KIEV, Ukraine — The sanctions against Russia and cuts in oil prices have finally worked. They are destroying the Russian economy.

The ruble has collapsed, losing 60 percent of its value since President Putin’s invasions of Ukraine began. But that's little solace for Ukraine, whose economy has collapsed even faster; the value of its currency, the hryvna, has lost 60 percent of its value since February.

The difference is that Russia had an enormous cash reserve of $550 billion — now said to be $400 billion or less — whereas Ukraine had a $40 billion deficit.

The decision of Western governments to assess sanctions on Russia after it annexed Crimea rather than give direct military aid to Ukraine meant that the eastern part of Ukraine would fall under Russian influence. It was understood by the West that economic sanctions would take eight months to have any significant effect.

Each cautious step of Putin's escalation went unopposed — and no spine was shown by the US or NATO — despite the 1994 Budapest Memorandum pledging US, England, and Russia to defend Ukraine's borders in exchange for giving up their nukes.

A firmer initial response might have backed Putin away from the Eastern Ukraine insurgency/invasion; he already had Crimea to digest. Ukraine could endure the loss of Crimea, but losing the industrial heart of Donbas likely will be fatal to its economy, no matter how much Western money is available to them.

Putin saw sanctions as a tool of the weak; they infuriated him far more than a US fleet in the Black Sea or squadrons of F-16’s sent to Ukraine.

Putin's response hurt Russians. He put an embargo on Western foods. He jailed friendly oligarchs to rob their companies, provoking capital flight of perhaps $200 billion. He continued sending massive Russian military aid and troops into the Donbas. He spit in the West's eye with recklessly aggressive military acts.

Imperial Crimea now needs billions in support for construction of a huge bridge across the Kerch Strait to link it to Russia and restoration of its devastated tourist industry.

Russia has lost $110 billion in oil revenue since June; oil and gas are 70 percent of Russia's exports. And gas prices take about six months to reflect oil prices, which means they are about to tumble, too. Sanctions prohibit refinancing the $700 billion of Russian bond debt.

Ukraine, roiled by six months of protest, turmoil, revolution, invasion and war, badly mishandled the initial subversion in the East. Sixty loyal commandos and 500 troops could have easily taken back all Separatist-occupied buildings in April and May.

With paltry finances and a crippled military, Ukrainian leaders didn't make the hard decisions of declaring martial law in the Donbas, mobilizing the people, instituting a draft, tripling military funding and cutting military exports to Russia.

The Hryvna is collapsing. Ukraine is facing $12 billion of foreign loans due in 2015, 40 percent bad bank loans, an 8 percent drop in GDP, company and country bonds devalued 33 to 50 percent, and under $9 billion of foreign reserves. Default is looming for Ukraine. The EU is showing no desire to offer the $15 billion Ukraine is begging for.

The Ukrainian people are suffering; product prices, even domestic, have doubled, but wages haven't budged, and utilities have skyrocketed because of IMF pressure to stop the hemorrhaging of Naftogaz, which loses $10 billion a year.

After all the pain and travail Ukraine has suffered in its year-long odyssey to escape the Soviet chains, it would be a tragedy for it to fail now, especially when the new 75 percent reformist Parliament and government are finally undertaking brutal reforms and confronting corruption.

Seeing his realm and power shrinking or collapsing, Putin is utterly unpredictable. He might react militarily and up the ante or back off. He is a small man of enormous self-regard, serious skills and a steely will — a retreat now would be an almost inconceivable humiliation.

That makes Vladimir Putin the most dangerous man in the world.

Michael Hammerschlag is a journalist whose political commentary and articles have been published in the US, Russia and Ukraine. He has spent nine years in Russia and Ukraine.

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