A way out of the Ukraine crisis may now be faintly discernible. The round-table negotiations promoted by the Germans has the support of all the key governments. It is intended to produce a ceasefire, discussion of future Ukrainian constitutional arrangements, and the election of a new Ukrainian president on 25 May. There are still all sorts of ways it could go wrong: the east Ukrainian dissidents are not yet involved and will need to be; and polarisation continues, with both sides gradually losing control of their thuggish surrogates. But things now look marginally more hopeful than they have since the ill-fated Geneva agreement of a month ago.

The west has had to learn some hard lessons to get to where we are now.

It is generally accepted that the EU (in a mode splendidly described by one commentator as of "impotent megalomania") precipitated matters by blundering into the most sensitive part of Russia's backyard without seriously asking itself how it might react. This was not an isolated error but the culmination of 20 years of the west simply not taking Russia seriously, most notably with the Kosovo war and the expansion of Nato. When Russia did react in the (legally indefensible, but historically understandable) form of annexing Crimea and destabilising east Ukraine, the western view then swung 180 degrees to focusing on the need to "contain" a revanchist Russia intent on rebuilding the Soviet Union.

In the absence of any willingness among western publics to fight for the independence of Simferopol, the only weapon available was sanctions. These allowed western leaders to claim they were "doing something", but in fact cruelly exposed their unwillingness to take real economic pain on Ukraine's behalf. They have also become something of a badge of patriotic pride for those Russians targeted by them – of the six uses of sanctions by the west against the USSR/Russia since the second world war none have worked.

Happily, we now seem to be waking up to the reality that we are dealing not with a revanchist Russia, but with a coldly calculating one – a Russia that is neither patsy nor praying mantis. They don't want to fight a war or take on the economic burden of rebuilding eastern Ukraine, but they do have a minimal list of requirements – Ukrainian neutrality, more autonomy for Russian speakers – which have to be met before they will back off.

Should we concede these points? Ukraine is a big heterogeneous country where provincial autonomy makes sense, and in such a mess that Nato membership is certainly at least decades off. Nevertheless, I regularly hear two quite compelling arguments why we should not. First, if the Russians get what they want this time, they – and by extension others – will come back for more. We cannot let the annexation of Crimea go unpunished. Second, what business does Russia have telling Ukraine how it can govern itself anyway? The world has moved beyond the point where big states can tell small states what to do.

I am afraid my answer to these arguments has to be an uncomfortable one. Indeed, in a rules-based world aggressors would be punished and small states would not be pushed around by big ones. But the rules-based world we imagine we have been living in since 1991 was always an illusion, and is now a fading one. It was an illusion because the rules, as admirably set out in the UN charter, were in fact interpreted and enforced by an economically and militarily predominant west.

When the west saw need for an exception – Iraq, Kosovo, Israel – the rest privately grumbled but went along with it. And the illusion is now fading because, of course, western predominance is also fading. President Obama's trip to Asia two weeks ago saw a circle of allies diminishingly convinced by his assurances of support in their dealings with China. In Ukraine, perhaps the first real crisis of the new order, we are dealing with a newly confident Russia, and it is striking that the other "rising powers", which might have been expected to deplore an illegal annexation, have in fact stood carefully aloof.

Through the crisis the US has regularly charged Russia with behaving in a "19th-century way". This has provoked a leading Russian commentator to suggest that the time has indeed come for the world to relearn the diplomatic arts of that period. He was right. We are no longer in a world where the west can simply enforce its view. Great power politics is back. No doubt we could have a knockdown, drag-out showdown with Vladimir Putin about Ukraine's right to join Nato. But the result would be a split Ukraine, a lot of economic disruption, an even more aggrieved and destructive Russia, and a further enfeebled world order. The only winners would be the likes of China and Iran. As Henry Kissinger, the arch doer of deals with global pariahs, has noted, "We cannot abandon national security in pursuit of virtue".

The best outcome for Ukraine, and for us, would be an agreement with Russia to get the great powers out, as with Finland during the cold war, and give the country space to turn itself into an economic and political success, which would then be an example to Russia itself. And I am afraid we are going to have to brace ourselves for more such transactions in the future.