Russia stepping into the same river
Russian government has quietly informed US embassy in Moscow it will postpone the ban on employing Russian staff that it introduced with a lot of hype as a reprisal for “unfair” expulsions of Russian diplomats in response to GRU activity on the ground and on the Internet.
It seems like Kremlin quickly stepped back as soon as US embassy said it will only offer services to US citizens and suspend issuing visas to Russians. Russian bargain position seems to be quite weak in such international sabre rattling, as it's still Russians that need to travel to USA more than Americans to Russia. Many wealthy Russians, including government officials, are investing their profits in USA or EU, while people from these countries investing their savings in Russia are yet to be seen.
Kremlin is making exactly the same mistakes it was making back in 20th century, which ultimately took it to a collapse of the whole country. Its power relies entirely on military force, which it certainly mastered. But military is expensive, and is developed at the cost of other branches of economy. The US suffers from the same problem, but the difference is US can afford it (if barely) while Russia cannot.
Russia's economy is still largely based on exports of hydrocarbons (~40%) and other natural resources (~20%). And because Kremlin couldn't resist from controlling and then weaponizing the exporters (as it did many times), everyone started considering it to be a cheap but unreliable partner. This led to a wave of diversification efforts among Gazprom customers – as of 2020 even Germany, largest importer of Russian gas in EU, only secures ~50% imports from Russia and the trend is to reduce reliance on fossil fuels.
Russia's leadership certainly realizes the current model is not sustainable. This apparently results in perception of lack of safety, which in turn results in obsession of control, both internal and external. And Kremlin seems to understand only one tool in foreign policy – force.
Some of the Russian military interventions were clearly a desperate struggle for a few more years of gas sales (like in Syria, whose sole purpose was to prevent building a pipeline from Quatar to EU), most of them did not make any sense from the point of view of Russian economy. The war in Ukraine or Georgia made absolutely no sense from business point of view,it seemed to be mostly about turning some areas into military-controlled blackholes. Russia certainly is controlling the territory of DNR/LNR... and what?
And while many countries (US, but also France, UK or even Poland) took part in similarly stupid dick contests in 20th century, most of them simply could afford it in terms of their economic performance. They came out of these adventures bruised, at huge human and financial cost (Vietnam) but recovered. Russia, then Soviet Union, and now Russia again tends to end up in different outcomes.
Now, what was the point of 1979 Soviet invasion in Afghanistan? It was utterly pointless and stupid operation, that ultimately got USSR stuck there for 10 years and hundreds of thousands killed on both sides.
Now, if you think about the foreign policy of modern Kremlin, it's just repeating exactly the same steps.
Back in 1953 the East Berlin uprising was not about politics – it was about working conditions and Soviet-imposed work quotas. Same repeated in 1956 in Hungary, 1968 Czechoslovakia and 1981 in Poland.
All of these were suppressed by military interventions – just note, uprisings started not because they wanted to leave Eastern Bloc, but merely because they wanted better living conditions. And they were all suppressed, with hundreds of civilians killed.
What was the point of these interventions? None, apart from obsession of control and “teach them lesson”, in spite of all evidence clearly witnessing to the inefficiency of Soviet economy, which led to stagnation and then ultimately to a tragic collapse in late 80's.
Repeating the history
Back in 2000's Ukraine wasn't at all obsessed on joining NATO – mass protests (Orange revolution, then Euromaidan) had primarily economical background, which is understandable if you look at this:
Back in 80's, on the ground in countries like Poland, everyone understood we were part of Eastern Bloc. But the economic situation was so dire that reforms were required – and they were not at all directed at the “road to socialism” directed by USSR (and nobody really believed in it anywhere). The postulates of the strike committee in Gdańsk Shipyard in 80's were literally as if from a socialist party leaflet.
The expectation was that USSR will at least not interfere, because... it was simply unreasonable thing to do. When people can't feed their children, this is when revolutions break out.
So what did USSR do? Of course, they interfered, and suppressed the reforms – in 1953, 1968, 1981, and then on much smaller scale in each country separately, as protests broke out literally every 5-10 years.
Not because that would somehow hurt its economy or “road to socialism”, but out of the obsession of control, and “teach them a lesson”.
Exactly the same thing happened again in Ukraine in 2014...
Leaving aside the fact that Ukraine is a sovereign country whose independence is recognised by Russia, and it has the right to join whatever alliances it likes, back in 2014 Ukraine was not interested in joining NATO. It was merely interested in economic cooperation with EU – if you don't understand why, once again just look at the GDP per capita chart above.
Did it hurt Russia? Quite the opposite, as economic growth in Ukraine would only increase its trade with Russia.
The only thing it did hurt were the feelings of the Russian elites who believed that their Commonwealth of Independent States (CIS) was an actual alternative to EU. And as usual, instead of just proving that simply by being economically successful and viable alternative (which it wasn't), they chose to force the potential breakaway country into submission.
What followed was only a logical chain of consequences, with sanctions and counter-sanctions, and GRU operations in Sofia, Vrbetice, and sanctions for these.
Does the current Kremlin policy have any future?
Clearly not. The view that Russia has some kind of invisible “zones of influence” that must be respected is only present in Kremlin, and in some European capitals and I guess it's mostly out of kindness. I haven't met anyone in Russian province who would actually care if Ukraine or Georgia joins EU – if anything, they'd welcome it as EU would be then closer to them.
And now, as result of Russian intervention, Ukraine wants to join NATO.
And it wants to join NATO in the very same way as the whole of Eastern Europe promptly jumped into it after seeing what was going on in Russia in early 90's, with at least three further military interventions, KGB coup and numerous calls to “restore USSR in its previous borders”. Readiness to join NATO (which is otherwise quite costly) is proportional to the perceived threat from your neighbour...
Is there a way forward for Russia?
The problem is that any sector that gets successful in exports is immediately weaponized by Kremlin, either for bullying other countries (Gazprom, Rosatom) or simply for racket (Nginx).
If that goes away, and I think it's entirely doable, Russia has plenty of things to be proud of – Rosatom, Gazprom, highly competitive IT industry, new prospective hydrogen energy projects and many more. In most of its parts, Russia is a quickly developing and modern country whose potential is thwarted by a close circle of paranoid and backwards-thinking Cold War leftovers.
I'm pretty sure Putin's circle does realize that perfectly well. After all, most of them travel a lot and most have property abroad – usually in the same USA and EU that they officially condemn as “decaying”. It's not in their slightest interest to further close Russia and turn it into some kind of North Korea, and people in Russia won't allow it.
In the upcoming decade we will hopefully see Putin going away in a peaceful manner, with formal continuation of power preserved, and Russia opening up again.