Putin and Russia's old guard have been taken by surprise. Their authoritarian democracy and monopoly on wealth is no longer an option.
A crisis of credibility for overconfident old guard in Russia
An unprecedented protest wave is shaking Russia's rulers. On December 10 and 24, anti-government rallies across the country over allegations of ballot fraud in recent parliamentary elections mobilised over 100,000 demonstrators. For the first time since the transition from communism in 1991, a broad civic movement is emerging that challenges the Kremlin's power.
This nascent uprising has taken the regime around Vladimir Putin by surprise. At first, Mr Putin derided demonstrators as foreign-financed troublemakers. Faced with growing popular mobilisation, he somewhat softened his rhetoric on Tuesday by acknowledging the legitimacy of public dissent. But Mr Putin continues to dismiss demands for a rerun of the parliamentary ballot and Mikhail Gorbachev's call for his withdrawal from next year's presidential contest.
So far no "Russian Spring" is in sight. Mobilisation remains low. For two decades, post-Soviet Russia has had civilian rule, periodic elections and a liberal-democratic constitution. Ordinary citizens have enjoyed much greater freedoms and opportunities than most people across the Middle East and North Africa.
However, the demonstrations express deep-seated disillusionment with the prevailing political and economic system. Widespread suspicion of electoral fraud has triggered a protest movement that is fuelled by growing popular outrage about rampant corruption, arbitrary state power and the elite's contempt for the people.
Without adequate national and international monitoring, it is hard to verify allegations of vote rigging. On the one hand, several opinion polls by the independent Levada Center before the parliamentary ballot corresponded more or less to the final result. On the other hand, extensive anecdotal and visual evidence indicates systematic electoral fraud in favour of Mr Putin's ruling party.
What matters is not so much the precise extent of vote rigging as the principle and the practice of official cheating. Far from being apathetic or cynical, many Russians have begun to mobilise against a political class of which they are profoundly ashamed. Ordinary citizens are outraged by the blatant violation of their sense of national honour and patriotic pride.
Growing popular defiance threatens the country's leadership. Since inheriting power from his predecessor Boris Yeltsin in 2000, Mr Putin's authority as national leader was based on constitutional continuity and state stability. That carefully crafted image has never looked more deceptive.
Mr Putin has vigorously defended a parliamentary ballot that seems decidedly dodgy. This, coupled with elections that are free but neither fair nor competitive, violates both the spirit and the letter of the constitution. Not to mention the near-universal impunity of state officials implicated in corruption, contract killings and political intimidation.
Moreover, Mr Putin announced in September that he would swap his current job as prime minister with the incumbent president Dmitry Medvedev. In one stroke, he degraded the highest office by claiming it as his personal fiefdom. Once he is back in the Kremlin, the presidency won't strengthen the state but instead secure the permanence of his power.
All this underscores the arrogance of Russia's regime. Mr Medvedev has announced a string of political reforms but he lacks the necessary power base to deliver on his promise. His surrender to Mr Putin leaves the project of linking political liberalisation to economic modernisation in ruins.
Mr Putin is undoubtedly the country's single most powerful politician. But notions such as "dictator" or "autocrat" are wide of the mark. Like the USSR, post-Communist Russia is ruled by a kind of collective leadership. The former pillars of the politburo and the army have been replaced by the unelected presidential administration and the vast security apparatus of the intelligence services and "law enforcement" agencies. With multiple levels of authority and overlapping circles of loyalty, this labyrinthine structure is more akin to a Byzantine court than an absolutist autocracy.
Crucially, Russia's regime is in the hands of two factions. First, economic modernisers such as Mr Medvedev or the former finance minister Alexei Kudrin. Second, conservative statists and former KGB like Mr Putin himself.
Mr Putin's trouble is that his authority has taken a real knock. The system he embodies requires a measure of political credibility and popular legitimacy that are fast eroding. His social contract of providing economic freedom in exchange for political control has broken down. Workers and the restive middle class feel politically disenfranchised and economically squeezed. Instead of trickling down to the masses, the proceeds from exporting national resources, especially oil and gas, are propping up an increasingly corrupt officialdom that controls an inefficient central state.
In the current crisis, more of business-as-usual will not wash. "Putin 2.0" will have to make a choice between further authoritarian consolidation or genuine democratic renewal. That would require reversing the centralisation of power and the concentration of wealth on which Mr Putin's system ultimately rests.
Russia's regime faces an unprecedented crisis of legitimacy that can only be overcome by a fundamental transformation that the ruling elites are unwilling to deliver. No Russian Spring is on the cards, but Mr Putin's system is beginning to unravel.
Adrian Pabst is lecturer in politics at Britain's University of Kent and visiting professor at the Institut d'Etudes Politiques de Lille, France