a) The Russians knew that Fogle was CIA even before he arrived in Russia.
b) The Russians had already expelled another US diplomat in January of this year for attempting to recruit a Russian citizen and told the Americans to stop these kinds of attempts. The Americans ignored these warning so the Russians got fed up and decided to highly publicize this arrest.
In this context, I would like to add the following reminder:
During the 1990s the Russian security services practically collapsed: their funding almost stopped, corrupt or even outright traitorous individuals were named at the top positions, secrets were given to the American "friends" is mass quantities, key institutes and academies were shut down, many officers resigned and went into "private practice" (for the oligarchs, the mob, private companies, banks, etc.), the media engaged in a hate-campaign against them, their legal powers were curtailed, etc. Last, but not least, the security services were "reformed", "reformed" and then "reformed" some more, and then "reformed" again. As you know, in the 1990s being "reformed" meant being destroyed.
Under Putin this state of affairs dramatically changed, in particular for the FSB (internal security service). The FSB was for many reasons the easiest service to rebuild and Putin's determined efforts to re-establish law and order in Russia made such a process a top priority. Things were far more difficult for the SVR, the external intelligence service which is a far more complex structure. Things did begin to improve there, but at a slow(er) pace not because of any bad will (Putin himself was ex- PGU KGB which is now called the SVR), but because of inherently difficult nature of such a task. The one service which originally appeared to have least suffered from the "reforms" of the democrats, the GRU or military intelligence, then rapidly collapsed. Though I don't know that for a fact, I can imagine several plausible reasons for this collapse:
1) The GRU was a military intelligence service and the fact that the armed forces were "reformed" over and over again obviously affected it.
2) The GRU was a very expensive intelligence service to run due to its huge technological capabilities (space assets), its high-tech institutes and large size thus when the Russian economy collapsed, there was simply no money to run it.
3) The GRU is very secretive and secrecy breeds corruption. Furthermore, the GRU had a lot of very valuable assets (in terms of monetary value) and judging by the level of corruption in the regular armed forces, one can only imagine the level of corruption in the GRU.
4) The GRU has always been a competitor to the other Soviet and, later, Russian security services. So when Putin came to power, his KGB/SVR past and corporate closeness to the FSB put the GRU into an "2nd rate" position compared to the other services.
5) Some still secret crisis did happen inside the GRU with an important number of top officials killed in very mysterious circumstances. While (almost) nobody knows what really happened (all we have is rumors) it appears likely that some kind of ugly "war" involving part of the GRU did result in a weakening of this organization.
6) The performance of the GRU has been, shall we say, less than stellar in a number of occasions including some major intelligence failures in Chechnia, poor intelligence work during the 08.08.08 war against Georgia, and a couple of clumsy intelligence failures abroad.
I wanted to mention these facts to illustrate an important feature of the context of the latest CIA SNAFU in Moscow: the after two decades of absolute collapse, the Russian security services are back, some of them probably better shape than their Soviet predecessors (I think of the FSB here). This means that after two decades of careless arrogance western intelligence services need to adapt to this new reality and not assume that the 1990s are not really over. They are.
Whether Fogle himself was a drooling idiot or somebody with mental issues really doesn't matter. What matter is that the Russian security services are clearly punishing the USA for not taking their previous warning seriously.
This is what we see across the board: the Americans just can't accept the fact that Russia under Putin has truly slipped away from its imperial control and that from now on the USA will have to treat Russia as an equal and respected partner if it wants to do business with it. If not - they can expect even more painful or embarrassing "push back" from the Kremlin.
When not in denial, the other typical western reaction is a mix paranoia and phobia: the Evil Empire is back, the Russia is becoming a totalitarian KGB-run state, complete with dissidents (-: Khodorkovsky :-) and blue-eyed spies under every bed. Check out the cover of one of those paranoid reports: it shows a rabid bear, surrounded by the emblems of various Russian security services. This bear is clearly up to no good and about to attack all sorts of noble and freedom loving innocent people.
Another example of this kind of paranoia is the report of the notorious CIA front "Freedom House" which is modestly entitled "Contending with Putin's Russia: a call for American leadership".
By showing a row of Russian riot police (obviously standing there with the clear intention to mercilessly beat up any putative democrat left in Putin's Russia) Freedom House suggest an even wider agenda and this is why this cover is even better: not only does it reduce all of "Putin's Russia" to a row of mean looking riot cops, it also clearly states that the world is
calling for "American leadership" to deal with those nasty coppers. The cover with the bear really did not suggest a 'solution' whereas Freedom House is far more ambitious and even suggest a moral obligation for the USA to stand up to these Russian bullies. Yes, sure, this is all kindergarten level propaganda, but with a general public lobotomized by hours of staring at the TV, this is good enough to trigger the correct horrified response.
The core issue is this: due to decades, if not centuries, of highly misleading propaganda, most folks in the West simply are unable to imagine a state which is simultaneously 1) supported by a majority of people and democratic 2) with strong enough institutions to defend itself and its people and 3) not subordinated to the USA. In this mindset, world leaders can all be split into 2 basic categories: servile and obedient servants or vicious and bloodthirsty dictators. As Dubya said, you are either with us or with the terrorists. And nevermind that this kind of simplistic dichotomy alienates almost the entire planet as long as it keeps things simple and justifies grotesquely bloated military and 'security' budgets.
Regardless of what made him act the way he did Fogel is an iconic image of this confused, infantile, embarrassed and clueless USA which confidently treads into a world it does not understand and ends up being stunned when it stumbles. It is really rather comical to observe.