Two years ago yesterday, on March 21, 2014, only 5 days after the so called “referendum” on the status of Crimea, the Russian Ministry of Defense issued medals “For the Return of Crimea” to the soldiers who had participated in the storming and illegal annexation of the Ukrainian peninsula. Most Russians, thrilling at the lavish media coverage, saw the Crimean operation as an achievement rivaling Yuri Gagarin’s trip into outer space.

The West was completely blindsided by the annexation. Military analysts, who were well aware that Russian President Vladimir Putin had for years been setting aside large chunks of his budget surplus in order to modernize the military, nevertheless were shocked to see how well the spetsnaz performed. And political analysts, who clearly remembered Russia’s invasion of Georgia in 2008, were still utterly surprised at Putin’s willingness to tear off territory from a neighboring state in full disregard of international borders.

Intoxicated with the early and easy successes in Crimea, the rhetoric coming out of the Kremlin was maximalist. The term “Novorossiya”—referring to a historical territory encompassing lands from the Donbas to Moldova dating back to Russian imperial times—was freely bandied about by officials as Russia began to execute its hybrid invasion in eastern Ukraine. Meanwhile, European and American leaders came to accept the reality that Russia was a revisionist power, and slapped targeted sanctions on Russian various oligarchs, politicians, and businesses—first for the annexation of Crimea, and then for the war in eastern Ukraine.

Putin and his advisors clearly believed they were at the dawning of a new era of restored influence in Russia’s own neighborhood—and of increased sway in the world as a whole. Many in the West thought the mounting economic and human costs of Russia’s not-so-secret war, coupled with low oil prices, the sanctions, and international political pressure would hasten Putin’s demise.

So far, both parties appear to have miscalculated. Putin is not helming a rising power, but is rather managing its decline. Though not yet particularly threatened, he is in permanent crisis management mode, selling the Russian people a vision of a return to former national glory while trying to keep the country’s economy from completely unraveling on his watch. The West vexes him, but does not deter and contain him. This is a recipe for trouble ahead.

Two factors had convinced Putin that he had the upper hand in 2014.

For one, comparatively high oil prices put an additional $1.9 trillion into the federal budget from 1999 to 2014 (measured as a surplus from the 1999 price). This windfall had allowed Putin to shape the country to his liking: There was no opposition capable of challenging him (he successfully crushed the civil protest wave of 2011-2012 after taking back the presidency from Dmitry Medvedev); All the remaining oligarchs in the country had pledged their allegiance to him; He had full control of the media; And the secret services were stronger than ever. Even when oil prices began to fall, he was convinced that they would bounce back just like they had in 2008.¹

For another, he saw that Western resolve to stand by its principles and protect the existing security order in Europe was weak. Remembering the response to the Georgian campaign, Putin and his advisers were convinced that the West would not directly confront Russia as it meddled in Ukraine; the West would limit its actions expression of concern, and public condemnations, and efforts at reconciliation.

As far as his read of the West goes, Putin was not too far off. President Obama’s recently published candid remarks—to the effect that he saw Ukraine as de facto “Russia’s client state” and that “…Ukraine, which is a non-NATO country, is going to be vulnerable to military domination by Russia no matter what we do”—indicate that the leader of the most powerful nation in the Western alliance saw international norms, principles, and obligations extending not much beyond the existing NATO/EU borders. Furthermore, the initial set of sanctions, issued in response to the annexation of Crimea, were indeed mostly symbolic. Even when incontrovertible evidence began to mount that the Russian military was engaged in a large intervention in eastern Ukraine on behalf of its proxy separatist militias in April and May of 2014, the West held back.

It was only after the tragic downing of flight MH17 on July 17, 2014 that the West finally started to get serious about sanctions—to an extent that is reported to have surprised Putin personally. And the timing was terrible, as far as the Kremlin was concerned: it coincided with a calamitous decline in the global price for oil, which itself was hitting an already-wobbly Russian economy. GDP growth had already started to stagnate in 2010, going from 4.5 percent to 1.3 percent in 2013. Slack in oil markets grew GDP by only 0.6 percent in 2014, and led to a staggering 3.7 percent contraction in 2015. Western economic sanctions (and Russian counter-sanctions) have significantly damaged consumer goods markets, and have caused inflation to spike. Imports have been decimated, decreasing by almost three-fold between 2012 and 2016. Over the past year alone, retail revenue has dropped 15-20 percent, construction has tumbled 30 percent, and restaurants have seen as much half of their customers disappear. The number of Russians below the poverty line has recently exceeded 20 million.

All that said, Western leaders have little to celebrate. The sanctions by themselves, while legitimately inconveniencing those hyper-rich oligarchs closest to Putin, appear less and less likely to shake the tsar from his throne: the commanding heights of the Russian regime seem to be sticking together. And as noted above, the sanctions’ total efficacy relies on depressed global oil prices, and a pesky recession that increasingly looks like something far more permanent than a cyclical downturn.

The reality is that two years after the annexation, Putin is not a pariah and Russia is not meaningfully isolated. Russia’s incursion into Syria on behalf of Bashar al-Assad, a move that has created even larger refugee flows streaming into Europe, has clearly caused the West to deprioritize Kyiv’s concerns, at least for a while. (Ask a Western diplomat about this, and she will angrily protest that there is no linkage at all between trying to cooperate on Syria and the EU keeping up the pressure over Ukraine. Talk to European business leaders or populist politicians, however, and you will get a very different answer.)

If through inertia alone, Western sanctions will probably not be lifted any time soon—at least not the ones associated with the annexation of Crimea. No one is rushing to recognize Crimea as a legitimate part of Russia, nor is anyone about to stop reminding the Kremlin of its obligations under the Minsk II agreements. But though Putin may have been taken aback at the fact that the West managed to put up any resistance at all, he certainly has not been deterred from risky behavior—and trying to keep people distracted from a deteriorating economic picture at home almost cries out for risky behavior abroad.

Putin’s approval rating had been steadily dropping since August 2008 (88 percent right after the Russian-Georgian War), and had by February 2014 reached its lowest point since his elevation to the Presidency in 2000 (just above 60 percent). The nationwide euphoria that took a hold of the country due to the Crimean gambit brought him back to 86 percent, and it had not dipped below 82 percent through February 2016—with new data suggesting it might be lower now, though it’s not yet clear yet. Indeed, Putin’s notable success in preserving the Assad regime in Syria has not translated into GDP growth, nor will his adventure boost global oil prices. But the Syrian campaign was supported by a majority of Russians, and it has had a not insignificant effect on maintaining his high approval ratings even as the economy has continued to sputter.

Most analysts agree that if Putin doesn’t leave the office “feet-first”, he will stay in power through the end of his fourth term. Any orderly transition of power now would be too disruptive—and probably too dangerous for all those involved in currently running the country. While it would be foolish to bet that oil prices stay quite this low through 2024, it would also be a mistake to think that Putin will be able to bring back the heady growth of his first two terms in office. The next eight years, therefore, will probably be peppered with various showdowns with the West. America’s next president, in particular, should probably prepare for another challenge to come up “out of nowhere”, probably early in his or her term, just like Putin’s surprise announcement of Russia’s “departure from Syria”.