Before invading Georgia, Prime Minister Putin of Russia surely weighed the consequences. He likely assumed — correctly — that no country’s military would intervene on behalf of Georgia. He likely assumed — correctly — that no country would take meaningful economic steps to punish Russia. Until economic retaliation is a credible threat, Mr. Putin will not stop short of his military objectives.

Mr. Putin assumes that international banks will continue to issue lines of credit to Russian companies and lend money to international firms seeking to invest in Russia. He assumes that Russian exports will continue to be welcome around the world, and that foreign firms will continue to do business in Russia. He no doubt assumes that Russian scholars and businessmen will be free to continue visiting anywhere in the world they please.

In practically every assumption, with respect to the economic consequences of invading Georgia, Mr. Putin shares the expectations of businesses and banks around the world: Russia can intimidate its neighbors, whose greatest threat is to offer liberty, and the rest of world will do nothing.

Of course, relative to a few weeks ago, businesses in Russia and its many neighbors now have increased risk factors. Insurance rates no doubt have gone up, as have risks associated with business investments. Investors in countries engaged in actual or threatened warfare experience the rewards and penalties of greater risk, but in the case of Russia those penalties are not imposed by other governments.

Diplomats from around the world, including America, have attempted to mediate a return to previous conditions in Georgia. Russia, with its dominant military position, will not desist until either (1) it reaches its objectives; (2) it faces a credible threat, or (3) it succumbs to moral suasion. None of these conditions has yet been met.

The credible threat to a Russian invasion of a neighboring country is not military. The people of Hungary, the former Czechoslovakia, Afghanistan, and many other countries know all too well that the world’s military powers are reluctant to confront Russia militarily on its own border.

Economic warfare may one day prove a credible threat to deter not only Russia but other rogue governments around the world. In the American arsenal, we need a range of weapons far more subtle and nimble than the limited military options we have. Punishing the economy of a state that breaches fundamental standards of decency is not easily done. But the mere threat that even one country is willing to take a moral stand with unpredictable consequences may cause rogue leaders with ill intents to pause and may give courage to other countries. American military intervention today is not a credible threat to Russia; American economic intervention might one day be.

Economic warfare often fails. North Korea, Cuba, and other countries have survived decades of economic sanctions. Terrorist groups have been targeted but rarely destroyed by our economic warfare alone. During the Cold War, we harmed ourselves by limiting international trade with the Soviet bloc, by denying investment opportunities to firms seeking business in those countries, by denying access to our financial institutions, and by limiting the movement of people. Yet the Soviet empire collapsed not from external economic pressure as much as from the internal corrosion caused by decades of communist rule compounded by pervasive corruption.

The consequences of government economic warfare are disproportionately suffered by businesses. Shops in Russia are filled with goods from around the world. American banks make loans in Russia to American firms that are executed by American law firms and audited by American accounting firms. Limitations on business with Russia would harm and cripple many American firms. Investors in those firms, and Mr. Putin as well, assume that no American government will take economic actions against Russia.

No one, least of all American businesses, believes that our government will effectively use economic warfare against other countries. Perhaps it is time to change that view and examine how we might use some small part of our economic power against rogue governments. We need to be much more clever about economic warfare than we have been in the past. Until we have a credible economic threat against Mr. Putin, he will see no reason to stop invading Georgia or elsewhere.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.