On Monday, the Lugansk Electricity Union, which provides electricity in Lugansk province in Ukraine, announced that it would no longer supply rebel-held areas of the province with power. According to the Union’s director, Vladimir Gritsai, this follows the receipt of instructions from Ukraine’s Fuel and Energy Minister Igor Nasalik.

The decision is just the latest step in the Ukrainian government’s efforts to blockade the rebel Donetsk and Lugansk Peoples’ Republics (DPR & LPR). In March this year, the government confirmed that it would no longer purchase coal from the DPR and LPR. And last week, sources suggested that Ukraine might also stop buying coal from Russia, to prevent the Russians from exporting to Ukraine supplies which they had purchased from the DPR and LPR.

The strategy, in so far as there is one, appears to be to try to impoverish the rebel republics and undermine their leaderships’ legitimacy in the eyes of their people, hopefully thereby at some point persuading the people to abandon their rebellion. At the same time, the blockade imposes costs upon the Russian Federation, which might serve to persuade it to stop supporting the DPR and LPR.

If this is a conscious strategy rather than merely the product of domestic political pressures, most notably from the far right and the volunteer battalions, it isn’t very well thought out. For sure, the blockade is imposing costs on Russia, but it seems that those are costs which Russia is quite willing to bear. The Russian government announced today that if Ukraine did stop supplying electricity to Lugansk, it would step in to provide it instead. The effect of Ukraine’s action will thus not be to assist the re-integration of the DPR and LPR into Ukraine, but rather to accelerate the process of their separation from Ukraine and their integration with Russia. As Russian spokesman Dmitry Peskov put it, Ukraine’s action ‘is one more step on Ukraine’s path of tearing the territories away from itself.’

From the start of the crisis in Ukraine, the Russian government has shown a consistent preference for a solution which sees Donbass remain within Ukraine but with some form of autonomy. Russian leaders have repeatedly made it clear that this is only possible if the Ukrainian government negotiates a settlement directly with the rebels. Russian policy has in part been oriented towards coercing Ukraine into accepting this reality. This policy has, however, failed. Ukraine still refuses absolutely to speak to the DPR and LPR. This has placed Russia in an awkward position. It cannot abandon the rebels, both because that would be unacceptable to domestic public opinion and because it would mean losing whatever strategic leverage it still has over Ukraine. But supporting the DPR and LPR is expensive. The optimal policy thus involves supporting the republics, but keeping the costs low.

Because of this, it initially suited Russia to keep the rebels integrated as much as possible with Ukraine – if Ukraine could pay for pensions etc, and support the rebel economies by trading with them, Russia’s costs would be lower. The Ukrainian blockade has rendered this policy impractical. Russia has to step in to provide what the Ukrainians won’t. At the same time, it has become necessary to maximize the rebels’ own sources of income. This in turn has meant that it has become necessary to further sever economic ties with Ukraine by placing major industrial enterprises under so-called ‘external management’, stripping the Ukrainian owners’ of their management rights and forcing the enterprises to pay taxes to the DPR and LPR.

In this way, bit by bit, as a result of the Ukrainian blockade and the Russian and rebel responses to it, the DPR and LPR are turning into de-facto independent states without any substantial economic ties to Ukraine. The longer this goes on and the deeper the process the goes, the harder it will be to reverse it. As the process continues, a side effect will be that the state institutions of the DPR and LPR will become stronger. In an interview yesterday with Izvestiia, DPR leader Aleksandr Zakharchenko commented that,

There are natural problems in constructing a new state. In first place is the problem of personnel. And it’s not just a matter of many specialists having left the republic when combat operations were going on. Turning a region of a unitary state into an independent country requires a large number of new specialists. We are doing everything we can to prepare new personnel. We are opening educational institutions, and new faculties within existing institutions in those subjects which are needed in the management of the state and the national economy. And so we are resolving this problem, albeit not quickly.

As time goes on, Ukraine and everybody else will find that they are no longer dealing with a rebellion but with fully fledged state formations. This will inevitably change the political dynamic as the new states will demand recognition as such, if not de jure then at least de facto. As Zakharchenko told Izvestiia, when asked if he would accept reintegration in Ukraine on the basis of federalization:

That train has already left the station. We were willing to speak to Kiev about federalization in spring 2014 until Kiev began to shoot us from tanks, guns, and combat aircraft. Now we are willing to engage in dialogue with Ukraine only on the basis of equal rights, as an independent state. … Perhaps, as an independent state we will be willing to negotiate with Ukraine about co-existence on a confederal basis. But this will only be possible once not only those in power in Kiev, but the entire ruling elite, is changed.

In January 2015, I remarked that:

Kiev is now pinning its hopes on turning its own territory into a zone of good government and prosperity while blockading the DPR and LPR so that they face economic and social collapse, thereby in the long term convincing the population of Eastern Ukraine to rejoin the rest of the country. Should the leaders of the DPR and LPR succeed in consolidating their republics, this strategy will fail.

Two years later, we can conclude that this strategy has indeed failed. Indeed, it has been thoroughly counterproductive, as the policy of blockade has actually encouraged and enabled the process of state consolidation. It has also given the rebels’ Russian backers no option other than to promote total independence. Things are now so far gone that there is almost certainly no way back. The DPR and LPR will complete the process of state formation and their economies will become fully integrated with that of the Russian Federation, while both entities will remain officially unrecognized. This isn’t what anybody wants, and it is a thoroughly unsatisfactory outcome. But I no longer see how it can be avoided. Rather than pursuing futile dreams of re-integration with Ukraine via the Minsk process, it would make more sense, therefore, for all concerned to recognize this reality (even if only in private) and to focus instead on how to bring about a lasting ceasefire, so that both Ukraine and its lost territories can go their separate ways in peace.