The shooting down of Malaysia Airlines Flight MH17 over Ukraine will be a catalyst for Europe to step up their sanctions on Russia, said Neal Wolin, former deputy Treasury secretary in the Obama administration.
"What you see here in the last 24 hours is a real event that will galvanize … European leadership thinking on economic sanctions," Wolin said Friday on CNBC's "Squawk Box."
Ukraine and Russia are trading accusations after U.S. intelligence officials said a surface-to-air missile brought down the Malaysia Airlines jet carrying 298 people—over Ukraine's troubled eastern region Thursday. Officials say many world-renowned AIDS researchers and activists heading to an international AIDS conference in Australia were on board the plane that was en route from Amsterdam to Kuala Lumpur.
German Chancellor Angela Merkel said Friday it's too soon to make any decisions about imposing tougher sanctions on Russia—beyond the measures announced earlier this week, which failed to match those of the U.S., focusing instead on blocking loans to Russia. But she said Moscow must take responsibility for advancing a peace process in Ukraine.
"[Europeans] have economic interests which are very much intertwined with Russia, in particular on energy but also with the respect to trade," Wolin pointed out. "It's not likely they're going to go from zero to 60 all in one fell swoop. They're going to put them on increasingly and with more focus."
The broader U.S. measures unveiled Wednesday target two major Russian energy firms, a pair of powerful financial institutions, eight weapons companies and four individuals. But they stopped short of the most stringent actions the West has threatened, which would fully cut off key sectors of Russia's oil-dependent economy. U.S. officials said those steps were still possible if Russia fails to back off in Ukraine.
Wolin said it's a complicated balance for the U.S. and Europe when deciding whether additional penalties are warranted. "The goal here is to put pressure on [Russian President Vladimir] Putin to do the right thing. And to go too far too fast is likely to [disincentivize] him rather to [incentivize] him."
Ultimately, he predicted the Europeans will increasingly take a "leadership role on these sanctions."
—By CNBC's Matthew J. Belvedere. Reuters and AP contributed to this report.