Germany’s Chancellor Angela Merkel, rarely one to engage in flights of fancy, finished a telephone conversation with Russian President Vladimir Putin about the crisis in Ukraine, and then, turning to several of her aides, she said that “she was not sure he was in touch with reality.” The Russian leader, she added, seemed to be “in another world.”

And therein lies a possible source of dangerous misunderstanding, or no understanding, between the leader of Russia, on the one hand, and those of the western nations, including the United States, on the other. Just what does Putin have in mind? This is the central question.

Having gobbled up Crimea, is he now planning to invade the generally pro-Russian eastern half of Ukraine, and split the country in two? Has he indeed lost “touch with reality”? Or, more likely, has he now concluded, pursuing his own cold logic, that he can recapture a large portion of Russia’s former imperial glory by moving aggressively against Ukraine—and doing so with relative impunity? Who, or what, is going to stop him?

Putin is not mad, and he is not in “another world.” He is very much in his own world, which is for him a very realistic world of a new, frothy, determined Russian nationalism. Indeed, he is master of this world.

Now that he has gambled—and won—on a successful, terror-free Olympics, creating a global image of a slick and modern Russia and inspiring ordinary Russians to be proud of their country once again (and polls show they are), he figured it was time to take on the chronic, nagging problem of Ukraine: put simply, whither Ukraine?—east or west?

That question may haunt politicians and pundits in the west, but it does not trouble Putin. He knows the answer: for hundreds of years, Ukraine was part of the Tsarist and Stalinist empires, and it will remain in Russia’s sphere of influence. That is his reading of history, and that is his policy. When it seemed last November as though Ukraine might slip out of Russia’s tight economic and political embrace, and accept a loose form of membership in the European Union, Putin acted swiftly to smash this possibility. He offered then President Yanukovich a $15 billion loan, plus a cut in gas prices, to tie Ukraine to the east, to Russia, thus effectively squashing the illusion of many Ukrainians that they were on the edge of genuine independence through formal association with the west. Putin wanted no part of that.

In despair, Ukrainians organized widespread demonstrations in central Kiev. Anger deepened, as casualties mounted. Finally, protest leaders met with Yanukovich, a Russian emissary appointed by Putin, and the foreign ministers of Poland, Germany and France. They all agreed that Yanukovich would remain in power until December, when new elections would be held under international inspection.

Within 48 hours, the deal collapsed, Yanukovich fled, and the Ukrainian parliament appointed a new and inexperienced government, which was greeted with guarded optimism in the west and obvious disapproval in Moscow. Over the next few days, top Russian officials, fearing they were losing their grip over Ukraine, began to blast the new Ukrainian leaders as “ultranationalists” and even “fascists.” Prime Minister Medvedev described conditions in Kiev as “lawless” and “extremely unstable.” It will end, he predicted, “in a new revolution…and bloodshed.” It seemed as if Medvedev was seeding the ground for a Russian military intervention.

Last weekend, the Russians acted with uncharacteristic precision, suggesting lots of advance planning. They took control of Crimea, a strategic appendage hanging precariously from Ukraine into the Black Sea, where Russia has maintained a major naval base for many years. And, in addition, the Russians seemed to have their eye on the eastern half of Ukraine, where pro- and anti-Russian protesters were in frequent and bloody combat. The Kremlin, in a special statement, said that “any further spread of violence to eastern Ukraine and Crimea” would give Russia “the right to protect its interests and the Russian-speaking population of those regions.”

Though stridently nationalistic and proud of the occasionally restless Russian masses, Putin is also a Russian leader fearful of popular unrest. When tens of thousands of Russians objected to his election a few years ago, he let them demonstrate until the demonstrations became too blatantly anti-him, and then he stopped them. Putin hated the Chechen uprising and crushed it. He distrusts the rising Islamist rattling in nearby Dagestan, and aggressive Russian action there is considered likely, and soon. And, obviously, Putin is prepared to use additional military force, if necessary, to keep Ukraine in his bailiwick.

What can the West do? It can condemn Russia for “blatant aggression.” Its leaders can threaten to boycott the G-8 meeting scheduled for June in Sochi, of all places; it can even threaten to kick Russia out of the G-8. It can impose a number of business sanctions on Russia. It may even produce an economic package to help Ukraine, but big enough? With strict conditions? And while this collective western response to his moves against Ukraine may all end up hurting Russia economically, it will not change Putin’s mind about his controversial war-like policy in Ukraine.

Years ago, when Russia was run by a weaker, older leader, namely Leonid Brezhnev, and Russia sent the Red Army into Afghanistan, ostensibly to save a communist government in trouble, the West wailed and President Carter decided to boycott the Moscow Olympics. East-West relations suffered, no doubt, but Brezhnev did not change his reckless policy. He did what he thought he had to do to protect Russian interests and to project Russian power, just as Putin is doing right now.

Unless the West, led by the United States, is prepared to use military power to stop Russian aggression, and that is not in the cards for very good reasons, Ukraine will again be swallowed up in the Russian orbit. Let us then hope that this sad result does not trigger a mindless political exchange between Republicans and Democrats during our November elections this year.