One school, tactically embraced by President Vladimir Putin himself yesterday, is that conciliatory rhetoric, signals of non-aggression toward Ukraine, and massaging the divergent economic interests between European countries and the US, may succeed in blunting further sanctions, if not rolling back the ones already imposed.
But another point of view, held by many leading foreign policy advisers, is far more pessimistic, and even fatalistic. This perspective argues that Russia's schism with the US will keep on widening no matter what happens in Ukraine.
The US, they say, is pursuing a "containment 2.0" strategy that, like the successful US cold war policy that toppled the former Soviet Union, is aimed at weakening and ultimately defeating Russia as a geopolitical foe.
'The ultimate goal is regime change'
Several waves of sanctions have hit banks and individuals considered close to President Putin or heavily involved in Russia's Ukraine policy-making. Last week the US imposed the toughest measures yet, curbing the access of leading Russian banks and oil companies to Western capital markets. The European Union followed up with somewhat milder sanctions, which they have threatened to bolster again in the wake of the MH17 disaster.
But while Moscow's March annexation of Crimea may have been the trigger that unleashed successive waves of sanctions from the US and Europe, the "containment 2.0" theory's adherents say that it was merely the spark that set off a conflict that had been brewing for a long time.
"It's an illusion to believe that there are some specific steps we could take in connection with Ukraine to mollify the US, and they would lift this blockade and return to normal," says Sergei Markov, a Kremlin-connected political analyst. "No, just watch, they will keep moving the goal posts."
The real reasons that US-Russia acrimony has been inexorably building, they say, is that Russia is at the leading edge of emerging countries that are challenging the US-run global financial and political order.
The US plan, Mr. Markov says, "is to continue tightening the screws over the long term, aiming to increase discontent among Russia's middle class, and to turn people against Putin. The ultimate goal is regime change, and we would be fools not to see that."
Although the Kremlin has claimed that sanctions against Russia will "boomerang" against Western economic interests, few analysts believe Russia can win against the overwhelming financial and economic firepower of the US and its allies in any extended showdown. As such, some argue that Russia has no choice but to accept a measure of isolation as its lot.
But there are ways Russia can turn the situation to its advantage, they say.
First, they argue, the Kremlin could adopt policies that might compensate for the loss of foreign investment by encouraging domestic capital to mobilize.
Indeed, they say, something just like that appears to have happened by accident. After the first wave of US sanctions caused an exodus of foreign investors in March, a remarkable Russian stock market rebound occurred in the weeks after, as Russians came rushing in to snap up the bargains.
Similarly, they argue, the Russian government can use its nearly half-a-trillion dollars in foreign currency reserves to bolster the ruble and back investments in domestic industries. That could make up for the coming loss of virtually all Ukrainian imports and redirect Russia's economy from raw materials exports to modern manufacturing and services.
"There is a lot of domestic capital and energy that could be unlocked, but our elites need to embrace reforms," says Sergei Karaganov, honorary chair of the Council on Foreign and Defense Policies, a leading Moscow think tank. "The sanctions so far imposed are doing very little harm, but our economy was stagnating even before," due to over reliance on raw materials exports and an unwelcoming environment for small and medium-sized businesses in Russia.
"The sanctions can be an impetus, a wake-up call," he says, "but only if we make the right policy choices."
A wall of BRICS?
The other major thing Russia can do, say those who see a US campaign against it, is grow its ties with like-thinking countries who are also at odds with the US-dominated world order.
Unlike the former Soviet Union, whose string of client states were a crippling economic drain, Russia's potential allies are some of the world's fastest-growing economies. Two months ago Putin closed a huge gas deal with China, signalling that Moscow has alternatives if its main customer, the EU, decides to stop buying Russian energy. Last week, at a summit of the BRICS [Brazil, Russia, India, China, South Africa] countries, the emerging five-nation group resoundingly condemned US-led sanctions against Russia. They also established a development bank which could eventually rival US-dominated institutions such as the World Bank.
The evolution of the BRICS over the past 14 years from an idea suggested by a Goldman Sachs analyst to an actual bloc of countries that holds summits, coordinates foreign policies, and designs its own supra-national institutions obviously has deeply-rooted causes. But Russian experts say the current sanctions campaign against Russia by the US is probably doing more than anything else to spur the determination of BRICS states to develop their own parallel institutions – and, incidentally, give refuge to Russia.
"A couple of years ago the idea of a BRICS development bank seemed completely fanciful," says Georgi Toloraya, director of the Russian National Committee for BRICS Research, a semi-official think tank in Moscow. "But now we have this confrontation between Russia and the West. Tensions are growing between China and the US in the political-military sphere. This is changing minds rapidly. Now the idea of creating a separate institution doesn't seem so exotic at all."