What’s occurring in Ukraine, says the Peterson Institute’s Fred Bergsten, is an unwelcome consequence of globalization. Russian President Vladimir Putin thinks he can enjoy political and military freedom in dealing with Ukraine without experiencing crippling economic costs from sanctions or the exit of multinational firms from Russia.

Call this Putinomics. It presumes that Russia’s “trading and investment partners are so committed to their own economic interests that, for all the talk of tough sanctions, they will not upset the apple cart in meaningful ways,” Bergsten says. Commerce dominates geopolitical interests. This gives Putin the freedom to pursue both. In this skewed system, economic interdependence makes effective sanctions difficult and often impossible.

To be sure, Russia has suffered economically from seizing Crimea and threatening Ukraine. Capital outflows have surged: Investors dump Russian stocks and bonds, convert the proceeds from rubles to dollars or euros and move the money out of Russia. Economist Lubomir Mitov of the Institute of International Finance, an industry think tank, says that capital outflows jumped to a near record $70 billion in 2014’s first quarter and might be as high as $170 billion for the year. The ruble depreciates, making imports more expensive and raising inflation.

Economist Anders Aslund of the Peterson Institute, an expert on Russia and Eastern Europe, predicts inflation of 6.5 percent for the year and thinks that the crisis “has shaved off 2 percent” of gross domestic product (GDP), the economy’s output. This would signal a recession. Russia’s growth last year was a meager 1.3 percent, reports the consultancy IHS. Uncertainty and capital flight will weaken consumer spending and business investment, says IHS.

But Putin treats these setbacks — driven mostly by market decisions, not government sanctions — as short-term costs dwarfed by the long-term gain of reacquiring Crimea. His further ambitions are unclear. “My basic view is that Putin is intent on taking half of Ukraine,” says Aslund. “The question is when” — and whether added sanctions might deter him. So far, sanctions have been modest, mainly involving asset freezes and visa restrictions on a few Russian officials.

Toughening sanctions will be hard for both macro and micro reasons. Start with the macro. Russia is among the world’s top oil producers. Logically, stern sanctions would crimp oil sales, which provide the bulk of Russia’s exports and tax revenues. But reduced Russian sales would probably push up oil prices and weaken the fragile global economic recovery. Not popular.

Now the micro.

Among big firms, the distaste for sanctions is tangible. In late March, Joe Kaeser, chief executive officer of the giant German firm Siemens, flew to Moscow, met with Putin and declared that “we support a trusting relationship with Russian companies.” Siemens sells high-speed trains to Russian Railways. In 2011, ExxonMobil signed a co-production agreement with Rosneft, the largest Russian oil company. ExxonMobil chief executive Rex Tillerson recently said cooperation was proceeding normally.

At best, the record on sanctions is mixed. A Peterson Institute study of 204 cases from 1914 to 2000 judged two-thirds as failures. Sanctions did not cause Castro’s Cuba to collapse. They did not deter North Korea from building nuclear weapons. Although they may have pushed Iran into serious negotiations over its nuclear program, they haven’t yet forced it to change the program significantly.

Sanctions fail because target countries believe other goals (including survival) outweigh economic costs. Sanctions are also evaded. To succeed, they must be widely honored. In 1980, after the Soviets invaded Afghanistan, President Jimmy Carter limited grain shipments to them. Led by Argentina, other suppliers filled the void. The Reagan administration later barred Caterpillar from selling 200 pipe-layers to the Soviet Union; the business went mainly to Japan’s Komatsu.

Economic warfare is often costly for both sides. Putin’s central insight is that the other side is risk-averse. Although sanctions could be strengthened, the odds seem against it. Many U.S. executives see sanctions as a “lose-lose” proposition: U.S. firms lose foreign sales (“you get tagged as an unreliable supplier,” says a Caterpillar executive); and the U.S. government doesn’t achieve its political goals. With closer ties to Russia, Europe has greater reservations. It also dreads the effects of a cutoff of Russian natural gas, even though this gas supplies only about 7 percent of Europe’s total energy.

The essence of Putinomics is to exploit these fears. Collective commerce, which was supposed to muffle bellicose behavior, loses much of its restraining power. Bergsten worries that China may one day resort to military aggression to achieve its goals on the same assumption that its economic partners can’t — or won’t — retaliate. It’s an unsettling thought.

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