The Federation Council rejected the bill on February 21 by a vote of 93-13, with 15 abstentions.
The agreement was originally signed by Putin and Tatar President Mintimer Shaimiyev
in October 2005. It had received the lower house's backing earlier this month.
A Blow To Tatarstan The failure of the bill, which would have regulated the separation of powers between Tatarstan and Moscow and maintained the Tatar language's dominant status in the province, comes as a disappointment to many in Tatarstan.
"I think the reaction here in the republic will be painful, said Rashit Akhmetov, editor in chief of the independent "Zvezda Povolzhya" newspaper in Tatarstan's capital Kazan. "This is a blow to Shaimiyev's political reputation. This could be the first step toward forcing him out of Tatarstan's presidential seat, since he is one of the few free-thinking leaders from the [former Russian President Boris] Yeltsin era."
"Let us not ignore the fact that while [Russia's] regions have equal rights, they are not equal." -- Tatarstan State Council Chairman Mukhammetshin
Under a treaty negotiated between Shaimiyev and Yeltsin in 1994, Tatarstan enjoys a rare degree of political and economic autonomy.
Since Putin came to power in 2000, however, the Kremlin has taken a raft of measures
to extend its control over Russia's sprawling regions.
However, Putin signed off on the latest 10-year power-sharing agreement, which despite new restrictions allows the province much more autonomy than other regions.
There are fears that Tatarstan, a mostly Muslim republic with a population of almost 4 million, may try to secede from Russia, following the example of Chechnya.
And critics say the agreement could encourage separatist sentiments in other of Russia's "ethnic" republics and regions.
Dangerous Precedent? Federation Council Speaker Sergei Mironov said before the February 22 vote that adopting the agreement would create "a dangerous political precedent" for other regions.
Tatarstan's State Council Chairman Ferid Mukhammetshin responded that such fears were unfounded.
"Let us not ignore the fact that while [Russia's] regions have equal rights, they are not equal," Mukhammetshin said. "Our economic capabilities are different, our ecological and climate conditions are different, and we should speak about it openly. Such agreements should be able to give each [region] an opportunity to find a mechanism of resolving problems in each particular territory, and a federative state should not be afraid of that."
But all is not lost for the treaty.
The State Duma has the power to overrule the upper house's rejection if the bill garners two-thirds of the votes. But it is still unclear whether such a vote is planned.