In her excellent book on the events and social movements leading up to the First World War, The War that Ended Peace, the noted historian Margaret Macmillan quoted Britain's soon-to-be King Edward's observation concerning the Kaiser's attitude to war and militarism: "William the Great needs to learn that he is living at the end of the nineteenth century and not in the Middle Ages." Just over one hundred years later, after two World Wars, and countless conflicts, Secretary of State John Kerry said of Vladimir Putin, "you just don't in the twenty-first century behave in nineteenth century fashion by invading another country." Some people never learn.

The Obama administration remains blind to the realities of international politics. Like the pacifists who lobbied for disarmament and international arbitration prior to what was called the Great War—until it was superseded by an even more devastating conflict—the administration is living in a dream world that presupposes that its own vision of rationality is universally shared. Germany and Britain were each other's largest trading partners prior to the War, economically intertwined the way the US and China are today. Businessmen—they were called Capitalists—argued strenuously that war would cause an economic disaster for all who became involved. They were right, but it did not stop the war.

The administration, and its increasingly feeble Western European allies, needs to recognize that nationalism is alive and well in the rest of the world, indeed in Europe itself. It is rampant in Poland, in Georgia, Armenia, Azerbaijan, Turkey, and the Balkans, as well as in Israel, Iran, much of the Arab Middle East, Pakistan and East Asia. In some countries, such as Poland, it has taken on a milder form, but it is still there. In Russia it is virulent, as Putin's skyrocketing popularity has demonstrated.

Only American power can put a brake on the more irrational designs of hyper-nationalist leaders, as it has since 1945. Beijing, for example, has benefited for decades from American presence in the Western Pacific, where the American alliance with Japan, and its nuclear guarantee, has dissuaded that country from pursuing its own nuclear weapons program. Similarly, American presence in Europe underpinned the postwar reconciliation of Germany with its neighbors and prevented the Soviet threat from justifying a massive Western European return to pre-World War I militarism.

The Obama administration, with its hectoring tone, its red lines, its fanciful support for weapons reductions, its determination to reduce defense spending, and its singular desire to avoid any foreign entanglements that might complicate its domestic agenda, is signaling to the world that it is increasingly becoming the paper tiger that Chairman Mao often called it. Putin has now twice taken advantage of what he, and virtually all American allies, adversaries and others around the world, perceive as an American withdrawal from the international security stage. Georgia and Crimea have paid the price of American war weariness. The toothless pivot to Asia, the withdrawals from Europe and the downsizing in the Middle East—the pious banalities of the Quadrennial Defense Review notwithstanding, have convinced the Russian autocrat that he can bully his neighbors without repercussions.

The current sanctions regime imposed on Russia is a joke. Indeed, even if it is toughened, it will take years before it has the kind of effect on Russia that is has, at last, had on Iran (only to be eased as Western Europe in particular desperately seeks a deal on Tehran's nuclear program). Equally vapid are NATO's military responses. Previously scheduled exercises, and the deployment of a few aircraft to NATO's eastern members, will do nothing to dissuade Putin from whatever else he has in mind for Ukraine or other former republics of the Soviet Union he so venerates.

There are things that the United States, as the world's leading military and economic power can do to convince Putin to go no further than the Crimea. First, it must lead NATO in stationing troops in the Baltic states and Poland. If Putin doesn't like it, he can lump it. Second, the administration should immediately increase the current Fiscal Year 2014 defense budget through a budget amendment that, sidesteps the Budget Control Act and adds $25 billion to the operations and maintenance and procurement accounts. Third it should make clear to Moscow that any movement into eastern Ukraine will lead to NATO's immediate invitation to both Ukraine and Georgia to join the alliance. Finally, in addition to imposing financial sanctions on Russia, Washington should release American oil and gas for export to Europe, and immediately approve the Keystone pipeline from Canada. A Germany that is less reliant on Russian energy will stiffen its spine vis a vis Moscow. And as Germany goes, so will go the rest of NATO.

What the West should not do is target Putin himself, or his closest advisors. Backing him into a corner could lead to unwanted results. Predictions that the Russian economy will collapse fly in the face of similar predictions about the impact on the economies of Europe's major powers prior if they went to war. They did, and fought for nearly five years. Nazi Germany managed to fight on even when its people lived on ersatz foods. Putin may well choose to fight.

Putin needs to be given the opportunity to save face, in exchange for guaranteeing the territorial integrity of Ukraine. Such an arrangement is still possible. After all, the Soviet Union withdrew from Austria in 1955, and tolerated an independent Finland that was sensitive to the Kremlin's concerns. A "Finlandized" Crimea, perhaps with the kind of latitude that Kurdistan enjoys within Iraq, would give that peninsula's Russophones the autonomy they seek and the links to Moscow that so many of them desire. But targeting Putin personally and directly could lead to the very war the West seeks to avoid.

There is no way Putin will agree to any deal, however, if he perceives that Washington is spineless. That is currently how he sees it. The Obama administration may seek to wish away international crises. But wishes are just that, and nothing more. Washington needs to show its mettle, nothing less will do. And Putin will then back off once he sees what he has provoked, as all bullies do when confronted with overwhelming strength and the determination to use it.

Dov Zakheim served as the undersecretary of defense (comptroller) and chief financial officer for the U.S. Department of Defense from 2001–2004 and as the deputy undersecretary of defense (planning and resources) from 1985-1987. He also served as DoD's civilian coordinator for Afghan reconstruction from 2002–2004. He is a member of The National Interest's advisory council.