In fact, EU members are not unanimous over how strictly it should enforce sanctions against Russia. British Prime Minister David Cameron has warned that sanctions against Russia will continue to be tightened unless Russian President Vladimir Putin "changes his approach" in Ukraine. In contrast, German Chancellor Angela Merkel's tone comes across as borderline gentle. She admitted, however, that the latest EU measures are "unavoidable."

Germany is Russia's largest trading partner in the EU. To side with its allies in sanctioning Russia, Germany must pay a price. As such, Merkel has to persuade domestic businesses involved in the trade and investment with Russia to compromise some of their interests.

Deutsche Bank said earlier that the industrial production of Germany has dropped 2 percent monthly since the first wave of sanction measures were carried out. It is expected that more than 350,000 jobs will be cut from German companies that engage in trade with Russia.

Noticeably, the EU has attempted to maintain flexibility so as to alleviate tensions with Russia. The bloc emphasized in a statement that it remains ready to reverse its decisions and re-engage with Russia "when it starts contributing actively and without ambiguities to finding a solution to the Ukrainian crisis."

Russia has also left the door open for talks. Russian Foreign Minister Sergei Lavrov said that Moscow will not impose tit-for-tat measures or act "hysterically" over Western economic sanctions.

Seeking resolutions

Despite economic losses, Russia won't wait to be trapped by the blockade. Russian officials said that Western sanctions would not fundamentally harm the country's economy, suggesting that they may even spur Russia to enhance its economic independence and diversify away from the developed world.

Putin paid a visit to Latin America in July and attended the Sixth Summit of BRICS countries in Brazil. At the summit, BRICS leaders did not talk about the Ukraine crisis—a conspicuous absence that suggests political support for Putin, said Pang Dapeng, a researcher of Russian and East European affairs at the Chinese Academy of Social Sciences.

Russia signed a host of economic and arms contracts with its Latin American partners during Putin's tour, and may also receive a boost from the newly established BRICS New Development Bank that has an initial authorized capital of $100 billion.

Russia has also come to terms with a large buyer for its huge gas reserves. On May 21, Russia's gas giant Gazprom and China National Petroleum Corp. signed a 30-year natural gas supply deal in Shanghai with an expected contract price of $400 billion.

Many political and economic researchers commented that the signing of the long-awaited gas deal between the two giant neighbors is based on mutual benefits and market demands. After a long period of negotiations, some believe the Ukraine crisis acted as an important catalyst for the significant deal, Beijing-based Caijing Magazine reported.

Furthermore, Russian businesses have quickened the shift to emerging markets, such as China. According to the Financial Times, Russian companies have been preparing to switch contracts to the Chinese yuan and other Asian currencies amid fears that Western sanctions may freeze them out of the dollar market.

To some extent, Putin's pragmatic diplomacy will reduce the pressure imposed by the West, Pang noted.

Email us at: baishi@bjreview.com

U.S. and EU Sanctions

- July 29-30

Restrictions on Russian financial institutions from access to EU capital markets, an arms embargo, an export ban on specific U.S. goods and technology, as well as blacklisting of 95 Russian individuals and 23 companies

- July 16

Sanctions against major banks like Gazprombank and defense and energy companies including oil giant Rosneft, as well as a halt of European Investment Bank's funding of Russian projects

- April 28

Penalties expanded to 17 companies in the Russian oil, financial and hi-tech sectors

- March 20

Broader restrictive measures targeting more Russian officials and one bank

- March 17

Travel bans and asset freezes on seven Russian government officials who are said to be linked to President Vladimir Putin's "inner circle"

(Compiled by Beijing Review)