President Mahmoud Ahmadinejad must be fuming. There was a time not long ago when his outbursts predicting the fiery destruction of his enemies would have grabbed the world’s headlines. Today he has been comprehensively eclipsed by President Vladimir Putin of Russia who has adopted similar language against the West and has the nuclear tipped missiles to make the point more forcefully.

The Kremlin leader has openly threatened to target his missiles at Europe and raised the spectre of a new Cold War between Russia and the West. All this because America is seeking to build an anti-missile defence shield in eastern Europe against the threat one day of an Iranian nuclear missile being fired at the West.

The Russian leader’s language may be extreme, but it is not unexpected. For months, the former KGB officer has been raising his anti-Western rhetoric in an effort to re-establish Russia as a world power.

Western businesses have seen their investments in Russia’s energy sector renationalised by the state. America’s behaviour has been likened to Nazi Germany. Britain has been branded “stupid” for daring to suggest that Russia should hand over a suspect in the murder of Alexander Litvinenko. Several former Soviet and East Bloc countries, now firmly in the Western camp, are involved in bruising battles with Moscow.

While it may be difficult for America and Europe to see themselves as a threat to Moscow, in Russian eyes the Western challenge is all too clear.

The European Union and Nato have expanded steadily eastward since the collapse of communism and even now they are heavily involved in countries like Ukraine, Moldova, Azerbaijan and Georgia, which Russia regards as its traditional sphere of influence.

The brutal crackdown against the weak liberal political forces in Russia is a signal that the Kremlin will not tolerate the sort of popular movements which led to Georgia’s Rose Revolution and Ukraine’s Orange Revolution.

The final straw was the anti-missile defence shield that America wants to deploy in Poland and the Czech Republic.

Russia’s more assertive and nationalistic policy has been hugely popular with ordinary Russians, who want to redress the perceived humiliation suffered by Russia after the collapse of the Soviet empire.

So how worried should the seven richest and most powerful leaders of the world be when they sit down on Wednesday across the table from Mr Putin, the most senior G8 leader and least welcome?

The important notion to dispel is that the West and Russia are about to resume the Cold War.

Russia is a far weaker country today than it was during the Soviet era. Its economy may be buoyed by high oil and gas prices, but in other respects it is still very weak. Its military is staffed by poorly equipped conscripts. When it recently decided to buzz a Royal Navy exercise off the Scottish coast, it sent two turbo-prop Bear bombers that are Cold War relics better off in a museum.

Russia’s population is falling by nearly one million people a year due to the serious social and health problems that have been neglected by the state. Russian infrastructure remains primitive. It desperately needs Western investment for its future development and Western technology to exploit its mineral resources.

Despite its weakness, Russia remains an important country that the West needs to engage with. It has a permanent seat on the United Nations Security Council. Its cooperation is vital in tackling international crises like the future of Kosovo, the search for peace in the Middle East, and a solution to the nuclear threat posed by Iran and North Korea. Its energy resources, although unreliable, remain vital for Europe’s industries.

The best way to respond to the bluster and the rattle of Cossack sabres is to engage Russia properly. Distracted by the war on terror, the quagmire in Iraq and the future of Europe, the West has a lot of catching up to do.

A joint strategy on Russia needs to be agreed by the key Western powers, notably the new European leadership of Chancellor Merkel, President Sarkozy and Gordon Brown.

Russia’s bullying of its neighbours, its campaign against dissidents at home and abroad and other unacceptable behaviour must be challenged with one voice by the West.

Equally, Western nations should avoid provoking Russia and where possible show the country the respect it believes it deserves.

Culturally and socially Russians regard themselves as Europeans. They choose to send to their children to schools in England and to spend their summers on Mediterranean beaches.

Mr Putin has less than a year left in office. Western nations will want to ensure that his successor is welcomed back into the club.