German Chancellor Angela Merkel reportedly expressed doubt that President Vladimir Putin was in touch with reality after her recent phone conversation with him. He seemed to be "in another world" Merkel reportedly commented.
What can the West really do about it? One option would be to freeze the overseas accounts of top officials. That approach might have helped topple the regime of former Ukrainian President Viktor Yanukovych, but it is far from clear if it will have an impact on the Kremlin. The best option is to bring down oil and gas prices, forcing the collapse of Russia's unpredictable and dysfunctional regime. That is what former U.S. President Ronald Reagan, with the help of Saudi Arabia, did following the Soviet invasion of Afghanistan.
The West could boost shale gas production in Ukraine and Poland. Chevron has plans to start shale gas production in western Ukraine by the end of 2014. Even Yanukovych claimed that Ukraine would end its dependence on Russian gas by 2020.
This would not only deprive Gazprom of about $14 billion in annual revenues, but also oust Russia from the European gas market. The same strategy would also work in Poland.
The same is also true of shale oil. The U.S. not only surpassed Russia in 2009 as the world's leading producer of natural gas, but in 2013 also overtook Russia in combined oil and gas production. As a result, U.S. oil imports have fallen by 15 percent over the past five years.
There is an even simpler solution: The West can lift its trade embargo on Iran. From a foreign policy standpoint, Iran is now a more predictable country than Putin's Russia. If the embargo is lifted, the influx of Iranian oil on global markets would help lower prices. What's more, Iran is second only to Russia in gas reserves. Although it currently does not export gas, Iranian gas is much closer to Europe than the Novy Urengoy gas field in Siberia. In addition, Iran could ship its gas to Europe through the already built but not yet functioning Georgian pipeline.
The big question is whether the West has the political willpower to implement such a scenario. On the one hand, Putin's clearly unpredictable regime demands such a response. The problem is not only the situation in Ukraine but that the West will never know when or how Putin will lash out next. Systemic dangers require systemic solutions.
At the same time, however, the West's will to act is atrophying before our eyes. Modern Western democracies are overrun by influential bureaucratic institutions devoted to protecting the shellfish of the Thames Valley and regulating the curvature of cucumbers.
The West also has a shortage of institutions capable of implementing strategic decisions, or at least of providing state leaders with reliable information on which to base decisions. This became evident when U.S. intelligence informed U.S. President Barack Obama that it did not see any possibility of war in Crimea, even after armed men had already seized the Verkhovna Rada there.
It turns out that it is the West, not Putin, that is living "in another world." This is a world in which good-natured, civilized people argue that the use of force has no place in international relations and are therefore powerless to cope with those who believe otherwise.
Yulia Latynina hosts a political talk show on Ekho Moskvy radio.