Great detailed analysis.

However you assume Western leaders are rational actors, but they clearly are not.

They misunderstood and underestimated Russia and ignored its clearly stated redlines regarding NATO expansion while weakening NATO's actual military capabilities to the point where Russia is far more powerful than NATO and can now do WTF it wants without any real fear of conventional NATO military opposition.

Confronted with this harsh reality and cognitive dissonance between their imagined power and reality on the ground they are going beserk with self destructive sanctions that hurt "The West" much more than they hurt Russia.