My must read of the day is "Ukraine Crisis: Fear of Wider Pain Tempers Sanctions," in the Wall Street Journal:
The deepening sanctions battle over Ukraine is already tipping Russia into recession, rattling nearby economies, and threatening to deal a blow to Europe's wobbly recovery, which could damp global growth.
That fear of wider spillovers shows why the West is moving gingerly in cracking down on Russian President Vladimir Putin, say a host of economists and investors, despite mounting pressure from many U.S. lawmakers to quickly turn up the sanctions heat. […]
"There has to be extensive consultations" before moving forward with tougher sanctions, Mr. Obama said. "You've got 28 countries, and some are more vulnerable than others to potential Russia retaliation. And we have to take those into account." […]
Roughly one-third of oil and natural-gas imports fueling Europe's economy are from Russia. Mr. Obama has said it is unrealistic to turn off the tap on Russian oil or natural-gas exports as the administration tries to calibrate how to pressure Mr. Putin without simultaneously harming Europe's economy.
A few weeks ago, Sen. John McCain (R., Ariz.) said that Russia needed "some very severe sanctions that may cost our European friends and us some financially in the short term."
He’s right.
Europe doesn’t want to damage their economy. The United States doesn’t want to damage Europe’s economy. That’s fair. It would have a global impact, and the European Union has not done anything wrong. It seems unfair to impose a penalty on Russia that could cause significant pain to a bystander of sorts, but what we’ve seen over the last two months is that Putin will press forward—it wasn’t just Crimea. That’s the threat that the E.U. and the United States have to consider more than the immediate economic strain sanctions could cause on their own economies.
The cost of Putin’s actions will increase in more ways than one, and it’s probably better to take a hit now than wait for it to get worse. If the situation continues to deteriorate, the cost to Europe and other third parties will become greater as well.