Interest in giving Ukraine's divided regions more control over their financial and political destiny is gaining traction in both Kiev and the Russian-speaking east, possibly deterring separatist movements and offering common ground between Moscow and Ukraine.

Regional leaders in the volatile east were loyal to former President Viktor Yanukovych – and dismissive of Kiev’s new central government. But in recent days they have said that greater fiscal and legal autonomy could appease those who want closer ties to Russia but are not necessarily keen to break off from Ukraine entirely.

“I’m not talking about separation. I mean decentralization of powers that would result in giving us control over budgets and resources, general prosecutors, and security services,” says Sergei Bogachov, the secretary of the Donetsk City Council and a member of Mr. Yanukovych’s Party of Regions political bloc. “Kiev needs to understand and support regional demands. This is a big country, and it can’t be ruled from the center as it is now.”

Mr. Bogachov is careful to note that decentralization was not the same as the federalization of Ukraine. “It would be more like what you have in the United States,” he says.

Decentralization in the cards

This week, Prime Minister Arseniy Yatsenyuk indicated that Kiev might be amenable to decentralization as a way to stem the tide of separatism threatening the country. The eastern cities of Kharkiv, Donetsk, and Luhansk have seen violent clashes between pro-Russia and pro-Ukraine demonstrators, and separatist sentiments have risen here since Russian President Vladimir Putin welcomed Crimea as a Russian territory.

In a speech delivered in Russian, Mr. Yatsenyuk tried to appeal to eastern voters by promising that the parliament was discussing reforms that would lessen Kiev’s centralized control over “authority and financial resources.”

Ukrainians in the Donbass, the eastern industrial heartland ( yellow section of this map ), have been offended by the Ukrainian parliament's nationalistic slogans. They don’t understand the direction Kiev is taking, Bogachov says, explaining that some fear the interim government will neglect their regional concerns about language and ties with Russia. Many eastern Ukrainian businesses depend on trade with Russia and rely on close ties for their economic stability.

The newly appointed regional governor of Donetsk, Serhiy Taruta, said in an interview with Reuters Thursday that he supported Kiev’s moves for decentralization. He did not advocate full-fledged federalization, however. That move would face strong opposition, he said, because many Ukrainians would see it as creating potentially insurmountable divisions between the Moscow-leaning east and the Brussels-leaning west.

The central government currently appoints governors for the country’s regions. Yanukovych centralized power even further by adopting a presidential-parliamentary system, giving the lion's share of authority to the president's administration. One of the first moves made by Kiev's interim government was to revert to a parliamentary republic, which put the power back into the hands of elected deputies representing the entire country. The change was hailed as the first step toward breaking down the “power vertical” created by Yanukovych.

The only way forward?

Today, the regions have very little control over their revenues, which are for the most part sent to Kiev, says Volodymyr Panchenko, the director of the International Center for Policy Studies in Kiev.

“If we make the management better and leave the regions up to 70 percent of their financial profits, and combine it with some elements of self-governing within the framework of a united state, [decentralization] might work,” Mr. Panchenko says.

For the Kremlin, federalization or decentralization is a matter of semantics, with many Russian officials apparently seeing little practical difference between the two. The Russian Interior Ministry listed federalization as one of the key points in its statement this week about the roadmap for Ukraine.

“Federalization is the only way out to let Ukraine be integral country,” said Alexander Konovalov, the president of the Institute of Strategic Assessment in Moscow. “If the decision is taken on principle, it will calm down the situation inside Ukraine and make the tension in the south and east less.”

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In Donetsk, however, there are still some who just want to quit Ukraine altogether and are tired of discussions about federalization. Yanina Yanovskaya, a young business owner in Donetsk, says a split between eastern and western Ukraine is inevitable, with the east joining Russia and the west going at it alone.

"I’m personally ready for a referendum for separation to be called sooner rather than later,” Ms. Yanovskaya said. “I see a federation scenario [as] trying to force all these different cultures and countries together into one, and I don’t think it can work any longer.”