DuBow Digest American Edition March 28, 2014

The more sober, if less juicy description, of how Europe and the US deal with Russia and the Ukraine is that of close cooperation that involves a division of labor as evidenced this week.

While German Chancellor Angela Merkel discussed the crisis with Polish Prime Minister Donald Tusk on Wednesday, US President Barack Obama hosted Ukraine's interim prime minister in a high profile Oval Office meeting. And in what has been billed as a last chance to avert a further escalation of the crisis before the Crimea referendum, US Secretary of State John Kerry met his Russian counterpart in London on Friday.

Washington is deeply engaged in the Ukraine crisis diplomatically and militarily. But the fact is that Ukraine and Crimea are simply not geopolitical priorities for the United States and that Washington's economic exposure to Russia and the region is considerably weaker than that of Germany and the EU. "For the United States Ukraine is far from a vital interest," notes Oliker. "For Europe and for Germany it is much more of one due to proximity, due to gas pipelines and due to just a much closer economic relationship with Russia. For the United States it's a matter of principle and certainly Europe as a whole is a vital interest of the United States."

Neither Germany, the EU nor the US have a silver bullet that can coerce Russia to change course on Ukraine anytime soon. In the long-run however, a joint, coordinated effort that may well involve meaningful sanctions by all three parties is the best option to make Moscow reconsider its game.

That is now happening. Both the EU and the U.S. have raised the stakes with sharper sanctions – mostly against individuals and some banks that are Russian owned. The tightening of the economic noose seems to be the only real weapon the West has.

However… Keep reading.

TAKING THE HIT? While economic sanctions seem to be the weapon of choice today, for Germany there may be a better and longer range solution. However, it would cause a lot of economic pain in Germany.

The Local.de reported, “The Spiegel suggested that European fears of Russian sanctions leading to economic problems should be turned around.

"Russia is dependent on exports from the EU, in particular from Germany. But more painful than export restrictions would be if the EU were to stop, or at least convincingly threaten to stop, gas and oil imports from Russia. Income from this supply is the hook on which the Russian state hangs - and also Putin's military machine.

"The missing Russian gas and oil could be compensated for by deliveries from other sources. Of course such steps would push up energy prices in Germany and the EU. 4