A solemn-faced Barack Obama walked into the White House briefing room on Friday afternoon and laid down his version of a red line for the Ukrainian crisis. “There will be costs for any military intervention,” the US president said.

Within hours, Russian president Vladimir Putin had openly called his bluff, sending in troops to take control of Crimea and warning of potential further military incursions into eastern Ukraine.

Mr Obama now faces his sternest international test yet as president, one where US interests and leadership are both at stake and where his immediate options against Russia’s land-grab are limited.

“This is the most difficult international crisis of Obama’s presidency. It affects vital US interests, the idea of a Europe whole and free,” says Nicholas Burns, a former senior state department official and ambassador to Nato. “There is only one option, not a military strategy but a diplomatic strategy to try and outmanoeuvre Putin over Ukraine.”

Having launched a “pivot” to Asia and watched the diplomatic energies of his administration consumed by crises in the Middle East, Mr Obama now finds himself defending the biggest achievement of US foreign policy in recent decades, the end of the division of Europe and the establishment of a continent of free and independent states.

The Ukraine crisis has also become a test of Mr Obama’s personal resolve and decisiveness, something that has been called into question around the world after his public dithering last year over military strikes in Syria. At a time when the US is engaged in high-stakes diplomatic talks with Iran and when China is pressing its neighbours in the East China Sea and South China Sea, Mr Obama’s response will have global repercussions.

His domestic critics have been quick to suggest that the president’s own reluctant approach to using US power, most notably in Syria, has created a vacuum that Mr Putin is exploiting.

“We have been hearing so much about how war-weary the American public is and we have seen the recent defence cuts,” says Damon Wilson, a former White House adviser on Europe during the George W Bush presidency. “This is influencing Putin’s calculations about what he can get away with.”

While such an argument reflects the conversation about Mr Obama in many capitals these days, it ignores that fact that Mr Putin also sent his army into Georgia in 2008 – defying the warnings of Mr Bush.

The reality is that no one in the US or Europe is pushing a military option for Ukraine for fear that it could evolve into a broader continental war. There was no discussion of a military response at a meeting of Nato ambassadors in Brussels on Sunday, according to one diplomat.

“Nobody is willing to go to war over Crimea and Putin knows this,” says Jan Techau, director of Carnegie Europe, an arm of the US think-tank.

There are, however, diplomatic tools that the US and Europe can apply. One option is sanctions against members of the Russian government involved in the Ukraine operation. Under the 2012 Magnitsky Act, the US has already placed visa bans and asset freezes on one group of Russian officials and it would be relatively straightforward to introduce a second list. Congress would be happy to help the administration if any legislative fixes were needed. “We are all Ukrainians now,” senator John McCain said at the weekend.

Beyond that, the administration is being urged to quickly put together short-term financial assistance for Ukraine to help the new government in Kiev. US secretary of state John Kerry is among the foreign ministers flying to Kiev in the coming days in the hope of buttressing that economic lifeline.

The White House has already suggested that Mr Obama will not attend a G8 summit in Russia in June and Britain and France have pulled out of preparatory talks for the meeting. But the US and Europe could go further by ejecting Russia from the group and reconstituting the G7.

One of the more difficult questions will be how to use Nato. There have been suggestions to begin handing over satellite information and other data to Ukraine about Russian troop movements and to begin planning military aid – steps that in the short term are likely to be considered too provocative. More possible would be a decisive statement by Nato members of the principle of collective defence, something that would be particularly welcomed by the Baltic states.

The final point of leverage could be Mr Putin’s anxiety that he might have over-reached by sending troops into Ukraine. Popular and military resistance against Russia is possible in Crimea and even more so in parts of eastern Ukraine that Mr Putin might be tempted to try and snatch.

“Putin has won the first round, but it is not clear if he knows how this will end. This will get difficult for Putin over time, as the Soviets found out in Afghanistan,” says Mr Burns. “We can start to turn the tables on Putin by beginning to do some of these things.”

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