They're already using the Russian currency. They may soon be issued Russian passports. And in a couple of months, they plan to vote in a stage-managed referendum to formally join Russia.
It sure is beginning to look a lot like an annexation in Donbas. Or at least a well-orchestrated bluff.
Separatist officials in the self-styled Luhansk People's Republic this week formally made the Russian ruble their main currency.
The ruble, of course, has long been in circulation in the breakaway eastern Ukrainian enclave. But effective September 1, it will be the official monetary unit for taxes, the budget, wages, pensions, and other social benefits.
The goal, separatist officials say, is to bring the territory fully into the ruble zone and eliminate the hryvnya.
The move followed announcements that separatist-held areas of Donetsk and Luhansk oblasts will hold a referendum on uniting with Russia in late October or early November.
And this all comes amid persistent press reports claiming that the Kremlin is mulling the option of issuing Russian passports to residents of the so-called Donetsk and Luhansk people's republics.
We've of course seen this movie before -- in Transdniester, in South Ossetia, and in Abkhazia. But if in those cases, forcing a frozen conflict and creating a Russian protectorate was part of an offensive strategy meant to exert pressure on Moldova and Georgia, respectively.
But in eastern Ukraine, they are a sign that Moscow is losing the diplomatic and political tug-of-war that is the Donbas endgame -- and losing it badly.
And that is because Russia's goal in eastern Ukraine -- at least in the small chunk of territory it now controls - has never been annexation or the establishment of a de facto protectorate.
Moscow doesn't want the separatist territories separated from the rest of Ukraine, but integrated into it. The Kremlin wants Kyiv to carry the burden of reconstructing the region, and it wants Moscow's proxies to act as a fifth column to disrupt Kyiv's westward drive.
But the authorities in Kyiv aren't letting this happen.
"Ukraine's position is that it will not play according to the Kremlin's script in Donbas," Vladimir Gorbulin, a former secretary of Ukraine's National Security Council, wrote in NZ recently. "The reintegration of Donbas into Ukraine in Russia's terms will not happen,"
MIsplaced Fury
Sure, Ukrainian nationalists are up in arms about proposed amendments to the constitution that will devolve power to the regions and stipulate that a vaguely defined special status will be granted to the separatist-held areas of Donetsk and Luhansk.
Those changes, part of the Minsk cease-fire agreement, passed their initial reading in parliament this week, sparking the worst violence Kyiv has seen since the Euromaidan revolution when far-right protesters hurled grenades at police, killing three.
But if you look closely at what is going on, it is clear that the nationalists' fury is misguided.
President Petro Poroshenko and his government are obviously slow-walking the process and have no intention of granting the separatist-held territories special status any time soon.
Kyiv is insisting that the pro-Moscow rebels disarm, Russia withdraw its troops from Donbas, and that separatist-controlled areas of the border be returned to Ukraine's control before there can be any discussion about the territories' status.
Poroshenko says the decentralization amendments won't even come up for a final vote until the end of the year.
"Whether or not the Kremlin removes its troops, equipment and proxies from the Donbas or not -- and one has to suspect not -- the final decentralization vote does not seem likely to occur anytime before Easter 2016," political analyst and blogger Nikolai Holmov wrote recently.
Holmov adds that it's highly unlikely they will pass with the required super-majority as long as the clause about the rebel regions' status is included.
And what about that clause? It simply states that "The particulars of local government in certain districts of the Donetsk and Luhansk regions are to be determined by a special law."
In other words, even if the amendments pass, the status of these territories won't be determined until an entirely new law passes.
This is clearly going to take a while -- which is the point.
The Poroshenko government is being careful to tick all the boxes on the Minsk accords, while at the same time running the clock out until the end of the year, when Moscow is obliged to fulfil its end -- returning the border to Ukraine's control.
Unpalatable Options
All of this puts Russia in a very tough spot.
The Kremlin had been heavily lobbying the West to pressure Ukraine to grant the separatist areas autonomy before it ceded the border, but these efforts appear to have failed.
This became apparent, according to political analyst Taras Chornovil, following Poroshenko's meeting with German Chancellor Angela Merkel and French President Francois Hollande in Berlin on August 24.
"There was a breakthrough moment in Berlin," Chornovil told Nezavisimaya Gazeta. "Germany and France for the first time admitted openly that they support the Ukrainian side in its interpretation of the Minsk agreements."
Moscow can't force Ukraine to take the rebel-held territories back on its terms. And this leaves it with three unpalatable options: restart the war, annex the territories, or freeze the conflict and turn them into a protectorate.
The moves to formally introduce the ruble in the separatist regions, the threats to hold a referendum on joining Russia, and the noise about issuing Russian passports are a last-ditch effort to pressure Kyiv. And Kyiv isn't budging.
Which leaves Moscow stuck taking its least worst option: call it a soft annexation.
And this removes the last bit of leverage Russia has over Kyiv.
"Ukraine will never now be a gray neutral territory between East and West," Ukrainian political analyst Serhiy Taran told Nezavisimaya Gazeta. "Either we won't emerge alive from this hell or else we will emerge very strong. I am convinced it will be the latter, if only because this is what everyone except Russia wants."
