Better in their words…

We shall see just how much damage the likes of Obama and Merkel are willing to let Putin inflict. Much more than most of us would allow, I presume.
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President Obama and European leaders are ratcheting up their rhetoric against Russia. Too bad Vladimir Putin is a man of action who hasn’t seen anything worth stopping his assault on Ukraine.

In the two weeks since Russia invaded Crimea, the U.S. has put a handful of unnamed officials in Moscow on a visa-ban list. The Europeans suspended talks on trade and visa liberalization. That’s about it. Both put off sanctions to give Russia time to “slow down and take the off ramp” in Crimea, in the favorite Western evasion. John Kerry will give diplomacy another shot in London Friday with Foreign Minister Sergei Lavrov, who has lied throughout this crisis.

President Putin has in the meantime hit the gas pedal on his takeover of Crimea. The Kremlin’s local toughs, who took power by force, declared independence from Ukraine this week, cut off air links with Kiev and seized branches of the country’s banks. Despite Western pleas, the hasty and sham referendum on Crimea’s union with Russia will go ahead Sunday with some 20,000 Russian soldiers as observers.

The “off ramp” the Kremlin boss is taking is to the first naked land grab in Europe since World War II, and Crimea may only be the start. His old intelligence pals are working overtime to import secessionists into eastern Ukraine and perhaps give the Kremlin a pretext to intervene. Moscow’s defense ministry on Thursday admitted to a troop buildup along its border with Ukraine. Kiev itself is vulnerable, Ukraine’s Prime Minister Arseniy Yatsenyuk said in Washington this week.

Meanwhile, Western leaders have heard from business groups about the risks of confronting Moscow economically. The Kremlin has amplified the message by threatening to confiscate foreign assets in Russia. But commercial calculations have to be set aside here. The strategic choice in Ukraine is between preserving the post-Cold War order in Europe or accepting the new Putin rules.

The modern czar probably figured on some manageable pain from this gambit. Every previous time he has misbehaved, Western greed and weakness tempered the response. (See Georgia war, 2008.) Can Mr. Putin now swallow his neighbors and do business as before in the civilized world?

After Sunday’s referendum, the EU and U.S. are expected to announce financial sanctions on officials who had a direct hand in the Crimea operation. The list is likely to be limited, and these people will be hailed as heroes in Russia and compensated by the Kremlin for any losses.

Any counterpunch by the West needs to hit close to Mr. Putin with financial sanctions. Mr. Obama could expand the number of Russians covered by the 2012 Magnitsky Act, which bans human-rights abusers from traveling to or banking in the U.S. His refusal to expand the Magnitsky list as promised in December was the latest signal of this Administration’s lack of concern for bad Russian behavior.

As with Iran, the U.S. can deny Russian banks access to Western capital markets. The G-7 can impose quotas on imports of Russian metals, grain and possibly energy. These sanctions would push the Russian economy, set to grow 1% this year, into recession and “sharply” weaken the already weak ruble, according to Moscow-based Renaissance Capital.

Rich Russians keep most of their money in Europe’s banks, live in its capitals and send their kids to its schools. Punish Mr. Putin’s circle with asset freezes and travel restrictions and you endanger his regime. Four-fifths of Russia’s inward direct investment comes from the EU; half its exports go there. Vice President Joe Biden did something possibly useful this week by calling the president of Cyprus. This favorite Mediterranean destination for Russian capital is an important ally in opening up the financial front against Mr. Putin.

Europeans could also stop turning a blind eye to money laundering from the east. Earlier this week Austria arrested a Ukrainian energy oligarch closely connected to Moscow who is wanted in the U.S. A similar attitude adjustment toward rich, Kremlin-connected Russians is overdue across Europe, especially in the city often known as Londongrad.

Russia can also be squeezed through the international courts for absorbing Crimea. The Ukrainian government needs a legal strategy to file claims for billions of dollars in state and private property lost to Russia’s occupation. Aeroflot planes, overseas accounts and government real estate may be war reparations for Kiev one day.

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The Kremlin says Russia will match Western measures tit-for-tat, and Mr. Putin no doubt means it. But Russia’s economy is barely the size of Italy’s. It has oil, gas and little else. Russian capital flees at every opportunity, and nervous outside investors have sent Russian equities down sharply. In other words, the pain of economic war will be far worse for Russia than for the rest of the world.

“If Russia continues on its course of the past weeks, it will not only be a catastrophe for Ukraine,” German Chancellor Angela Merkel said on Thursday. “No, this would also cause massive damage to Russia, economically and politically.” Strong and welcome words, but Mr. Putin only understands the language of action.

Putin Acts, the West Talks – WSJ.com.