The mood in Moscow has changed profoundly in the last two months as a critical mass of Russians has come to believe that Vladimir Putin's regime is approaching its end. People are not tense and angry, but humorous and excited.

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Paradoxically, the opposition thinks it has won and lives in a free country, while the government believes its rule persists. These two contradictory perceptions of reality are soon bound to clash, however, and Russia's system of government will be changed beyond recognition in the process.

The general assumption remains that Putin will win the presidential election on March 4. But Russians' expectations about the aftermath vary greatly. Five alternative scenarios are floating around Moscow these days.

The dominant liberal view is that Russia's economy and society have outgrown the country's obsolete political system and will experience a peaceful and gradual democratic breakthrough -- evolution rather than revolution. Although Prime Minister Putin will return as president, his power will dwindle away, and a full democratic transition will occur within two to three years. As the modernization theory laid out by the late political scientists Seymour Martin Lipset and Samuel Huntington holds, Russia is simply too wealthy, too well educated, and too open to be so authoritarian and corrupt.

An alternative liberal view, expressed by political scientist Lilia Shevtsova, argues that Putin will tighten the screws after the election and that his new presidency will be more repressive than his current rule. "The Putin era is ending, but the authorities are doing everything possible to make it a dramatic finale," she writes.

A third view, mostly limited to pro-Putin Western businessmen, is that Putin has understood his precarious position and will now return to the reform program he adopted in 2000, which emphasized market deregulation and judicial reform. As the skillful politician he is, this line of thinking goes, Putin will take the air out of the protests by carrying out the necessary liberal economic and legal reforms while maintaining authoritarian power.

Some liberals also fear that an alliance between the far-left and far-right opposition in the Duma will come to the fore if the officially market-friendly regime falters. This red-brown alliance would be made up of Gennady Zyuganov's Communist Party, Vladimir Zhirinovsky's Liberal Democratic Party, and Sergey Mironov's A Just Russia. It would favor mass confiscation of private enterprises, much higher public expenditures, higher taxes, and price controls. Putin's regime has often stoked fears of this scenario to advance an "après nous le déluge" argument -- which has yet to prove true.

The fifth view, which is the dominant view among regime loyalists, is that nothing has really happened -- the pampered elites have just let off some steam. After all, Russia's economy grew 7 percent a year from 1999 to 2008. As British Prime Minister Harold Macmillan said in 1957: "Let us be frank about it: Most of our people have never had it so good." These officials and businessmen claim that political stability is paramount, and they call for 12 more years of Putin without much change to the status quo.

Although it is hard to predict how change will come to Russia, the accelerating pace of events has made a political transformation in Moscow all but inevitable. Now-despised President Dmitry Medvedev preached a sensible program for Russia's modernization for the last four years, and though he never did much to implement it, his program has achieved a broad public consensus. The middle class may have abandoned Medvedev after he nominated Putin as a presidential candidate on Sept. 24, but it is still searching for other means to implement his agenda.

At the same time, the blend of authority and coercion that Putin has successfully wielded for 12 years has seemingly lost its magic. The watershed moment came on Nov. 20, when the audience at a wrestling event booed him on state television. A dictator has to be feared -- otherwise, he just becomes ridiculous.

Putin's position declined further when his United Russia party stole the State Duma elections on Dec. 4. The fabrication of the vote was so crude that the independent election monitoring organization Golos assessed that 15 to 20 percent of the United Russia votes were stolen. Even so, United Russia could only claim 49.5 percent of the votes, a decline of 15 percentage points from 2007. Putin's dictatorship has never looked so weak.

The opposition may be multifaceted and poorly organized, but it has proved its ability to bring people to the streets and has united around a surprisingly cohesive agenda. The three mass demonstrations held on Dec. 10, Dec. 24, and Feb. 4 were the largest Russia has seen since 1991, and they broke the barrier of fear. The demonstrations were orderly, offering no excuse for violence by the police, who no longer seem capable of suppressing the opposition. As liberal opposition activist Andrei Piontkovsky writes, "Any resort to brute force to suppress demonstrations would finalize the regime's loss of legitimacy." In line with Russia's post-Soviet history, the police would likely refuse to shoot unarmed demonstrators. So even if Putin aspires to be a stricter dictator, that option is probably closed.

The opposition also has a common agenda. Its formal demands center on honest elections but focus more broadly on two issues -- democracy and the rule of law. The left demands justice, while the right calls for efficient judicial services. Both aspirations are directed against corruption and Putin, who is seen as Russia's chief enabler of corruption. Putin's United Russia, which anti-corruption activist Alexey Navalny has dubbed "the Party of Crooks and Thieves," is a flashpoint for popular resentment.

The government's response appears confused and often contradictory. Strangely, one of the Kremlin's first steps in December was Medvedev's call for the reintroduction of elected governors, which Putin abolished in 2004. Putin has not gone quite that far, but the governors have quickly turned against the federal government, realizing they are likely to have to garner local support to stay in power. At the Gaidar Forum in late January, for example, four governors publicly criticized the minister of regional development for creating a system of evaluating federal expenditures that disbursed funds arbitrarily.

The governors have also come under pressure from the Kremlin, which has simultaneously asked them to bear the blame for falsifying the Duma elections while being asked to deliver an overwhelming presidential vote for Putin. Clearly, they see the writing on the wall and are not going to do more than necessary for the federal authorities, potentially endangering Putin's majority in the upcoming vote.

In another early step, Putin replaced his longtime Machiavellian chief political advisor Vladislav Surkov with the cruder Vyacheslav Volodin. The crucial difference between the two men is that Surkov argued for Putin to win the presidential election in the second round, as Jacques Chirac did against Jean-Marie Le Pen in the 2002 French presidential election -- thus gaining more legitimacy. Volodin and Putin, however, do not want to take such risks and prefer a first-round victory.

Even beyond his reelection team, Putin's political appointments show that he has no intention of reaching out to the broader public. In December, he appointed two of his closest and oldest friends -- contemporaries from the KGB in St. Petersburg -- to two top positions. Sergei Ivanov became his chief of staff, and Sergei Naryshkin speaker of the Duma.

As he surrounds himself with loyalists, Putin has also increasingly relied on anti-Americanism to bolster his regime. He recently appointed two of Russia's most vocally anti-U.S. politicians to top foreign-policy positions: Dmitry Rogozin became deputy prime minister for the defense industry, and Alexei Pushkov was named chairman of the foreign-policy committee of the Duma. Simultaneously, Putin launched an anti-American campaign that blamed the protests on the U.S. State Department -- a hackneyed charge that seems old-fashioned and irrelevant.

The entire federal administration, meanwhile, is in turmoil. After 12 years of minimal changes in the cabinet, it is clear that only a few ministers will remain in place. Respected finance minister, Alexei Kudrin, departed in September and has joined the liberal opposition. First Deputy Prime Minister Igor Shuvalov has publicly welcomed Russia's democratization. Many officials are running for the exits, and some may be prosecuted for their gross corruption.

Putin's election bid also appears to be little more than an afterthought. Officially, the 75-year-old film director Stanislav Govorukhin leads his campaign, but this is little more than a facade. Volodin leads the real campaign from the president's office, with United Russia offices set up in the gubernatorial administrations. Absurdly, United Russia has been left on the outside looking in, as Putin does not want to be associated with its "crooks and thieves" reputation. As a consequence, many ambitious United Russia officials in the provinces are now running as independents in local elections against the government.

Putin kept an uncharacteristically low public profile until mid-January, but then became all the more active. So far, his campaign has followed two tracks. The first is a series of newspaper articles and daily public appearances enunciating his positions on the rule of law and economics. For good reason, Putin boasts about Russia's strong economic record, and he has promised liberal market reforms and tough action against corruption. These statements represent a welcome liberal turn. The problem, however, is that Putin sounds as he did in the early 2000s, when many of these very same promises proved hollow. This raises the obvious question: Why should voters believe he will carry out these reforms now, if he did not do so then?

The other campaign track consists of propaganda films on five television channels. These films are typically one hour long and as crude as they get. One praises Putin for saving Russia from the global financial crisis -- never mind that Russia's GDP fell more than any other G-20 country in 2009. Another spins an absurd tale of how Putin saved Russia from civil war. They are targeting a less-educated audience, Putin's core electorate, but this aspect of the campaign undermines the credibility of the more intellectual pose that Putin takes in his newspaper articles.

Impressively, Putin's public style has changed. I saw him speak at the conference of Troika Dialog, a Moscow investment bank, on Feb. 2. To my great surprise, Putin engaged in a public debate with economics professors Paul Krugman and Raghuram Rajan. He attacked Krugman for his advocacy of loose fiscal policy, arguing that it would lead to overproduction, and he criticized both Krugman and Rajan for their preference for democracy, which he said would make it impossible to cut Russia's social expenditures. Although restless, Putin spent two hours with us.

These appearances reflect Putin's complex personality. He is late to decide but then stubborn. He hates to act under pressure and never negotiates, compromises, or changes a decision. At the same time, he has proved to be a daring improviser. It is difficult, however, to see how his old tricks could succeed in restoring the authority he has lost in the last several months.

For Putin to regain his credibility, he would need to take aggressive action before the March 4 presidential election. He would have to sack and prosecute some of the most corrupt among his top aides and take steps to clean up the state-owned energy company Gazprom, which has long been considered the worst hole of corruption in Russia.

The liberals within the regime warn that Putin must start fighting corruption to avoid revolution. Such steps, however, would be just as likely to undermine Putin's power base as revitalize his rule, as they would threaten the interests of his closest aides. Putin appears to have moved from a win-win position to a lose-lose position, and because the opposition's demands center on law and justice, no oil price can save him this time around. Opinion polls suggest that Putin may win the presidential election with an absolute majority so that no runoff is required.

But though he will likely succeed in returning to the presidency, he will have lost his legitimacy in the process. The electoral system is simply not democratic: Putin himself has selected the four "alternative" candidates, and he has also maintained full administrative control over the Central Election Commission in defiance of protesters' demands. And media outlets, of course, continue to tout his candidacy day and night.

But the beginning of the end has come for Vladimir Putin -- the only question is how his rule comes to a close. Today, it is fashionable to oppose him. At the Troika Dialog conference, Vladimir Mau, president of the Academy of the National Economy, concluded: "The most stupid thing now is to waste the crisis." Russia's opposition, for so long left out in the cold, has no intention of missing this long-awaited opportunity.