Vladimir Putin's state-of-the-nation address was a classic performance by a man who has grown used to getting his way after seven years as President of Russia.

He was the unsmiling champion of ordinary Russians at home, battling an unresponsive bureaucracy to win them a better standard of living. And he was the stern defender of Russia against unspecified threats abroad.

Mr Putin was everything to everyone - except, he insisted, a third-term candidate in next year's presidential election. A new president would present the address to parliament in 2008.

The 75-minute swansong encapsulated many of the paradoxes of Russia under Mr Putin's leadership. As the country has become wealthier and more assertive economically, so the view from the Kremlin has grown increasingly paranoid and insecure.

Mr Putin's accusations of foreign interference in Russia's domestic affairs effectively gave a green light for a campaign of harassment against opposition parties and civil society groups in the run-up to elections for parliament in December and the presidency next March.

His allegation that foreign money is flooding into Russia "to strip us of economic and political independence" played on the anxieties of many citizens about their future after Mr Putin steps down.

It needed little interpretation a day after Russia buried Boris Yeltsin, who is associated in the minds of millions with the chaos and corruption of the 1990s. Only Mr Putin, voters understood, could be relied on to make the right choice to protect them from a return to that past.

His threat to pull out of the CFE Treaty similarly combined Russia's new-found confidence with a deep sense of insecurity. Mr Putin linked the decision with Russian opposition to the plan by the United States to establish a missile defence shield in eastern Europe.

Few people, least of all in the Kremlin, seriously believe that ten interceptor missiles in Poland pose any challenge to the security of Russia, with its vast arsenal of weapons.

But Moscow has grown steadily more affronted by the eastward expansion of Nato, which may soon add the former Soviet republics of Georgia and Ukraine to its ranks.

Mr Putin has decided to flex his muscles and to remind Europe that Russia's opinion still counts militarily - even if he can no longer point to where the enemy is.

The former KGB agent might continue to perceive Russia as surrounded by hostile forces, but the country's new economic clout allows him to become more assertive abroad.

He noted with justified pride that Russia during his presidency had moved from an economic basket-case to join the world's ten largest economies. It is a record that has sustained his popularity with voters, who would cheerfully elect him to a third term if they could.

This may have been his last annual address but the speech lacked a valedictory tone. Mr Putin still has 11 months in power and he set out a vigorous programme of domestic reforms.

Mr Yeltsin apologised to the Russian people for all that he had failed to achieve when he stood down in 1999. Mr Putin is unlikely to follow suit.

His successor will undoubtedly inherit a strong economy and a resurgent state. But the task of putting Russia at ease with itself and its neighbours remains.

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