DONETSK, Ukraine—At Ten-Eleven restaurant in this separatist-held eastern city, customers can settle their bills in Russian rubles after washing down a meal with Russian beer that has bumped Ukrainian brews off the menu.

The owner said it is a practical, not political, choice made after Ukraine’s government in June tightened restrictions on goods entering areas controlled by Russian-backed militants. “We have to make a living,” said Boris Bit-Gevorgizov, 57 years old. “Ukraine is pushing us away.”

The preponderance of Russian currency and products in rebel-held areas is deepening separation from the rest of Ukraine and muddying the prospects for a European-brokered peace plan.

The February cease-fire has damped, but not ended, fighting that has cost more than 6,000 lives. It also was supposed to reintegrate the two self-proclaimed republics into Ukraine. But political progress has stalled amid disagreement over how much autonomy they would receive.

Meanwhile, Ukraine has gradually squeezed flows of money, people and goods in and out of those areas since last fall, saying it needs to prevent the spread of rebel fighters, weapons and potentially counterfeit currency.