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It was a few days after the start of the new millennium, and the U.S. Embassy in Moscow was holding a reception at Spaso House, for decades the elegant residence of the American ambassador. Russias tumultuous Boris Yeltsin era had come to an abrupt, shocking end on New Years Day, when the Russian president who had brought down the Soviet Union and turned his country into a chaotic, fledgling democracy announced his resignation. His successor was the man he had named his prime minister just four months earlier, a man barely known to most Russians, let alone to the outside world: former KGB officer Vladimir Putin.

As Jim Collins, a soft-spoken career diplomat who was then the U.S. ambassador to Russia, made the rounds at that reception, querying guests as to what they thought of the dramatic shift atop the Kremlin, the overwhelming sentiment was relief. The Yeltsin era, which had begun with so much promise, had turned into a shambolic, deeply corrupt dystopia. Yeltsin, who had burst to prominence with a burly energyhis climb atop a tank in central Moscow to turn back revanchists who sought to save the Soviet dictatorship is one of the iconic moments of the Cold Wars endhad become chronically ill and increasingly fond of his vodka. A group of politically connected businessmen had raped the country economically and spirited most of their gains offshore. Its budget was busted, its civil servants unpaid. (I did a story then about a colonel in the Soviet Rocket Forces who killed himself because he could not afford to throw his wife a birthday party.) The once mightyand mightily effectiveKGB had to watch its best officers go off to work for private businessmen, leaving the state security services demoralized and increasingly corrupt. Russia was in chaos.

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Collins listened to the various opinions offered and then offered his own. They need someone, he said, who can get control of this place. In other words, he too was relieved that Yeltsin was gone.

We forget now, in the midst of the intensifying hysteria in Washington, D.C., about all things Russia, that Vladimir Vladimirovich Putinnow commonly portrayed as a cartoon villain by Western politicians and presshad a honeymoon period. Many people back then chose to disregard Putins career in the KGB and focused instead on the fact that he had been an energetic aide to the reform-minded mayor of his native St. Petersburg in the immediate post-Soviet era. Madeleine Albright, then Bill Clintons secretary of state, called him a reformer, and both sides of the political aisle in Washington were conned by Putin in the following decade. George W. Bush, desperately seeking Russian help in the post-9/11 war on terror, famously said he had looked into [Putins] soul. ("So have I, cracked Senator John McCain, "and I saw three letters: KGB.) As recently as the 2012 election, President Barack Obama mocked Mitt Romney for calling Putin a threat to the United States. "The 1980s called, and they want their foreign policy back, Obama cracked.

Outgoing Russian president Boris Yeltsin, center right, shakes hands with Russian prime minister and acting president Vladimir Putin, left, as he leaves the Kremlin in 1999. Sovfoto/UIG/Getty

That was one U.S. election cycle ago. Now, according to its critics, Russia is a mortal threat to all the West holds dear, and it attempted to intervene, largely through cyberspace, in the 2016 election. Americas most prized possessionits democracywas attacked in what McCain, speaking for much of the Washington establishment, called an act of war. The new Trump administration is beset by an FBI investigation into whether members of his campaign colluded with Moscow in an attempt to keep Hillary Clinton out of the White House. Trump had to fire his first national security adviser, Michael Flynn, for dissembling about what he said to Russian Ambassador Sergey Kislyak during the transition. Then, on May 10, he fired the man overseeing the FBIs investigation into Russia and the Trump campaign, Director James Comey, in part because he wouldnt publicly clear the president of having any ties to Moscow.

Suddenly, an undeniable whiff of Watergate-style crisis was in the D.C. air. But this scandal has a distinctive feature: As the multiple investigations unfold over the coming weeks and months, remember that this is not a homegrown scandal but one made in Moscow. Rarely, if ever, during the Cold War did Russia so effectively roil American politics.

Set aside, for the moment, whether this is a crisis or, as Trump would have it, a fake story manufactured by Democrats angry that they lost the election and peddled by their allies in the press. Less than two decades ago, Putin had inherited an exhausted, bankrupt country. Once a superpower, it wielded almost no geopolitical clout, not even in its own backyard. (The United States had humiliated Moscowand infuriated Putin, then running the Federal Security Service, the KGBs successor, for Yeltsinwhen it bombed Russian ally Serbia during the Kosovo war in 1999.)

Now Russia is again public enemy No. 1 in the United States, and Putin is on offense around the world. He is the primary backer of Syrian dictator Bashar al-Assad, thanks to his audacious deployment of Russias military to combat the anti-Assad Islamic rebels. He annexed Crimea and sent Russian troops and special operators into eastern Ukraine, where they remain today. In the Far East, he is moving Russia closer to a military alliance with Beijing. And in Europe and the United States, Putins cyberwarriors are wreaking havoc.

How did Putin pull all this off? Out of the humiliation of the 90sremember, Putin has famously said that the Soviet Unions collapse was the greatest geopolitical disaster of the 20th centuryhe had one essential insight. He knew Russias greatest asset was its vast natural resourcesoil and gas and minerals and timberall of which Yeltsin had peddled away to the oligarchs for a pittance. Putin realized it was critical for the Russian state to reacquire those assets. If the government controlled the countrys resourcesand in particular the oilit would again wield significant influence, particularly in Europe. Putin set about doing that.

Consider the case of Yukos, the oil giant acquired in the 90s by businessman Mikhail Khodorkovsky, who had paid about $150 million for a company that by 2004 would be valued at $20 billion . Starting in 2003, Putins government brought a series of tax evasion charges against Yukos and its management. Moscow sought $27 billion in back taxes, but thats not all Putin wanted. Yukos produced 20 percent of Russian oil, and Putin wanted it back. The government froze Yukoss assets and declined to engage in settlement talks; then, in October 2003, Khodorkovsky was arrested. (He would spend more than a decade in jail.) Moscow then seized Yukoss assets and eventually transferred them to a company called Rosneft, which was run by Igor Sechinlike Putin, a KGB alumnus.

The reacquisition of assets, either outright by the state or by private companies run by men loyal to Putin, had commenced. Putin was undoing what Yeltsin had done in the 90s. Today, much of Russias oil reserves are controlled by state-owned companies.

Putins timing could hardly have been better. In the 90s, prices for nearly all commodities had slumped. But after the turn of the century, a new and voracious consumer of commodities emergedChina, its economy growing by nearly 10 percent a year for several years running. Russia didnt sell much directly to China back then, thanks to the strategic wariness between the two that dated back to the Cold War. But that didnt matter. Chinas demand for everything from oil to timber to bauxite drove up global prices, and the Russian economy benefited enormously because of it.

Former Yukos chief Mikhail Khodorkovsky, center, stands behind steel bars in a court in Moscow, on August 3, 2004. Alexander Natruskin/Reuters

Human rights activists were outraged that Khodorkovsky was stewing in jail on trumped-up charges, but the average Russian didnt care. I remember visiting Moscow in 2007 and being struck by how it had been transformed since Yeltsins departure. In the 90s, most of the city had a dingy, low-rent feel. Now there were new retail stores everywhere and customers with the money to shop in them.

Putin got lucky that Chinas economic ascent coincided with his first decade in power, but he knew what he wanted to do with the money the commodities boom brought in. He shored up the states finances, and in the process, began rebuilding the state security services, the KGBs successor agencies, the ministry of the interior and the military.

He also recruited young, tech-savvy Russians to work for the motherlandsomething few of them would have even considered when I was there in the second half of the 1990s. And this raises an important point about Putins rise that most of the West, amid the current hysteria about Russia, misses. That countrys economic recovery, as well as the widespread sense that Putin was restoring order when there had been none, made him broadly popular at home. He was, you might say, making Russia great again, and most Russians loved that. That made it easier for Moscow to persuade those bright young people to become cyberwarriors for Mother Russia; the people who hacked the Democratic National Committee and Hillary Clintons campaign arent Cold War relics. Theyre mostly millennials who give themselves funky online nicknames and gleefully wreak havoc.

Russia staged its first massive cyberattack against a foreign government in 2007. Estonia was the targetone of three former Soviet states in the Baltics that had claimed independence when the U.S.S.R. collapsed in 1991. Dozens of Estonian government and business websites were crippled for days by distributed denial-of-service attacks from Moscow, which had been angered by alleged discrimination against native Russians living in the country.

As Newsweek reported exclusively on May 12 , that same year, Russia hacked the presidential campaign of then-candidate Barack Obamaattacks that campaign officials were unaware of at the time. Once Obama was elected, Russian hackers targeted several top officials in his departments of state, energy and defense.

Moscow was just getting started. It launched another massive cyberattack in 2008 when Russian forces, as part of Putins efforts to secure what Russians call their near abroad, invaded Georgia. As David Batashvili, then a National Security Council staffer for the Georgian government in the capital city of Tbilisi, recalls, "All of our government and media websites went down just as Russian troops were crossing the border. It was a massive cyberattack and very effective.

Since then, Putin has made his cybermuscle an essential part of Russias influence globally. In late December, Ukraine President Petro Poroshenko said that in just the previous two months, central government institutionsthe ministries of defense and finance and the capital citys power gridhad been attacked 6,500 times, probes that NATO commanders worry could portend a further Russian military incursion into the country soon.

Russia, as weve seen, also uses cyberwarriors to disrupt political campaigns abroad, whether its hacking Clinton Campaign Chairman John Podestas emails or rummaging through the files of new French President Emmanuel Macron, whom Moscow also opposed. (Marine Le Pen, the far-right candidate Macron defeated, was openly pro-Putin.) And German Chancellor Angela Merkel has already warned that Moscow will likely try to disrupt the German elections in the fall.

Its clear that Russia is meddling abroad, but its not clear if these intrusions are strategically smart. Political analysts in Moscow deride the notion that Putin was obsessed with defeating Clinton, as she once put it, but he did harbor an animus toward the Obama administration. He believed it helped foment anti-Putin demonstrations throughout Russia in 2011. While secretary of state, Clinton had criticized the legitimacy of Russias parliamentary election, and Putin said publicly that such interference in Russias political process was intolerable. Four years later, he let loose his hackers to work against her campaign for the White House.

The question now for Putin is whether the Russian effort to help defeat Clinton and elect Trump was worth it. Its already clearand will become clearer as the multiple investigations into this affair unfold in D.C.that Moscows cyberwarriors interfered with the election. Assume, for the sake of argument, that Putin ordered his intelligence services to collude with the Trump campaign, if not the candidate itself (although there is no evidence of that). Very little of that could be done in secret, and it will likely be exposed. And thats why Moscow-Washington relations, both sides acknowledge, are now at a post-Cold War low. Trumps meeting May 11 with Putins foreign minister, Sergey Lavrov, coming as it did amid the intensifying anti-Russia hysteria in Washington, was an embarrassment for the president. He may have come into the Oval Office seeking better relations with Moscow, but politically he has a shrinking amount of wiggle room to do that.

President Donald Trump meets with Russian Foreign Minister Sergey Lavrov, right, at the White House in Washington on May 10. Trump welcomed Vladimir Putin's top diplomat to the White House for Trump's highest level face-to-face contact with a Russian government official since he took office in January, the day after he fired FBI director James Comey. Russian Foreign Ministry/AP

Diplomats say Putins near-term geopolitical goals are clear: Hes not backing down in Syria, and Moscows military presence there effectively precludes the U.S. from doing anything other than one-off strikes against Assads military assets (while diligently alerting Moscow about them beforehand). He also wants to see if he can leverage his position in Syria to gain concessions from the West on Ukraine. That is, he may offer cooperation in setting up safe zones in Syria in return for the elimination of U.S. and European Union sanctions against Russia triggered by his snatching of Crimea.

That hes even in a position to try to pull all that off is remarkable, given where Russia was on January 1, 2000: in chaos at home and in retreat abroad. But in the current environment, could the Trump administration, and its allies in Western Europe, make concessions to Putin on anything ? In Washington, Putin has managed to turn the Democratic Party, which since the early 1970s has consistently sought better relations with Moscow, into hysterical, the-Russians-are-coming! Cold Warriors. Many Republicans, instinctively mistrustful of Russia, are looking for a bunker to dive into as they hope this Putin storm blows over; theyll give Trump no cover if he tries to reorient U.S. foreign policy in a way that pleases Putin. And the president, increasingly isolated just four months into his term, is left to tweet bizarre threats and accusations.

Putin may have restored Russian pride, and a semblance of its Great Power status, but the former spymaster may well have overplayed his hand in trying to tilt the 2016 U.S. election to his preferred candidate. He may have gotten the result he wantedbut someday wish he hadnt.

Sean Gallup/Getty

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Inside Putin's Campaign to Destroy U.S. Democracy - Newsweek - Newsweek