Russia's Foreign Minister Sergei Lavrov is right. In recent years, the G8 summits have made few concrete decisions. In fact, commentators have often talked of the death-knell ringing on the summit’s format because they view the G20, with emerging economies like China, Brazil and India, as more important.
Still, when Lavrov says it doesn't matter that Russia is no longer allowed to participate when the heads of the seven leading industrialized nations meet, few believe him. The Kremlin has to be concerned about no longer meeting with the other power-players. What’s decided at G8 summits may not be overly important, but being a member of this exclusive club certainly is.
Gorbachev, Yeltsin and Putin all wanted to have a place at the table, and they toiled long and hard to be equals among the super-rich. They wanted to be on the same level, so to speak. That's over now. And that hurts Russia's power-hungry leader, Putin. Diplomatically, Russia has been catapulted back to 1991 when CPSU Secretary-General Mikhail Gorbachev was allowed to pay a first visit to the G7 powers, which were meeting in London. And he was proud to be among them.
Vladimir Putin also hoped this summer to show how proud he was of his magnificently spruced up Black Sea resort town of Sochi. But he lost that opportunity. Is he concerned?
Putin is not going to change his plans for expansion radically, but he may just ease up and take a break. The Russian leadership can hardly be indifferent to the admirable unity shown by the remaining members of the club who have threatened further sanctions and rejected the Crimean annexation.
US President Barack Obama has made his commitment to Ukraine, Europe and NATO perfectly clear – he won’t budge an inch. And the remaining six are pleased: They view their unity as a diplomatic victory for the West, and a defeat - a downright slap in the face - for Putin.
How will the Russian leader respond? Will he now angrily stretch out a hand to scoop up the eastern part of Ukraine? Or will he try to organize a counter-summit - a coalition of the willing or something along those lines? The problem is that Russia currently doesn't have many allies. Even China appears to have distanced itself.
How much international isolation can Putin withstand? The diplomatic move by the G7 will not change Crimea’s annexation, but perhaps that signal can at least help prevent the crisis from spreading and creating a new division of Europe - and another Cold War. That now depends on Putin and the response from Russia's elite. Should the Russian army advance into Ukraine, the next level of escalation could be to force Russia out of the G20. Would Sergei Lavrov still remain calm and collected?
The business world is responding as anticipated. Investors are withdrawing their money from Russia. Many German companies see the trust built with Russian partners over decades crumbling away. There is no need for formal sanctions - the degradation process has already begun. That should give Putin something to think about. It's now up to the G7 to keep communication lines open and somehow bring Russia to the negotiating table to discuss Ukraine. The cancellation of the G8 summit should in no way end diplomacy.
A winner has already emerged, even if by coincidence. For the first time, it won't be a member country but the European Union in Brussels that will host the G7 summit. Europe is now on equal footing.