do? Fighting the last Cold War was easy in comparison, particularly towards the end, when it was clear that communism meant not just dictatorship, but poverty, injustice and backwardness. Now Russia is rich and strong, while the West, and particularly the alliance between Europe and America, is demoralised and discredited.

Russia no longer needs our money. Nor does it care much for our approval. The past few years have taught Mr Putin that when he needs something from the West, he gets it. Jacques Chirac, of France, is a Russian cheerleader, like Silvio Berlusconi and Gerhard Schröder before him.

The first response must be not to panic. For all its bombast, Russia’s strength rests on sand. Its demographics are disastrous: in the minute you may have taken to read to this point, five Russians died, and only three were born. Its roads and railways are still rickety, its pipelines and powerstations clapped-out. The much touted gas weapon may not be loaded: decades of neglect and under-investment may mean that Russia is an energy beggar, not an energy bully.

Then the West must stick together. Russia expertly plays off one country against another. British eurosceptics must drop their defeatist disdain for a common European foreign policy, especially in the field of energy security. Without it, we risk losing half the continent to the Kremlin’s new empire, one built on pipelines rather than tanks. Europe must dump its self-indulgent anti-Americanism and rebuild its alliance with an administration chastened and looking for friends.

That alliance’s big task will not be military defence, but diversifying energy supplies. We need new pipelines in the Balkans and the Caucasus to bring the oil and gas riches of the Caspian basin and Central Asia to European markets, bypassing Russia’s capricious, greedy and monopolistic oil and gas companies. We must also build more liquefied natural gas terminals, and interconnecting pipelines to hook up national gas grids. It sounds just as boring as the jargon of the last Cold War but it is just as important.

Similarly, we must give unflinching support to the countries in Russia’s viewfinder, such as Poland, Georgia and the Baltic states. They face hate campaigns in the Russian media, meddling in their energy supplies and arbitrary sanctions on their exports. All too often, the EU says that problems its new members have with Russia are “merely bilateral”. In future, the message must be: “If you mess with Estonia you mess with the whole of Europe.” These are brothers-in-arms and know a lot more about Russia than we do, and we have been slow to recognise it.

We must continue to expand Nato and the EU. Enlargement of both bodies has been an unsung triumph, spreading peace and security. The next phase will be more difficult, because the countries concerned are weaker and poorer. But that makes it all the more necessary. If our doors are not open, then the only choice available is Russia. It is a tragedy that this week’s Nato summit in Riga is hamstrung by division and timidity on the question of enlargement.

Thirdly, the West must recover the moral self-confidence that ultimately proved far more important than our guns and missiles. We believed in our system: it was not just richer and freer than theirs, but kinder, fairer, cleaner, healthier, more innovative, more tolerant and more truthful. It had flaws, certainly. But it also had the built-in capability to remedy them. In a market democracy, the crooked and cruel stand a better chance of being fired or jailed than they do in an authoritarian state-run economy.

So the most powerful weapon we have now is to to make our own system truly worth admiring. Integrity in public life would not only contrast with the Kremlin’s sleaze, but also immunise us against its bribes. Speedy justice, efficient government and public-spiritedness are lacking in Russia — and just what we need to make our system envied at home and abroad. It will be a long slog: but so was the last one.

Edward Lucas is Central and Eastern Europe correspondent for The Economist

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