Here are some options:
1. Putin is a crazy hothead who is not even procedurally rational. Merkel received that impression from one of her phone calls with him.
2. Putin is rational, in the Mises-Robbins sense of instrumental means-ends rationality, namely that he has some reason for what he does. He simply wills evil ends, namely the extension of Russian state power and his own power as well.
3. Putin is fully rational in the procedural sense, namely that he calculates very well and pursues his evil ends effectively. In #2 he is Austrian but in #3 he is neoclassical and Lucasian too. He knows the true structure of the underlying model of global geopolitics.
4. Putin lives in a world where power is so much the calculus — instrumentally, emotionally and otherwise — that traditional means-ends relationships are not easy to define. Power very often is the exercise of means for their own sake and means and ends thus meld and merge. Our rational choice constructs may mislead us and cause us to see pointless irrationality when in fact power is being consumed as both means and end. It is hard for we peons to grasp the emotional resonance that power has for Putin and for some of his Russian cronies. They grew up in the KGB, watched their world collapse, tyrannized to rise to top power, while we sit on pillows and watch ESPN.
Here is a former CIA chief arguing Putin has a zero-sum mentality, though I would not make that my primary framing. Here is Alexander J. Motyl considering whether Putin is rational (Foreign Affairs, possibly gated for you). Here is an interesting and useful discussion of differing White House views of Putin. This account of a several-hour dinner with Putin says he is prideful, resentful of domination, and hardly ever laughs. Here is Eric Posner on Putin’s legal astuteness.
My views are a mix of #2 and #4. He is rational, far from perfect in his decision-making, and has a calculus which we find hard to emotionally internalize. His resentments make him powerful, and give him precommitment technologies, but also blind him to the true Lucasian model of global geopolitics, which suggests among other things that a Eurasian empire for Russia is still a pathetic idea.
Putin is also paranoid, and rationally so. We have surrounded him with NATO. China gets stronger every year. Many other Russians seek to kill him, overthrow him, or put him in prison.
Assumptions about Putin’s rationality will shape prediction. Under #1 you should worry about major wars. With my mix of #2 and #4, I do not expect a massive conflagration, but neither do I think he will stop. I expect he keep the West distracted and seek to turn resource-rich neighbors into vassal states, for the purpose of constructing a power-intensive, emotionally resonant new Russian/Soviet empire, to counter the growing weight of China and to (partially) reverse the fall of the Soviet Union. Even if he does not grok the true model of the global world order, he does know that Europe is weak and the United States has few good cards it is willing to play.
Addendum: Whatever your theory of Russians in general may be, watch this one-minute video of a Russian baby conducting and give it a rethink.