“We are not a member of the EU, but we are a European country,” said Russian President Dmitry Medvedev in an interview with Western journalists on the eve of the G-20 summit and a key meeting with President Barack Obama in Toronto. His words are worth thinking about.The Russia we know today has been looking for its place in the world ever since the collapse of the Soviet Union 20 years ago. Stripped of the shell of Soviet empire, the country’s identity has been in flux. The search is at once geopolitical, philosophical and profoundly psychological. Russian officials have had trouble concealing their pleasure at the perception that the West is in strategic decline due to Middle East quagmires and cascading financial crises. Russia has experimented with several geostrategic options, most of which have proven illusory. One option was a “strategic partnership” with China. The economic complementarities seem obvious, but cooperation has been severely limited by mutual mistrust. The Russians and Chinese have mutual superiority complexes that make partnership all but impossible. Another tack for Moscow has been to trumpet its membership in the club of mega-emerging markets (BRICs). However, Russia has a weak manufacturing base, and would be a more natural member of OPEC, which underscores its dependence on hydrocarbon extraction. The most problematic phase of Russia’s identity quest culminated in the deadly Georgia conflict of August 2008. Rarely has a country moved from hubris to humility as quickly as Russia. Within a few weeks, Russia found itself on the receiving end of acute market contagion. Barack Obama put forward the idea of a “reset” of bilateral relations. The Russians at first reacted with skepticism but now tend to view Mr Obama as somebody they can do business with. More important, the Russian elite has had time to reflect on where their long-term interests lie. A recently leaked Russian foreign ministry “white paper” [published in Russian Newsweek] suggests an important debate is under way. The paper echoes President Medvedev’s themes of the urgent need for modernization and closer association with the West. It is doubtful that the hard-line camp based around Russia’s security services has come around to this view. They are still wedded to the notion that the West is in civilizational decline and that Russia has an opportunity to press its short-term interests in the immediate neighborhood. The Medvedev camp are clear-eyed about Russia’s own national decline. They probably do not underestimate the organic strength of the West to recover from its current economic woes. They know that Russia cannot afford neo-imperialist delusions. Mr Medvedev talks about promoting nanotechnology in Russia. Yet Russia’s deeper challenge is that it needs a new operating system, preferably a European-oriented one based on representative government, civil liberties, property rights and true federalism. Only time will tell whether Mr Medvedev can deliver. His Western counterparts, including President Obama, Chancellor Angela Merkel and President Nicolas Sarkozy, should continue to encourage the idea that Russia can become a European country.