What is your honest assessment of the situation? We (and presumably they) know their birthrate is below replacement levels, that they are quite cozy with China on the military front, and that they’ve got some cash now - spending it (for example) on missiles and TU-160s. Should it not be China that they view as the threat? It appears that it is us, the U.S., in the crosshairs.
Most of the stuff that Putin does and says is for domestic consumption, it is to look strong and consolidate power and resources of the state and to take them from “bad” oligarchs to the state and “good” oligarchs (e.g. Yukos and Sakhalin-2 etc. and other natural resources companies).
If they didn’t have China as a “friend” they would not have any friends at all, especially after shabby treatment they subjected their “neighbors” in Europe and former CIS with oil and gas gouging, and changes in power in Germany and France. They also need defense against Muslims, especially in the not-so-distant future when oil and gas prices will drop. Their inflation stubbornly exceeds their own 8% target rate and the economy has not been diversified beyond natural resources and military technology despite millions of dollars spent on that.
There aren’t a lot of places who are willing (unless they have to, lest they be open to another “energy blackmail”) to do business with Russia, so they are falling back in with the likes of Chavez and Iran etc. This is not done because of their strength, it’s due to their weakness. This weakness is being masked right now with the higher energy revenue which Putin hopes to transform into other sources of revenue, but so far has only succeeded in leveraging it into some overhyped military technology and sales (mostly due to lower price, not better technology).
If you noticed, he doesn’t go any place where he can’t sell either oil/gas/steel or some military equipment - he is now simply a Salesman in Chief with fewer retail sale outlets than Russia had just a few years ago, in Middle East, Europe and Asia. That’s quite different from trying to restore Russia into being a world power.
They are not a direct danger to us (like Ronald Reagan said “they lose, we win” and that has not changed), though they would not mind seeing us weaker - that’s one way to feel relatively stronger themselves, not unlike France under Chirac was. Putin knows they are weak and try to put-in (bad pun here) a good poker face, but that’s why he was finally publicly “dismissed” by Condoleezza Rice on the subject of missile defense in Poland and Czech Republic - they simply have no real voice on the world stage, except some in UN like Kosovo (where, BTW I hope they succeed). As a matter of fact, Putin’s Russia and Chirac’s France had a lot of similarities in attitude and show of grandeur (or more like delusion of it) - both got slapped into reality by Bush and Condi.
China upstaged Russia in just about anything (economy, political and geopolitical influence, military technology and its growth rate), except oil and gas where they can find cooperation, and same common threat - Islamic fundamentalism.
Putin is just making the best of circumstances (high price of energy) and trying to prevent Russia from heading for a hard crash, but he might be accelerating it by not trying to dismantle the grip on the economy from the oligarchs or the state and allowing entrepreneurs to diversify it.