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Washington is weighing an array of economic weapons to penalize Russia for its intervention in Ukraine, from asset freezes to expelling Moscow from the G8 group of states. President Barack Obama wants Europe to join it to make sanctions tough enough to deter Russian President Vladimir Putin.
But will sanctions force a change of heart from Putin?
“That would imply that he has to have one in the first place. Really. President Putin does not have changings of heart," said James Naxey, head of Russia and Eurasia program at Chatham House.
"He has basically done a land grab. He has wrong-footed the West. He will not go any further, that is highly unlikely. But he's achieved what he's wanted to achieve. Having been wrong-footed himself, he has made the next move and he has put the European Union and the West in general in check. For a moment he is entirely satisfied."
Putin’s decision to have troops that participated in a military exercise near Ukraine's border to return to their garrisons should not be interpreted as a response to market turmoil in Russia or to threats of economic sanctions, experts say.
"He has basically done a land grab. He has wrong-footed the West."
They warn that Putin is exactly where he wants to be, and that Moscow will continue to reassert its influence.
Speaking at a press conference on Tuesday – his first appearance since the Sochi Olympics started – Putin said those countries considering sanctions should think first of the damage they may incur if such measures were imposed.
"All threats against Russia are counterproductive and harmful," he told journalists, adding that Russia was ready to host the G8 but if western leaders did not want to come "they don't need to".
He also dismissed the turmoil seen in Russian markets, describing it as a "tactical and temporary" move by investors.
Russia's economy grew 1.3 percent in 2013, down from 3.4 percent the previous year. A slowing economy comes on top of weakness in local assets in recent months amid a broader sell-off in emerging markets following the tapering of U.S. monetary stimulus.
Not backing down
Despite that, Christopher Granville, co-founder and managing director of the Russia team at Trusted Sources, told CNBC that Putin was not backing down from the situation.
"Russia's position, in my opinion, is that it will not tolerate a hostile, anti-Russian government being installed by unconstitutional means with the support of the Western powers in a country next to it which it has vital interests in," he said.
On Tuesday, Russia's MICEX Index surged nearly 5 percent on the open but stabilized to trade around 2.5 percent higher.
"Why is it that markets are rebounding today? I think because financial markets always respond to uncertainty. Where might this end? Might the Russian army go on from the Crimea to invade Eastern Ukraine or possibly the whole of Ukraine? And clearly the signals are now that is not the aim," Granville said.
The bourse had lost nearly $60 billion in market capitalization on Monday, ending the session down 11 percent- its worst fall in five years. On top of that, the country's central bank jacked up interest rates and spent as much as $12 billion to support a weak currency, Reuters reported.
Nicholas Spiro, managing director at Spiro Sovereign Strategy, said that the last thing to scare Putin was price action in financial markets.
"While Russian stocks may be rallying this morning, the bottom line is that Russia has effectively annexed the Crimea, legally part of Ukraine, and shows no sign whatsoever of retreating from the peninsula," he said. "It's unlikely that Russia will send its troops into the mainland, but Moscow has made it patently clear that it wants to reassert its influence over a country which it deems to be of vital strategic and cultural significance to Russia."
Secretary of State John Kerry arrived in Kiev Tuesday to unveil an array of economic and technical assistance for Ukraine.
A senior Obama administration official told NBC News that Kerry’s team was looking at "steps we can take with our international partners to further isolate Russia" in a bid to end the crisis.