Paid content SUBSCRIBER-ONLY POLL RESULT: Should NZ reconsider finalising a free-trade agreement with Russia?
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The Russian Economic Ministry said on Thursday that Russia was prepared to retaliate with sanctions of its own if the West imposed economic measures over tensions in Crimea.
As the pressure mounts, Russian President Vladimir Putin is inching closer to yet another political victory over the EU, NATO, and the US.
The US Congress passed a resolution on Monday calling for Washington to work with European allies and others "to impose visa, financial, trade and other sanctions" against key Russian officials, banks, businesses, and state agencies.
A threat of sanctions against Russia is also worrying New Zealand exporters, many of whom were looking forward to a potential free-trade agreement with Russia.
New Zealand Prime Minister John Key recalled his delegation in Moscow as the Russian military flew attack helicopters into Crimea,. The delegation was told to suspend negotiations.
It is not clear if those talks will restart any time soon. Not only are the Russian markets feeling the effects of international condemnation over their provocative moves in eastern Europe, but New Zealand could also join some countries in imposing sanctions on Russia.
That, of course, would reverse many gains the delegation made over the last few months.
From Moscow’s perspective, a reversal in trade progress with a little nation like New Zealand will not be high on its current priorities. Russia has much larger concerns and far nearer goals to accomplish.
The drug of Russian nationalism
Russia is on a roll. Ordinary Russians are still basking in the ironically warm glow of a largely successful Sochi Olympic games.
Although they live in deteriorating living conditions and must deal daily with an insidious level of corruption, according to polls, the Russians couldn’t be happier with the way their government.
Mr Putin enjoys a robust 67.9% approval rating according to data released earlier this month by Russian polling firm VTsIOM. The Crimean debacle, worrying as it is for Europe, has apparently given Russians greater appreciation for what Mr Putin is trying to do.
By contrast, US President Barack Obama dropped from 43% approval in January 2014, to 41% in March. More than 54% of respondents, according to Wall Street Journal/NBC News, now directly disapprove of the American leader’s trajectory.
An especially telling statistic in the poll showed the lowest-ever approval of Mr Obama’s handling of foreign policy.
Really, when those two indicators are compared, the story of what is happening in international geopolitics couldn’t be clearer.
Russia’s moves in the Crimea are not entirely unexpected or out of the blue. Moscow and Mr Putin have been heading down the track of reconsolidating Kremlin control over the Former Soviet Union states for much of the past decade.
For Moscow and the Russian people, gaining greater control over eastern Europe and Central Asia is nothing less than a Cold War game for influence and power. The US and Europe may not talk about their geopolitics in such stark terms but, to an extent, they too still treat the world as a chessboard.
The disparity between the two approaches to geopolitics is that it places the West on the back foot. Everything the Russians do is geared toward shifting their pieces on the game board closer to victory, whereas the West is not as caught up in strategic games.
Moscow and Mr Putin don’t worry about how many Russians get access to healthcare. And they care very little about diversifying their economy away from energy exports and the Soviet idea of monocities, where a single industrial creation is produced.
The Russian narrative still talks about the US as being behind all the political trouble on its near-abroad.
The Orange Revolution in Ukraine a few years ago was orchestrated by Washington, they say. And the colour revolutions in Georgia, Kyrgyzstan, and Serbia were all part of a plan to destabilise the Russian periphery.
Mr Putin is worried that Russia could be next. His fear is not that Russian troops will instigate a shooting war with Ukrainian or NATO forces in Crimea, although that would be disastrous for the entire region.
Something like that would be largely manageable by Russia and probably not constitute a direct threat to his rule.
He worries instead that the demonstrations experienced in Kiev over the past few months, culminating in the ouster of a democratically-elected leader, could spark similar protests in front of the Kremlin.
Mr Putin may be overly paranoid about Western meddling in Eastern European politics but, if demonstrations started in Moscow he is probably correct in assuming American and EU interests would take full advantage to weaken his regime.
Thankfully - at least from Moscow’s view - the EU, NATO, and the US have reacted weakly and were horribly unprepared for Russia’s movements in Crimea.
Mr Putin acted heavily in Crimea, because his supporter President Viktor Yanukovych very quickly lost control.
Moscow’s overt actions are not for show. They reflect the vulnerable geographic reality Russia must cope with.
There is little stopping an invading force from moving eastwards across the North European plain towards Moscow. After all, that is the traditional invasion route used by the armies of Napoleon and Hitler.
Moscow’s strategic goals in eastern Europe
Mr Putin must maintain influence over the countries which offer Russia a strategic buffer from their historic threats in Europe. He simply cannot risk a united Europe soaking up too much territory and coming too close for comfort.
He is also determined to preserve Russia’s economic clout over European energy needs. Natural gas and oil pipelines require a lot of investment and are not going to be neglected.
Ukraine is also rich in shale gas which Moscow would dearly love to get its hands on. A more independent Ukraine, aligned with the EU, would cancel this opportunity and remove critical Russian oversight.
Russia’s ultimate goal is to create a counterweight to the EU with his own network of states as part of his Eurasian Economic Union. If this union can get off the ground, it might become a significant challenge to the EU’s dominance in Eurasia.
But then Europe is in a bit of a bind. On the one hand it needs to show Russia it isn’t willing to be pushed around, and it will achieve this with a list of sanctions.
However, those sanctions cannot have very sharp teeth if implementing them threatens imports of Russian energy. Europe may as well not do anything, which is exactly what Russia wants.
Russia is close to achieving a very important victory. Aside from fomenting unrest in Ukraine against any Kremlin-backed government, NATO and the US can do very little about the military intervention. Russia holds many of the most important cards when it comes to what happens next.
Perhaps the approval ratings of US President Barack Obama’s efforts at foreign policy are indicative of a wider problem. Twice now, in six months, Mr Obama’s threats of crossing his “red lines” have been blown aside.
Mr Putin has seen blood in the water and taken full advantage of the vulnerability. His strategy isn’t exactly subtle but it is very effective for Russia’s long-term goals.
Nathan Smith has studied international relations and conflict at Massey University. He blogs at INTEL and Analysis