Dima talkin' about rational democracy at the G8.  Brought to you by the official Kremlin website.  

Russian text

English text

"разумной"  rational, reasonable, translate it how you wish, but this is the "condition" on which he accepts a politically & economically competitive system a.k.a. "democracy."  (as opposed to autocracy...)

The AFP comment is in quotes, and while I'm no fan of the MSM, I don't think this quote was used misleadingly.  Which is surprising, frankly.

2.  Thanks for the Tretyakov source!

Here is something in English for interested readers.

Diagnosis: Managed Democracy
I will put a name to the situation at which we arrived long ago. It is not dictatorship, not despotism. This is an authoritarian-proto-democratic type of government, existing in the form of a presidential republic and in the form of a nomenklatura. It is a bureaucratic, feebly federalist, in places quasi-democratic, and heavily corrupted state. In two words, the name I give for all of this is: "managed democracy." In 1917, the Bolsheviks, headed by Lenin, took power. They had their own democratic slogan, "All Power to the Soviets!" But they could not ignore the no less popular slogan in society, "All Power to the Constituent Assembly!" The Bolsheviks, however, lost the elections to the Constituent Assembly; they didn't have a majority.

What was Lenin to do? Correct: He unlawfully disbanded the Constituent Assembly, and then, suppressing the resistance (included the armed uprising) of his followers, turned to revolutionary terror.

Managed democracy emerged in the country in a Soviet guise. Real democracy, however, remained in the party, at the party congresses.

Stalin came to power. Under his rule, Soviet-style managed democracy became quasi-democratic, but democracy remained in the party. Then Stalin, through the method he perfected ("the main thing is not how they vote, but how they count the votes") turned an internal party democracy into a nationwide managed democracy. Stalin finally, using terror, turned even that managed democracy into a quasi-democracy. Yet another cycle in the history of the Russian representative council was completed.

Decades later, Gorbachev was unable to democratize the party, although he did practically give "All power to the Soviets." As a result, he was crushed and overthrown by both the undemocratic wing of the Communist Party of the Soviet Union [the State Committee for the State of Emergency] and the power of Yeltsin's Soviets, which had turned into the "ochlocracy" [mob rule] of the intelligentsia.

Yeltsin, the leader of the democratic-ochlocratic movement, ascended to the throne. Yeltsin was faced--as Stalin, Lenin, and Czar Nikolai II were before him--with an old problem: Parliamentary democracy (in all its forms throughout Russian history, from the Czarist Dumas, to the Constituent Assembly, to the Soviets, to the party congresses) was interfering with the country's highest executive power.

So what did Yeltsin, who spent only a few years honestly fighting unmanaged democracy, do? That's right: He did the same thing that the Czar did with the Dumas, the same thing Lenin did with the Constituent Assembly, the same thing that Stalin did with the soviets and the party congresses: He moved against them.

But Yeltsin next did something completely new in Russian political history. He took a step away from dictatorship and despotism. He called for Duma elections, precisely with the purpose of establishing managed democracy.

In 1996, during the presidential elections, the manageability of our democracy was demonstrated in all its elegance. The problem was something else: Yeltsin managed the country poorly. But he did not extinguish the democratic impulse and did not swerve toward despotism, even though the managed democracy that he constructed wished to overthrow him.

And then Yeltsin, at the height of his power, pointed to Putin.

Putin, along with Yeltsin, intelligently decided to extend the life of the managed democracy for at least another term. Why? Selfish reasons, of course, were there. But the main reason was fear--a rational, grounded fear--that a departure from managed democracy would lead the country form ochlocracy, to unmanaged democracy, to anarchy.

In a managed democracy, the people vote, but the people who are in power correct the people's choice ever so slightly. In whose favor? In their own favor, of course.

I was basing my own understanding on sources like the following:

Wikipedia

Lately this term is also widely employed in Russia, where it was introduced into common practice by the Kremlin theorists, in particular Gleb Pavlovsky.[1]

CSMonitor

Gleb Pavlovsky, the head of the Effective Policy Foundation, a Kremlin-funded think tank, says that "a regime of managed democracy had to be established [after Putin came to power] in 2000, in order to counter real threats from shady groups who had seized power in Moscow and in the regions. That task has been accomplished now. Today, Putin's power is based on the moral authority of a leader of civil society and not upon an authoritarian dictatorship."

BBC

Russia has no real history of dealing "democratically" with these questions.

There is no tradition of Western style presidential campaigns or even of really "credible" presidential elections.

Under Mr Putin, the Kremlin has learned about spin.

The chief "spin-master" is Dimitri Pescov, a suave and urbane chain smoker with an easy charm and fluent English.

He defends what he calls the "managed democracy" of Russia by claiming that there is no single model of democracy, so each country carves out its own style.

"And as for the Russian style?" I ask.

"Just because it is different does not necessarily mean that it is wrong," he tells me.

3.  At this point in time I'm not sure if the term actually describes anything and if it does, why I don't see why it is not applied to all of the new Europe, Italy, Japan, UK and US, to name a few countries.

I think it describes it well.  Of course, I don't know what "democracy" means anymore.  But again, I don't care who uses it or not, I will.  But I don't attach an implicitly negative connotation to it, even if the whole world does.  Why?  I live in Chicago.  Chicago is run like Russia.  I also think it's a fine place to live.  But it's no anarcho-democracy.  There is a political machine.  It's corrupt.  There is graft and patronage.  There are also elections in which, if people actually wanted to they could swiftly vote the machine out of power.  The mayor loves his city.  And he's hard not to like.  I could go on.   What I am saying is this:

I'm far less interested in the purity of the system than with the outcomes of it.  So I don't really care what kind of democracy you are ("democratic" being a term used by everyone from South Korea to America to Finland, thereby signifying nothing), just what you do with it.  

Why don't we call other places out for "managing" their democracies?  Because it's only bad when Russia does it, silly.

"Pretending that you already know the answer when you don't is not actually very helpful." ~Migeru.