For the first time, Russia chaired the Group of Eight (G8) most industrialized nations --a presidency that significantly raised Moscow's international standing.
Economically, 2006 also brought important breakthroughs, including mounting energy profits and the signing of a landmark deal with the United States paving the way for World Trade Organization membership.
Russia's quest for global status, however, was marred by a number of bruising diplomatic rows and controversies -- most notably its ruthless dispute with Georgia and the high-profile killing of journalist Anna Politkovskaya.
These events and others have fueled concerns that Moscow's growing confidence is emboldening Russian leaders to treat critics with increasing brutality.
January 1, 2006, was a foretaste of the mixed year that lay ahead for Russia.
Russia took over the G8 presidency. But it also drew a barrage of criticism from the West by abruptly shutting off gas supplies to Ukraine in a row over gas prices. The cutoff, which disrupted gas deliveries to several European countries, cast serious doubt both on Russia's reliability as an energy supplier and on its legitimacy as G8 president.
Some of the fiercest denunciations came from U.S. Vice President Dick Cheney, who accused the Kremlin of using Russia's vast energy resources as "tools of intimidation and blackmail."
Yevgeny Volk, the director of the Heritage Foundation think tank in Moscow, says this year clearly demonstrated that the Kremlin views its new oil wealth as a means to achieve greater global clout.
"This year was marked by important changes in the Russian mentality and in Russian politics. The huge financial potential that Russia received as a result of high oil prices has translated, in the eyes of Russia's political elite, into a major instrument for political influence in the world," Volk says. "[Russia's] main priority now is to raise its status to the level of the superpower it was when the Soviet Union was in full bloom."
The world's growing dependence on Russian energy certainly places a powerful lever of influence into Moscow's hands.
The country's state-controlled gas monopoly, Gazprom, has threatened steep energy price hikes in a number of former Soviet countries -- namely Georgia, Azerbaijan, Belarus, and the three Baltic states of Estonia, Latvia, and Lithuania.
Gazprom has already raised tariffs for Ukraine from $90 to $130 per 1,000 cubic meters for next year.
While Russia insists that it has the right to charge all consumers market rates for oil and gas, the price increases have raised accusations that Moscow is using its energy resources to punish countries for acting against its interests.
Troubles With Georgia
At any rate, Russia's new energy pricing policy is a sign that it has adopted a more businesslike attitude toward former Soviet republics.
For some, like Georgia, this change has been accompanied by a dramatic deterioration of diplomatic ties.
Relations between Russia and Georgia have been chilly since Georgian President Mikheil Saakashvili came to power in 2003 with promises of steering his country toward the West and away from Moscow's orbit.
But September saw the worst diplomatic crisis between the two countries in more than a decade, sparked by the detention in Tbilisi of four Russian officers on spying charges.
Despite the officers' quick release, Russia struck back by suspending all postal, air, rail, road, and sea links with Georgia. It withdrew most of its diplomatic staff from Tbilisi and launched a crackdown against ethnic Georgians living on Russian territory.
The quarrel outraged observers, and prompted a bitter war of words between Moscow and Tbilisi.
Russian President Vladimir Putin accused Georgia of "state terrorism with hostage taking" and described the arrests as a legacy of the Stalin-era secret police chief, Lavrentiy Beria, who was an ethnic Georgian.
Saakashvili, for his part, branded the 1991 Soviet collapse freeing Tbilisi from Moscow's tether "the happiest day" of his life.
Volk says that deteriorating relations between Russia and neighbors like Georgia is largely the result of the Kremlin's mounting ambition to reclaim the influence it once wielded over the former Soviet countries.
"Russia's elite has strengthened its conviction that countries that once belonged the Soviet Union now logically belong to Russia's sphere of influence," Volk says. "Attempts by individual countries to leave this sphere of influence and reorient themselves toward Western structures are therefore perceived extremely negatively, as a kind of treason. Measures are then taken to punish these countries and bar their exit from this sphere of influence."
Russia's muscle-flexing, however, is not limited to former Soviet states.
The Kremlin's support of the radical Palestinian group Hamas and its consistent refusal to back a U.S.-led drive to impose sanctions on Iran over its nuclear program eroded relations with Washington.
Russia's ties with Britain also started on a sour note this year after Russia's secret services in January accused British diplomats of spying with the help of a fake rock planted in a Moscow park.
According to Sergei Markov, a pro-Kremlin political analyst and director of the Institute for Political Studies in Moscow, most rows involving Russia stem from conflicting perceptions of the country's status.
"Russia is restoring its power. But it is too optimistic about its power. Other countries, to the contrary, are too pessimistic about this strengthening," Markov says. "The situation leads to a clash of expectations. Russia expects to be considered more powerful than it actually is, and other countries expect Russia to be weaker than it is in reality."
Russia hired a U.S. public relations firm to improve its image abroad throughout its G-8 presidency, which ends on December 31.
Putin's taste for vitriolic statements, however, has shown no sign of abating.
At an annual Kremlin news conference on January 31, for instance, just one month after Russia took over the G8 presidency, Putin made the following statement: "I know the mood of the G8 leaders. No one is against our active participation in this club. Everyone is for it, because no one wants the G8 to turn into a gathering of fat cats."
Even at the showcase G8 summit in St. Petersburg in July, Putin could not resist launching barbs at his foreign guests.
When challenged by reporters on Russia's democratic record, Putin responded by mentioning Washington's unpopular war in Iraq and a corruption scandal involving the party of British Prime Minister Tony Blair.
Putin was no more restrained in other remarks during the year. His reaction to the brutal assassination in October of investigative reporter Anna Politkovskaya, a fierce Kremlin critic, shocked and angered many.
"Yes, this journalist was indeed a sharp critic of the present Russian authorities. But I think journalists should know -- in any case, experts understand it perfectly well -- that the degree of her influence over political life in Russia was extremely insignificant," Putin says. "She was well-known in journalistic circles, among human rights activists, in the West. But I repeat, her influence over political life in Russian was minimal."
Just over a week later, Putin again shocked the world by making a joke about the virility of Israeli President Moshe Katsav, who had been accused of multiple cases of rape.
Unaware that microphones were still on, Putin told visiting Israeli Prime Minister Ehud Olmert that Katsav was a "mighty man" since he had, Putin said, "raped 10 women."
"We all envy him," he added.
Instead of apologizing for his remarks, Putin later defended himself by saying that it was "not nice" to eavesdrop on his unofficial comments.
Russia this year was spared massive terrorist attacks like the 2004 Beslan school siege that have plagued it in recent years.
Moscow continued to champion the growing "normalization" in the North Caucasus republic of Chechnya, which the Kremlin considers a hub of Islamist terrorism in the country.
The brutal policing methods of Prime Minister Ramzan Kadyrov were roundly criticized by human rights groups, but to his supporters in the Kremlin, he was an efficient and reliable stabilizing force.
Moscow's biggest strategic gain in the region, however, came on July 10.
Nikolai Patrushev, the head of Russia's Federal Security Service (FSB), announced that Russian special forces had killed the notorious Chechen rebel commander Shamil Basayev.
Basayev, the suspected ringleader of the Beslan siege and other terrorist plots, was Russia's most-wanted man. His death, Moscow hoped, would critically weaken the remaining structure of the Chechen separatist network.
The murder of Politkovskaya on October 7 also eliminated a powerful critic of the Kremlin's policy in Chechnya.
Rising Racism, Nationalism
The rising tide of attacks against dark-skinned immigrants and foreigners in Russia further contributed to the shadows cast on the country.
According to Sova, a group that monitors nationalist violence, at least 45 people have been killed and hundreds more injured in racist attacks in Russia so far this year -- a significant increase from 2005, when 28 people were reported dead in hate crimes.
Street rallies glorifying Russia and calling for the expulsion of non-Russians, like this march by ultranationalist groups in Moscow, were seen throughout 2006.
The year was also marked by mass ethnic violence in the city of Kondopoga, an industrial town near the Finnish border. A restaurant brawl between Russians and Chechens that left two of the Russians dead sparked a string of attacks against immigrants in this usually quiet town.
The Russian government itself has taken a series of steps that have widely been denounced as discriminatory against immigrants.
One of them is new legislation that bans foreigners from trading at markets and street kiosks as of April 2007. Putin signed it into law in November.
Putin himself called on the government to draft this law, saying it will encourage Russians to take up jobs in the sector.
Russia's human rights ombudsman, Vladimir Lukin, condemned the legislation as "dubious" and running counter to the country's constitution.
Initiatives like these have led human rights groups around the world to denounce the Kremlin's policies and to call on their individual governments to take a tougher stance on Russia, amid what many see as a dangerous backsliding on democracy.
But the conciliatory tone Western leaders continue to strike with Putin and the decision by the United States to sign a landmark deal with Russia paving the way for its entry into the World Trade Organization -- just weeks after Politkovskaya's murder -- are clear signs that these calls went largely unheard this year.