"The first order of business should not be some sort of punishment," said Dan Fried, the Bush administration's assistant secretary of state for European affairs, in an interview this past week about U.S. policy toward Russia in the wake of its invasion of Georgia.

Fried is an accomplished Foreign Service officer who has served this and previous administrations loyally and professionally, and undoubtedly he is working with the instructions given to him by Secretary of State Condoleezza Rice and National Security Adviser Steve Hadley. But, in this case, the sentiment is dead wrong and only reinforces the worst tendencies in the key alliance capitals of Paris and Berlin.

Up to now, the transatlantic policy toward the Russian aggression in the Caucasus has been to offer aid and assistance to Georgia but avoid any steps that might be viewed as a substantive sanction in Moscow. It is the equivalent of coming across a victim of a violent mugging and robbery and offering to help the victim but doing nothing when it comes to punishing the actual perpetrator of the crime. Helping the victim, of course, is important, but that alone will not deter the mugger. Indeed, absent punishment, the mugger is only likely to grow bolder and deterrence even less sustainable.

Complicating matters is that Washington is not the sole judge in this matter. To make any punishment effective will require the cooperation of America's transatlantic allies--and right now, key allies, such as France and Germany, are actively stalling efforts to make Putin and company pay a price for Russian misbehavior. And since both the European Union and NATO operate on the basis of consensus, it is especially difficult to move forward when those two states are blocking the way.

Difficult, but not impossible.

The first step is to make clear that the German and French approach is not working. Moscow is not keeping even its minimal promises agreed to in the French-brokered ceasefire. If anything, with its de jure recognition of the independence of both Abkhazia and South Ossetia and de facto absorption of the two into Russia, Moscow has made a mockery of Paris's efforts. Nor, stepping back, has Berlin's policy of commercial engagement with Russia been shown to gain it any special leverage over Russian behavior. Worried most of all about its supplies of gas and oil from Russian pipelines, Berlin has blinked. For Germany and France, two states that want to (and should) play a bigger role on the world stage, Russia's blatant disregard of their concerns should be sufficiently humiliating to spur a reappraisal of their policies, one would think.

Of course that reappraisal is likelier to happen under pressure. And the best source of that pressure is from other European governments who live on Russia's doorstep. Sweden, the Baltic States, and Poland have all argued for taking a tougher line with Moscow--and they should continue to do so. It is precisely because NATO and the European Union operate by consensus that these frontline states have the ability to push their neighbors to the west in the right direction. This is especially true of the EU, where their potential unwillingness to cooperate on other issues of importance to France and Germany gives Warsaw, Tallinn, and the other capitals leverage they might not otherwise have.

With the EU-Ukraine summit scheduled for September 9--whose outcome on closer ties between the two is very much in doubt because of German objections--it is important that these cards begin to be played today, not a year from now. A weak agreement will send just another signal to Moscow that it has a veto power when it comes to defining relations with the countries in its "near abroad."

If recent history is any guide, it will ultimately be up to an American administration to develop a transatlantic plan to make Moscow understand that there is a price to be paid for ransacking and carving up Georgia. The obvious starting point is the Russian economy, a one-note Johnny. Minus oil and gas revenues, there is little good news on the Russian economic front. The Moscow stock market is in decline and foreign investment and capital are fleeing in the face of Putin's heavy hand internally and externally.

But Russia needs foreign investment and technology, especially in developing its own oil and gas supplies. Publicly denying Russia membership in the WTO and the OECD may seem mostly symbolic, but it can put a serious hitch in potential investors' steps when it comes to plans for sinking cash into Russian firms or markets. Playing hardball on that front, as well as making Russian companies' access to world credit lines more difficult, could turn the recent decline into something far more serious for the Kremlin to worry about.

Russia does have resources we need, but a tit-for-tat response can only increase the underlying fragility of the Russian economy and is not sustainable for any length of time. Unlike the Soviet Union, today's Russia cannot simply hunker down in a totalitarian snit.

Moscow can also be squeezed by the threat of moving the 2014 winter Olympic games from Sochi, Russia, to some other site. There is no need to boycott the games since there is still plenty of time to find an alternative location. If nothing else, an embarrassment of this sort would put a big wet cloth over Putin's neofascist, strongman strut that the world now bends to Russia.

In short, making Moscow pay a price for its actions--and potentially creating divisions within its leadership as a result--is not impossible, nor does it necessarily involve a hard-power show of force. There are plenty of soft-power tools at hand around which a transatlantic approach can be fashioned. And, indeed, if Washington and Europe want to avoid having to resort to more drastic measures down the road, it is important to use these and other points of leverage sooner than later.

Gary Schmitt is director of the program on advanced strategic studies at the American Enterprise Institute.

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