For months, the various negotiations formats on conflict management in Ukraine appeared deadlocked. But suddenly, in mid-January 2016, signs of a breakthrough in the making have multiplied—bringing both hopes and concerns to all the parties involved. The most meaningful of these signs was United States President Barack Obama’s telephone call to Russian President Vladimir Putin last Wednesday (January 13), in which Ukraine was the starting topic of the “open and business-like conversation” (Rbc.ru, January 13). The follow-up came on Friday, in the meeting between Assistant US Secretary of State Victoria Nuland and Putin’s aide Vladislav Surkov, in a cozy presidential residence in the Kaliningrad region (Kommersant, January 15). Surkov described the six-hour-long meeting as a “brainstorm.” And while his official status is low and the list of his rivals in the Kremlin is quite long, Surkov is indeed a person who can invent complex compromises and then sell them to his boss.

Putin particularly wants to be able to negotiate the fate of Ukraine directly with Washington. Regardless of any concessions the Kremlin might be forced to make as a result of these talks, such a bilateral format would serve to uplift Russia’s international status—even if, in a recent interview for the German tabloid Bild, Putin denied Russian ambitions to regain the rank of a “superpower” (Moskovsky Komsomolets, January 12). Moscow certainly keeps the conversations with Berlin and Paris going but expects them only to add varnish to the deal agreed with Washington. And besides, the Kremlin assumes that Europe is so preoccupied with its domestic disorder that it has little time for Ukraine (Gazeta.ru, January 14).

Vladimir Putin knows that Ukraine’s President Petro Poroshenko is unpopular and besieged by an opposition angry about Russian intrigues. Therefore, Putin has appointed his long-time loyal subordinate Boris Gryzlov as Russia’s representative in the Contact Group for Ukraine and sent him with a message to President Poroshenko primarily in order to put the Ukrainian leader in a tight political corner (Nezavisimaya Gazeta, January 15). In so doing, the Russian head of state exploits the Contract Group negotiating channel to present Ukraine as mired in discord and decline (Polit.ru, January 16).

The need to score a few tactical points comes from the inescapable domestic imperative for Russia to accept the failure of the “hybrid war” against Ukraine and to relinquish control over the occupied enclave in the Donetsk and Luhansk regions. Putin needs to make this deal fast, while Obama continues to consider him a serious stake-holder in the Syrian war and keeps open the option of lifting sanctions against Russia (Rbc.ru, January 16). The fate of the puppet rebel regimes in eastern Ukraine’s Donbas region apparently matter little to the Kremlin. The “governments” of the Donetsk and Luhansk “people’s republics” are not invited to or even informed about the closed-door negotiations; they are only used for breaking the ceasefire in order to produce extra urgency in striking a deal (Rosbalt, January 16). Abandoning the failed project of “Novorossiya,” the Russian leadership has to pretend a success of sorts. So the looming withdrawal is pre-emptively eclipsed by bluffs, like Defense Minister Sergei Shoigu’s promise to deploy three new divisions in order to counter the threats allegedly coming from the West (Ezhednevny Zhurnal, January 13).

A year ago, in the heat of the “victorious” battle over Debaltseve, Russian concessions were out of the question. But now, the disastrous degradation of its economy has compelled Russia to return to the negotiating table. Professional discussions at the Gaidar Forum in Moscow last week painted the picture of a failure of state control and an unchecked downward trend, even if most liberal economists were denied the chance to speak (Novaya Gazeta, January 14). Prime Minister Dmitry Medvedev tried to shift the blame on the global volatility and the hostile actions of Western partners. But it was German Gref, the head of Sberbank, who produced the strongest resonance with the acknowledgement that the oil age was over; moreover, he concluded that Russia was a loser in the competition and a “downshifter state” (Newsru.com, January 15). The only positive message from the government ministers was that no major mistakes were made since the arrival of the recession in the late 2014—but that was primarily because no coherent anti-crisis policy was developed (Moscow Echo, January 15).

The Kremlin expects its hard-given concessions on eastern Ukraine to be reciprocated by the West with a cancelation of the sanctions regime. However, it is far from certain that a relaxation of sectoral sanctions would rescue the investment-starved Russian economy. The exploration and development of “green” oil and gas fields in Eastern Siberia and the Arctic is hampered not only by the lack of access to modern technologies but also by the sustained decline of prices, which is certain to curtail the inflow of petro-revenues for years to come (Slon.ru, January 15). Personal sanctions that prevent many Russian officials, including Surkov and Gryzlov, from traveling to the West, are unlikely to be lifted, and they are reinforced by many recent investigations into the export of Russian corruption, including most recently the doping scandal in the International Association of Athletics Federations (IAAF), in which Putin is personally implicated (Kommersant, January 15). The Ukrainian leadership is pushing hard the case of the annexation of Crimea, which should not be forgotten even if Russia indeed withdraws its troops from the occupied territories in eastern Ukraine (Rbc.ru, January 14).

It is still unclear whether the Kremlin is indeed ready for a complete retreat from the war-devastated Donbas, which has no economic value for Russia and incurs heavy political, financial and military costs. The idea that makes such an abandonment agreeable is that Ukraine would have to bear the burden of rebuilding this war zone and would also receive a bouquet of complex political problems that could make its unruly politics ungovernable. The Russian propaganda machine has already switched off the “Novorossiya” theme and focuses on the Syrian/Turkish topics; however, these topics are increasingly overshadowed in Russians’ minds by the everyday experience of fast-rising poverty. Putin cannot dispel the specter of degradation and cannot show weakness by yielding to the Western pressure in Ukraine. His options for covering a retreat with yet another spectacular power projection enterprise in Russia’s multi-regional neighborhood are limited, and the benefits of unleashing a wave of repressions against domestic “enemies of the people” are dubious. He both needs a confrontation with the West and cannot afford it; but Russia’s neighbors should not count on him being paralyzed into inaction by these self-made traps.