Vladimir Putin now knows that the West won’t fight for Ukraine. The past few weeks have shown that. All options are open to Moscow. Russian troops could march on Kiev or stay on the border destabilising Ukraine’s economy until its government gives way. If Putin wanted a fight, he would win — at least initially. No western military force will stop Russia from crossing the border.

The main question is what punishment the West would be able to inflict on Russia after an incursion. Would Nato members be able to agree on what approach to take? Tensions within the alliance have been exposed. Jake Sullivan, Joe Biden’s national security adviser, has complained to Congressional Democrats that Germany needs ‘constant coaxing’ on a sanctions-led response to Russian aggression.

Nato, set up to counter the Soviet Union at the start of the Cold War, is trying to deter Russia not through military force but through the threat of such sanctions. These would hurt far more than those imposed on Russia after the 2014 annexation of Crimea. Moscow would be cut off from the global financial system, and the Nord Stream 2 pipeline, built to bring Russian gas directly to Germany, would never be turned on. Such a response would be public and proportionate.

Putin’s retaliation would not be either of these things. He could launch cyber-attacks on western banks, carried out by independent Russian hackers, giving Moscow the ability to deny knowledge. He could also cause harm indirectly. Putin has already suspended the export of ammonium nitrate (Russia provides roughly two thirds of the world’s supply), which will hit fertiliser and food prices. It’s a reminder to western countries that he can make the domestic cost of living crises far worse. Biden was right to prepare his voters for the fact that imposing sanctions on Russia won’t be cost-free for America. European leaders should issue similar warnings. If sanctions are going to be sufficient to deter Putin, the West must be prepared to bear some pain for a considerable period of time.

Putin has always followed Lenin’s dictum about testing defences: ‘You probe with bayonets: if you find mush, you push. If you find steel, you withdraw.’ It’s clear now that the only thing that would guarantee a concerted western response is a full-on invasion of Ukraine. Anything less than this would expose further divisions over how best to deal with Moscow. One of those on the western side involved in dealing with the Ukraine crisis argues that Putin is turning against a full invasion because Moscow will ‘not want unity on the other side’.

Putin can benefit from the ‘crying wolf’ aspect to the crisis too. If he has built up forces and then not acted, he will make it harder for Nato to rally the West next time. If this month ends with no military action, a consensus will form that the threat was a bluff and that Washington and London overreacted. Many countries will be less inclined to take the warnings of invasion seriously the next time Russia gathers tens of thousands of troops on the border.

Meanwhile, Putin can keep up the provocation. The Duma this week called on him to recognise the two pro-Russian, self-declared republics of Donetsk and Luhansk in Ukraine’s Donbas region. He could do so, then send in Russian forces to ‘protect’ them. It’s unlikely there would be western unanimity about how to respond.

Putin may also claim that Russian speakers in Ukraine are coming under attack and that he needs to send in forces to defend them: he absurdly claimed this week that what is happening in the Donbas is ‘genocide’. A belief that Moscow has a right to defend Russian speakers wherever they may be has been a feature of Russia’s approach to international affairs since the 18th century. Putin likes to say that Russians and Ukrainians are ‘one people, a single whole’, all descendants of Ancient Rus — a people he would like to reunite if he could find a pretext for doing so.

The West’s use of intelligence during the crisis has been unusually public. London claimed that MI6 exposed Russia’s plans to put a puppet government in Kiev; US intelligence sources briefed at the weekend that Putin would invade on a Wednesday. The aim was to undermine Putin’s narrative, to stop him from claiming that he’s riding to the rescue of Ukraine’s Russian speakers, or from attempting so-called ‘false flag’ attacks.

Some Whitehall intelligence officials worry about the theatrics of this tactic. The consequences, they say, have not been thought through. And what happens when the much-hyped invasion doesn’t take place? What happens to the credibility of intelligence when it is made public to try to change the course of events? Those involved in the tactic admit to being driven by the urgency of the situation rather than a wider strategy. But they argue that the approach has succeeded in alerting allies to what the Russians are thinking: false flags are far less effective if people are looking out for them.

The western world waits to see what Putin is going to do next. He has already succeeded in demonstrating Russia’s relevance: just look at the slew of foreign leaders who have gone to Moscow in recent days to sit at the end of his long table.

Nor does he actually need to attack to hurt Ukraine. When the UK and the US advised expats to leave the country, they sent a message to the world that Ukraine isn’t safe, leading companies to evacuate their staff. Ukraine’s President, Volodymyr Zelensky, has begged business leaders to return. Ukraine’s exporters need insurance, but according to one analysis just three of the 60 political risk firms that normally insure Ukrainian businesses are now prepared to do so. Flights have been disrupted and Russia’s naval exercises are preventing basic trade.

If Putin repeats this kind of military build-up on the borders, he could cripple Ukraine economically and force the country to find accommodation with Moscow. Look at how Zelensky has begun to emphasise that joining Nato is a ‘dream’ rather than a near-term prospect. Olaf Scholz, Germany’s new Chancellor, was similarly clear that Ukrainian membership of Nato is ‘not on the agenda’.

And then there are the (always deniable) cyberattacks. This week, Ukraine’s two largest state banks were hit by hackers, affecting card payments and the like. Last month, hackers took down Ukrainian government websites. It’s another form of attrition, something that Putin could halt if Ukraine bent to his will.

If there is an escalation, and the West imposes severe sanctions, Russia’s hackers would intensify their efforts. But so would Britain, with its newly instituted National Cyber Force. It could do its best to shut down critical Russian systems, though it is harder for the West, bound by laws, to play dirty as China, Russia and North Korea do. No organised crime groups act as extensions of the British state.

Another option open to Putin is deniable Russian sabotage. In Norway, several undersea cables have been disrupted recently, apparently by deliberate human activity. It is hard to prove beyond reasonable doubt who carried out these attacks, but the cui bono? answer points in one direction. This poses a challenge to Nato: how does it respond to this kind of activity against a member state, especially if it cannot prove guilt?

It is tempting to view Putin as a Cold War throwback, but he is an alarmingly modern leader. Under him, Russia has become better than any other major country at using grey-zone tactics to discombobulate its opponents or blur the line between war and peace. He has shown how well he can create a sense of imminent danger. This won’t be the last drama on Ukraine’s border that Putin directs.