The tensions in the Crimean peninsular show no sign of easing as Sunday’s Moscow-backed referendum on independence from the Ukraine looms. Along with that vote, comes the US and EU threat that if it goes ahead, Russia will be subject to economic sanctions.

Washington is making much of the fact that it is seeking a diplomatic resolution to the stand-off. However if a referendum vote sees Crimea’s ethnic Russian majority choose to breakaway from Ukraine, or violence breaks out between Ukrainian troops trapped in their bases and the Russian forces that surround them, all diplomatic initiatives will be over.

Western military intervention is of course unthinkable. EU military might is a joke. European governments have spent the last 30 years slashing military budgets in the crass expectation that Washington would continue to be ready to contribute significantly to the NATO shield that protects the continent. The Americans are not about to fight Europe’s wars for it. And as confrontations go, Ukraine is a European issue.

In the final analysis, despite all the fine, if sometimes contradictory, Obamian rhetoric about freedom, sovereignty and the right to self-determination without outside interference, only two issues are keeping US skin in the Ukraine game. The first is the chance of a successful confrontation with an increasingly intractable President Vladimir Putin. Washington has watched Russian revanchism impotently. The opportunity to cut Putin down to size was lost in Syria, to the great and tragic cost of the Syrian people.

Allied with this opportunity comes the realization in the White House that, as the second half of its second term approaches, this is an administration with severe reputational damage to fix. Obama’s single greatest achievement thus far is that he won the presidency, twice. A century from now, history may note him simply as his country’s first black president. To see off Putin in Crimea now could alter the entire course of Russia’s relations with its European neighbors. The crack of the sanctions whip could have the same effect on Russia’s billionaire power-broking oligarchs as it did on the backers of Viktor Yanukovich Ukrainian presidency. When they abandoned his regime, whose corruption had enriched them, Yanukovich was finished.

The Russian economy already faces stormy seas. Targeted US sanctions, even if honored in the breach by Beijing, could have serious repercussions for Putin and his Russian ironman leadership. Ordinary Russians back their macho president because they were exploited every bit as ruthlessly by post-Soviet capitalists, as they were by the communist system. Concerns over shrinking democracy and press and media freedom are less important than rediscovered national pride and prosperity. But if economic sanctions bite as severely as they could, an Iranian-style collapse in living standards could cost Putin massive levels of support. Additionally, the renewed triumph of US-led Western economic power, would bruise nationalist pride. Since the collapse of communism, Russians have had enough in terms of humiliation.

Therefore Washington’s calculation is that this is a showdown it has to win. It is not however entirely clear that Putin appreciates the economic odds he faces. There is almost a sense that the Kremlin is not taking the dangers seriously. A senior minister was asked to confirm that the thousands of troops that were in the Crimea, in uniforms that bore no insignia at all, were in fact Russian. He replied that they were all local militia. Then why were they all wearing the same uniforms? Anyone could go and buy such military dress from government surplus stores anywhere, he replied. However, as the UK’s Guardian newspaper pointed out on Thursday, the Russian politician did not seek to explain how the “local militia” had also managed to acquire the same weaponry and even the same Russian army-plated military vehicles.

Putin may have miscalculated in one important respect. He has seen Western public opinion pressure governments to intervene in a series of crises. With the exception of Libya, where NATO’s intervention has launched two years of post-revolutionary chaos, those interventions have amounted to nothing more than tough talk. Obama’s pathetic poison gas failure in Syria is the most regrettable of these fiascos. If Putin is assuming US threats over Crimea are a further bluff, he is almost certainly wrong. A sanctions war — the Russians are bound to launch their own revenge measures — is the one conflict that Obama and the Europeans can expect to win. Putin’s only other strategy is overwhelming force. This would be the insane option. Its short-term success would be destroyed by the long-term damage to Russian prosperity and stability. Could Putin really be that rash?