How important is Russia's economy?

Russia is the eight biggest economy in the world, with GDP of more than $2 trillion. Its economy -- which is heavily reliant on commodities, particularly oil and gas -- is expected to grow only slightly in 2014 to around $2.4 trillion. Hopes it would be one of the decade's powerhouse economies have faded, with its GDP growing just 1.3% last year compared to 2012, one of the sharpest slowdowns in the emerging markets.

Russia boomed in the late 1990s and early 2000s as energy prices rose, then stumbled as demand for commodities contracted. But its energy supplies remain vitally important for the European Union, to which it supplies a third of its natural gas. Germany, the eurozone's biggest economy, imports around 40% of its gas from Russia.

But Russia's relationship with the West has fractured over the Ukraine crisis, and it now risks being economically isolated by the U.S. and the European Union. Visa bans have been introduced, and harsher sanctions threatened.

Is Europe going to do the same?

The EU is Russia's largest trading partner, and there are deep economic links between the two. Almost half of Russia's exports -- $292 billion worth -- end up in EU countries. Russia, in turn, is the third biggest trading partner for the EU, with $169 billion in imports.

The EU has stepped more cautiously than the U.S. on sanctions. On Thursday, the EU threatened to impose sanctions on Russia if the negotiations between Moscow and Kiev did not prove effective in dealing with the Ukraine crisis.

European Council President Herman Van Rompuy said negotiations needed to start in the next few days and "produce results." Without that, he said, the EU would look to additional measures such as travel bans, asset freezes, and cancellation of the EU and Russia summit.

Earlier, a document leaked from British government suggested the UK was happy to impose sanctions -- but only those that would not cause harm to the country's financial sector.

And while G8 members -- excluding Russia -- are threatening to abandon a Sochi summit planned for later this year, Germany has also pushed for more diplomacy.

Clark believes Russia could retaliate against any European sanctions, saying it would probably try and "pick-off some of the countries that have been most forceful in advocating tough measures against it -- especially Poland and the Baltic States." However, "it probably wouldn't retaliate against the EU as a whole or against Germany."

Meanwhile, the West has offered $16 billion in aid for Ukraine, helping the country prop up its ailing finances. Ukrainian leaders have said they will be $30 billion in the hole by the end of 2015. About half of that debt comes due in 2014.