As I outlined yesterday, Putin will treat Ukraine the same way Russia and its partners treated the Polish-Lithuanian Commonwealth in the eighteenth century, although this time the process will be a hell of a lot faster. The principle is "give a dog a bad name and hang him". Russian provocateurs will try to create as much anarchy in Ukraine as possible. Russia will then step in to stabilise the "failed state", claiming the conflict on its doorstep is a danger to its own security as well as complaining the rights of ethnic Russians are being violated (Catherine the Great used concern about Eastern Orthodox believers as a pretext to intervene in Poland).
Putin is a blatant liar and he doesn't feel bad about it. Putin started as a spy and he's never stopped thinking like one. In spying, deceiving others is a patriotic duty not a sin. There is nothing wrong in lying to foreigners to benefit Russia. Putin has been a liar from his first days in office, from the apartment block bombings of 1999 to the claim he would not annex Ukraine on 4 March this year. As Edward Lucas has said, the real mystery is why Westerners have consistently failed to get this. Humouring Putin over the Litvinenko murder was abject cowardice and the debate in the Western media over whether Medvedev would serve a second term as president was always laughable. Diplomacy and naivety are not synonyms. Western foreign policy needs to get real.
Putin is more Mussolini than Hitler. Yes, Putin has copied some of Hitler's moves, but so did Il Duce. Badly. I've already noted the similarities between Putins PR and Mussolinis propaganda, although Putin lacks any Latin flamboyance (he prefers to pose topless by an icy lake rather than cavorting on a sunny Adriatic beach). Huge levels of corruption? Check. Mafia permeates society? Check. Failing battle for births? Check. Militarism without an adequate military? Check. Like Fascist Italy, Putinist Russia is a self-pitying bully with a massive inferiority complex, whining that other European powers and the USA have failed to show it proper respect and compensating with displays of macho aggression. Unfortunately, in hindsight it's amazing how seriously Britain and France treated Mussolini in the 1930s. Although they protested the invasion of Ethiopia, they were too timid to impose real sanctions on Italy (oil embargos, blocking the Suez Canal to Italian troop ships) for fear of pushing it into the arms of Nazi Germany. World War II quickly exposed Mussolini's pretentions and Cold War II might do the same for Putin.
Cold War II is different from Cold War I. Russia now has no major allies. Putin tried to reach out to China and India in his speech but I doubt they'll want to damage their relations with the USA and the EU to back his opportunism.
Putin probably believes Cold War I never really ended. The 1990s were simply a period of Russian tactical withdrawal forced on it by temporary weakness. No territorial or other treaties signed with its neighbours during this time are necessarily binding because Russia was effectively "acting under duress". The independence of Ukraine is just a two-decade anomaly in the long history of the Russian Empire. This is reflected in the way the independence of the Baltic states between the world wars is portrayed in Russian schoolbooks.
On economic sanctions, the question is: will Russia jump rather than wait to be pushed? I can imagine Putin seizing the initiative by declaring Russia will leave of its own accord before the G8 meets next week.
The cause of nuclear disarmament is pretty much dead. Iran will look at what happened to Ukraine after it gave up its nukes in the 1990s and think, "No thanks, we re better off getting tooled up."