By ordering a de facto invasion of Ukraine a week before Nato leaders meet for their summit in Wales, Mr Putin was flaunting the fact that he well understood the limits of European and American efforts to dissuade him from action.
As any strongman would, when sentenced to recession by Washington and Brussels, Mr Putin has taken the stinging slap without showing a trace of pain (even though his economy is hurting) and then hit back again, daring the West to go further.
This was not a gamble on the Russian president's part. As one US official despaired privately: "If Putin is immune to economic pain and we are not willing to use military force, then he's got us in check mate, doesn't he?"
Given events in Ukraine, the Baltic leaders could be forgiven for feeling more than a little nervous about the quality of Western assurances these days.
Ukraine is not a member of Nato, so we don't - to quote Mr Obama last week - stand "shoulder to shoulder" with them in the same way that we stand "shoulder to shoulder" with Latvia, Lithuania or Estonia under Article 5 of the Nato treaty.
European leaders talk tough - David Cameron threatens "consequences", Angela Merkel demands more sanctions, Francois Hollande says the Russian incursion is "intolerable" - and yet, as with the annexation of Crimea, that is exactly what we are being forced to tolerate.
We have clearly - and correctly most people would agree - made the calculation that we are not prepared to go war over Ukraine. Nor (unlike Mr Putin) are we prepared to suffer the recession and energy crisis that would be precipitated by inflicting extreme, crippling sanctions on Russia.
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