RUSSIA. The annexation of Crimea is an accomplished fact. It is blind eyed to think that Moscow would take the decision to cancel the takeover of Crimea, due to Western sanctions destined to broker such a retreat. Neither the sanctions policy, nor the disqualification of Russia’s membership of the G8 seems yet to be a successful approach. It becomes clear that the Western powers cannot handle the Kremlin’s military “audacity.” Subsequently, in the short term, Putin looks like a winner as the Crimean “operation,” backed up by the most of the Russian population has resulted in strengthened patriotic sentiment and grown support for president Putin.

At the same time, underneath the cover, the picture is not so colorful for Russia. With or without Crimea, the current situation does not imply economic growth for Russia, or a strengthening of the financial stability of the country. On the contrary, to convert Putin’s personal access into national benefits seems like a difficult quest. Moreover, Putin’s “triumph” may purport a further gradual demise of Russia’s economy, as the long-term consequences of (potential) sanctions will echo vociferously onto the ordinary population.

As for the West, and particularly for the significant part of its foreign policy circles, Russia’s annexation of Crimea was a long-awaited reappearance of an “old” enemy in his familiar guise. Paraphrased, Russia has become unreliable scion of the Soviet Union that plays dodgy games with its military stick.

The other side of the coin is that the West cannot accept Crimea as part of Russia. It would imply that the Crimean referendum would have set a precedent that could undermine state borders in Europe and trigger the further unilateral revision of status of many regions (as for example Catalonia, Basque Country or Scotland). This fact destroys the concept of security that derives from the inviolability of borders as a sacred principle in Europe established. Thus, the West cannot simply overlook this state of affairs.

In addition, the puzzle is that it is unclear how to oppose old adversary. Particularly when there is no agreement about the measure to employ against Russia. This discrepancy can be viewed in the actions of USA on the one side and the EU on the other in their approach to “penalize” Moscow. Moreover, there even is no unanimity among the members of the EU themselves.

The compromise up to the moment was found in the attempt to introduce sanctions against a number of Russian citizens, who are claimed to be part of Putin’s inner circle. Such measures are targeted to incite the discontent of “these personalities” who would in reaction convince Putin to change his policies. However, it remains an open question how effective these sanctions aimed at the president’s entourage will be.

Also in case of Russia’s further actions to destabilize the situation in Ukraine, the West threatens to scale up sanctions. It would entail an embargo on weapons sales to Russia, trade restrictions, financial sanctions, and the expansion of people with frozen bank accounts and restriction upon entering the EU and USA. Important outlets argue that the introduction of a “severe” package of sanctions will inflict a serious and painful blow to the Russian economy. Principally, the financial constraints will hamper Russian banks and companies from raising capital in western markets. In a similar way, the trade sanctions and restriction on imports of Western goods may lead to a deficit and inflation.

The imposition of severe economic sanctions is disadvantageous to both Moscow and the West (mainly for Europe because of stronger economic ties with Russia). If the Russian economy is affected, this will lead inevitably to a loss of public support for Putin and of other high-ranked politicians. However, the risk for Europe implies of sanctions would also affect the opportunities to recover from its own crisis after all, Europe is dependent on Russian gas supplies.

Finally, the decision regarding sanctions also involves other important strategic “rationales” and significance. The West is aware that the measures embodying various embargos and constraints in trade may eventually result in diversification of the Russian economy, no longer depending on petro- and gas dollars or euros, but seriously start dealing with an import substitution creating impetus for national industrialization. Likewise, and what is of more peril, these sanctions will motivate Russia into a possible alliance with China that is neither in the interests of the West, nor in Moscow.