Russia has pursued a policy of creating an alternate universe, politically and economically, in a strangely confrontational manner. The recent withdrawal from WTO talks, coupled with the veto of the OSCE mission in the Caucuses confirms that it has no fundamental intention of cooperating with any organization or country that it considers a threat to its goal of reasserting its hold on what used to be termed its "near abroad".
This may be a mistake of huge proportions in the long term. It faces competition from China in Central Asia and in Europe, Putin's aggressive stance has been only successful in the short-term. The EU is now painfully aware that it's dependence on Russian energy is a serious problem since Russia is very willing to use it as a weapon to achieve its foreign policy goals. But, Nabucco will now go forward, China has just concluded a huge deal for gas with Turkmenistan and although Norway's recent discovery of a potentially huge reserve of natural gas will not come on-line for years, the short-term gains achieved so far by Moscow will be remembered in the long-term.
The recognition by Russia of Abkhazia and South Ossetia as independent states, accompanied by Lavrov's assertion that the world needs to accept "new realities", has focused the attention of the Baltic States and Poland (perhaps even Belarus) that Russian foreign policy as applied to its neighbors is not benign.
Withdrawal from WTO negotiations seems particularly gratuitous since membership has been a goal of Russia since the collapse of the Soviet Union. To tell the world that Moscow is the center of a new, multi-polar world in which the Russian Federation can do anything it wants within its sphere of influence will backfire. It's economy is not strong and would benefit by WTO membership, which might force it to broaden its economy beyond energy. It is surrounded by political and economic competitors who do belong to the WTO and are not inclined to accept Russian leadership.
Russian positioning is not earning it any friends, much less partners. Putin - and he is fooling no one - is in charge. Medvedev is a messenger. The message to Russia's neighbors is to tow the line or suffer the consequences - mostly economic, but with the threat of military intervention. Coupled with the death of anything that could remotely be defined as "democratic" makes the region, ultimately, less stable.