Vladimir Putin is a hero in much of Russia. He is the man who brought order and prosperity, fought off terrorism, and restored Russian greatness after a humiliating period of Cold War hardship and defeat followed by democratic chaos which brought ruinous inflation and poverty to millions.

So he is not going to be intimidated by threats. What is vital for Putin to guard his legacy and complete his mission is simple: he cannot possibly accept a reduction in Russia’s strategic capabilities — so control of Sevastopol and its Black Sea port is essential. As the great protector of the Russian people, Putin also cannot allow himself to be seen as not caring or inactive when millions of Russian speakers and ethnic Russians worry about being marginalized or even physically threatened.

This means that opposing Putin on these two items is futile — threatening to punish him for these actions is counter-productive. So what is at risk? Putin has already said he will not annex the Crimea; he simply wants to ensure that they have a democratic choice of their future (although he is fairly confident they will choose to either join Russia or have an autonomous government that make its own deals with Russia for military bases).

The real risk now is that extremism on both sides will lead to a confrontation and then to hostilities that will justify further military incursions by Russia into eastern Ukraine. A further risk is that Russia will exert economic muscle, such as constraints on gas supplies and imposing tough terms on existing debt, that intimidate or undermine Ukraine’s new government.

Fortunately, these risks can quickly be reduced. The government in Kiev should do the following:
(1) Make clear that President Yanukovich surrendered his office when he left Ukraine. The fact is that the government of Yanukovich acted in a way that lost his government the allegiance of the people, armed forces, and political and business elites of Ukraine. Realizing this, Yanukovich departed, forcing the Ukrainian Parliament to create an interim government. Until elections are held, this interim government is the only legitimate leadership of Ukraine.
(2) Make clear at every opportunity that the interim government is committed to the protection of all Ukrainians. Invite civilian observers from Russia and the Council of Europe to monitor the safety of Russian-speaking citizens wherever they wish, and assure Russian-speaking Ukrainians that they will have full rights to use their language and culture in a free Ukraine.
(3) Set elections as early as possible for a new national government, with the promise that the new national government will THEN as soon as possible hold a referendum in Crimea for its people to determine its future status.
(4) Thank Russia for its help in maintaining order but say that Ukraine expects Russian troops in Crimea to return to their bases and return control of security to local police as soon as Russian and European observers ascertain that there is no threat to the safety of civilians in Crimea.

Meanwhile, America and Europe can do the following:
(1) Assure Russia that we share their goals of a having free Ukrainians determine their own future.
(2) Request that Russia join civilian fact-finding and safety missions to ascertain that Russian-speakers in Ukraine — including Crimea — are safe.
(3) Request that Russian forces in Ukraine stand down and return to their bases once those fact-finding missions have determined that Russian-speakers are safe (It may take some time to get there; be patient).
(4) Use their economic muscle — if you wish to look strong and yet avoid military confrontation, you must use other sources of strength, the famous “Soft power” that is supposed to be the West’s asset. But even soft power requires some real heft behind it. This does not mean treating this like a “bidding war” vs. Russia over Ukraine’s loyalty. Rather, it means offering Ukraine sufficient financial support for debt management, and to hold elections, so that Ukrainians have a free choice, without feeling the threat of economic disaster if they make certain choices. This looks to be underway, with the US offering short-term assistance and the IMF on the way to work out a longer-term financial package.
(5) Quietly make clear to Putin that IF Russia will not cooperate in the measures noted above, if Russia sends troops into other parts of Ukraine or refuses to accept civilian safety and monitoring missions, or interferes with planned elections, then there WILL be consequences for violating the agreements it has made in Budapest. These measures could include ending of visas to Europe and the US for leading Russian officials; investigation of bank accounts of Russian officials in the west; a reduction of gas purchases from Russia by Europe (Qatar would be happy to step in); excluding Russia from G-8 meetings and activities until the free sovereignty of Ukraine is restored. But these measures should be held in reserve rather than pushed forward now.

It is vital to remember BOTH Russia’s resolve and its weaknesses. Russia’s resolve is going to be strong to defend what it sees as vital interests and Putin’s own standing. Yet Russia has weaknesses too. The Russian government’s dependence on European gas sales to fund its budget is even greater than European dependence on Russian gas. Russian companies have investments and resources in Europe, as do Russian elites. A break in relations would be far more painful than it would have been a couple decades ago. And even for Russia’s military, a move into Eastern Ukraine would be difficult and risky, for even there the rural population is mostly Ukrainian speaking and would be hostile.

In sum, while Russia will be steadfast in doing what it must, it will be hesitant to do any more than it absolutely must. The fact that Putin has already publicly disavowed any intent to annex Crimea (much as he plans to control it and hopes it will vote to keep a special relationship with Russia), shows that he is not ready to cast aside all of his efforts in the last decade to develop a normal relationship with Europe.

In sum, I believe the current crisis can be calmed down. What is vital is to recognize the needs and concerns of all parties; focus on defending the safety and choices of Ukrainian citizens; and not to needlessly provoke Russia into going further than it wishes. At the same time, strength needs to be shown in offering substantial financial options to Ukraine, and reminding Putin of the value to Russia AND Ukraine of keeping good economic relations with Europe. With restraint and patience, the people of Ukraine should be able to move forward and shape their own future.