Who holds the cards?

As the diplomatic aftermath of the Georgian conflict goes into its second week, everyone is asking what is the West’s next move. What I am more concerned with, and what I feel is a much more interesting question is who holds the cards?

Europe, NATO and the United States certainly have far more soft power at their disposal, but given the economic ties that bind Europe and Russia and Russia’s overt disinterest tight relations with the West, what Western leaders actually do?

It is all but certain that the E.U. will not sanction Russia economically, and NATO, when threatening cutting back NATO-Russian cooperation, Medvedev threatened in return to cut all ties to NATO.  Clearly that threat didn’t carry much weight.

What that leaves is unilateral sanctions, but it appears that such actions would be unpopular in nearly all individual Western governments. While the some former Soviet countries have urged strong measures of protest, the European and American consensus has been to quietly protest while maintaining current relations where they are.

What few possible punishments remain would likely hurt the punisher’s as much as the punishee. For all of NATO’s tough talk about cooperation, they have appeared genuinely worried about losing the right to transport cargo through Russian territory, as per an agreement reached with Putin in 2001.

And any economic sanctions against Russia would involve an increase in European oil prices as they depend on Russia for about a third of their oil needs. Such an action would in severely hurt Russia, however, as it gets 60 percent of its oil revenue from Europe.

Basically no Western leaders want instability in the market or worse relations with Russia, so it looks like Georgia’s got muck with all the other players looking for ways out of the hand. There is still a pot in the middle of the table and it remains unclear who will take the geo-political win this round.