A senior European diplomat I met last week predicted that the Obama-Netanyahu talks would be “very tough in private, but very calm in public.” Well, the two leaders have just emerged and staged a brief press conference and – in public – they were indeed leaning over to be nice to each other.

Netanyahu, often self-confident and aggressive in private, was a real pussy-cat. He was clearly eager to sound reasonable and optimistic. There were no dark warnings about impending Armageddons. Instead he talked about a moment of unique opportunity in the Middle East because Arabs and Israelis “see a common threat”. Perhaps it was just a different way of talking up the threat of Iran – but it sounded more positive. The Israeli leader also kept emphasising what a great friend of Israel Obama is; there was no overt effort to question the president’s committment to Israel’s security – even though what Obama had to say (and his manner) was very different from the back-slapping, unquestioning support for the Israeli point of view that George W. Bush used to offer.

Officially, Russia does not use energy as a political weapon – and the gas cut-offs to Ukraine are no laughing matter. Unofficially – well, take a look at this video recorded in a Moscow theatre earlier this year.

As diplomatic gaffes go, it will be hard to surpass Hillary Clinton presenting Sergei Lavrov, the Russian foreign minister, with a “Re-set” button. This was meant to signify a fresh start in US-Russian relations. But unfortunately the Russian words next to the button actually translated as “Self-Destruct” – which more or less confirms the most paranoid Russian views of what the Americans have in mind for them.

Still – translation problems aside – America’s intent is clear. The Obama administration wants a new and better relationship with Russia. They want Russian help on all sorts of tricky issues, in particular Iran. If at all possible, the Americans want to cool down old arguments over issues like missile defence – and Georgia.

Unfortunately, it may not be possible. A new crisis over Georgia is looming, and could erupt quite soon. On April 9th, large-scale anti-government demonstrations are scheduled to take place in Georgia. The opposition are demanding that President Mikheil Saakashvili resign. That would suit the Russians extremely well – since they loathe Saakashvili. The Russian government is also convinced that there was an American-hand behind the Rose and Orange revolutions in Georgia and Ukraine. They will doubtless be giving support – and perhaps more – to the anti-Saakashvili opposition in Georgia in a couple of weeks time. Even without outside assistance, the demonstrations could easily turn violent – on both sides.

Turmoil in Georgia and the possible downfall of Saakashvili would present the Obama administration with an acute dilemma. Saakashvili still has many friends in Washington – and there would be lots of pressure to come to his support, particularly if it was felt that he was falling victim to a Russian-engineered coup. But a new crisis over Georgia would mean that the thaw in US-Russian relations had lasted little more than a few weeks.

The newspaper headlines in London proclaim that the temperature will drop to -10, and that Russia has just cut the gas supply to western Europe – again. And yet the reaction here, seems rather less alarmed than the first time this happened back in 2006.

Why? For three reasons, I think. First, bad news is always slightly less shocking, the second time around. Second, there is now more of a sense that this is a genuine economic dispute, as much as a Russian power-play. There are real arguments to be had about Ukrainian debts to Gazprom, and the price Ukraine pays for its gas.

But the most important reason is that Europe is actually rather less in thrall to Russian gas than we first thought. In Britain, just 3% of our energy needs are met by Russian gas. Pierre Noel of Cambridge University summarised the situation rather neatly in a recent paper  for the European Council on Foreign Relations called “Beyond Dependence: How to Deal with Russian Gas”.

Funny, how quickly things can go sour. The Russian government is the latest to face social unrest, linked to the global economic crisis. As blog-readers might have gathered, I was in Ukraine last week – and a Russian economist mentioned to me that there were demonstrations in Vladivostock against the new tariff on car imports. The FT is now reporting that the trouble is spreading.

More broadly, the Russian government is facing a serious economic crisis on several fronts. Just six months ago, its huge pile of almost $600 billion in foreign reserves seemed a symbol of the country’s new-found strength. But they have got through roughly a quarter of that in just three months – mainly through supporting the rouble. At this rate, it will all be gone well before the end of 2009. That is not an entirely implausible scenario, because the fiscal pressures on the Russian government are only likely to grow over the next year. Official projections are still that the economy will grow by about 3%; but private-sector economists in Moscow are talking about a deep recession. With oil down at just over $40 a barrel, the cash-spigot has been turned off.

There is a danger that, as the government comes under increasing fiscal pressure, it will be tempted to raid the foreign reserves for ordinary budget spending – espescially if the alternative involves cutting social spending and risking further popular unrest. Local governments are also likely to be screaming for financial support from Moscow.

The whole Putin phenomenon has been based on oil wealth and economic growth. So what happens now?