The Russian seizure of Crimea and its armed incursions into eastern parts of the sovereign territory of Ukraine represent a challenge to European security: friendly neighbours do not seize territory by force and any illusions that Russia is set on the democratic path have been abandoned.

Russia has elections, but so do Zimbabwe and North Korea. Under Vladimir Putin, Russia is a rogue state, with nuclear weapons and substantial conventional armed forces. The west has already conceded that Russia can throw its weight around in eastern European countries which are not members of NATO, and thus not protected by the alliance’s commitment to mutual defence.

But Russia has designs, it would appear, on the Baltic states with Russian ethnic minorities, countries which joined NATO as rapidly as they could after the break-up of the Soviet Union.

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If Russia shows aggressive intent towards Estonia or Latvia, there will be a military stand-off and the west cannot concede. Two recent books about Putin’s Russia* suggest that it will hardly come to actual conflict: Russia is a kleptocracy, a state based on stealing by elites, rather than an ideologically driven empire builder. So long as the elites can steal with impunity and rig elections, they have too much to lose from actual conflict.

The scale of the theft by Russian oligarchs and politicians is breathtaking. According to Bill Browder’s book, if you think that Bill Gates is the world’s richest person you are wrong by a large margin. The winner is the elected president of Russia, Vladimir Vladimirovich Putin, possessor of 26 palaces and official residences, several large yachts and a secret portfolio of financial assets reckoned to run into the tens, possibly hundreds, of billions.

When the USSR was run by the communist party, the staple warning about western-style democracy was that it would result in plunder by the capitalists, who would enrich themselves by stealing state assets and impoverishing ordinary people. This is pretty much what has happened in Russia, so the communists got this one right.

They failed, however, to foresee that the most successful kleptocrats would be their own communist colleagues. Karen Dawisha recounts Vladimir Putin’s early career in the KGB intelligence agency, the principal enforcer for the communist regime. Putin has perfected, since taking over from Boris Yeltsin 15 years ago, a state with elections but no democracy.

The wholesale theft of the Russian state’s assets under Yeltsin has not been reversed, but merely re-distributed, under Putin. His first act as president was a grant of immunity to Yeltsin and his family. He went on to punish those oligarchs who declined to support him.

The state assets stolen under Yeltsin, mainly oil, gas and minerals companies, were not returned to the state treasury or privatised honestly to its financial benefit: they were re-allocated to a favoured group of loyal oligarchs and some former KGB operatives with whom Putin has surrounded himself.

After the chaos of the Yeltsin years, there is no doubt that the Russian public has been supportive of his more resolute successor. But neither is there any doubt that elections have been rigged, opposition parties suppressed, independent media stifled and the justice system subverted. Transparency International rates Russia by far the most corrupt among the world’s major countries.

Putin’s adventures in the Ukraine are popular with the Russian public and sympathetic to Russian communities severed from the homeland when the Soviet Union broke up. But the rampant corruption is impossible to conceal and the Russian state has failed to deliver any meaningful improvement in living standards for most people. The recent collapse in oil and gas prices spells trouble for the Putin regime. Almost half of government revenue comes from the natural resource sector and state finances are in trouble. The rouble has collapsed.

More importantly, there has been no real progress in building a modern economy in Russia, a sharp contrast to China which lacks Russia’s natural resource endowment. Foreign adventures are a useful distraction from Russia’s domestic policy failures. The worry for western leaders is that the Putin kleptocracy fears an eventual popular revenge and will be tempted to further risk-taking in the Ukraine and elsewhere.

*Bill Browder, Red Notice, Simon and Schuster; Karen Dawisha, Putin’s Kleptocracy, also Simon and Schuster.