In contrast he developed a kleptocracy - parcelling out chunks of the economy to his former KGB friends. He disregarded human rights, took over the media and opponents were jailed or exiled. Some, like Anna Politkovskaya and Boris Nemtsov, died under mysterious circumstances.
Abroad he continued to carry out his bullying tactics, invading Georgia in 2008 and Ukraine in 2014. He showed no interest in resolving the so-called frozen conflicts in the Caucasus or Moldova and threatened other neighbours with his nuclear arsenal.
The West showed little resolve, simply expelling Russia from the G8 and imposing a few sanctions. Russian black money continued to pour into London, Paris and Berlin. Putin backed right-wing populists including the National Front in France and the Brexiteers. His strategy was clear – to weaken the EU and Nato.
But his biggest coup, influencing the 2016 US elections, may also prove a turning point. Every US intelligence agency concurred that Russia had meddled in the election. And despite Trump's reluctance to call out Putin, the Russian factor will not go away with special prosecutor Robert Mueller intent on getting to the bottom of the affair.
Meanwhile, Russia, along with China, was named as a strategic competitor in the latest US national security strategy. Nato has also upped its threat perception from Russia and reinforced its eastern border.
Despite the Kremlin sabre-rattling there is little prospect of Russia invading any Nato country. The GDP of Russia is about the same size as Spain and its forces would be no match in the long run for Nato. But Russia will continue to seize opportunities as in Syria to show that it is back on the world stage. And it will continue to probe for weaknesses especially in cyber and hybrid warfare.
This latest attempted assassination in Britain should thus be a wake-up call for the West to finally get its act together and see Putin for who he really is. Apart from the traditional expulsion of diplomats and a few travel bans, the West needs to get serious about combating Russian espionage, fake news, dirty money and beef up its cyber defences.
Putin is about to be re-elected for a further six years. We have no time to lose.
* Fraser Cameron, a former British diplomat and EU official, is Director of the EU-Asia Centre in Brussels.