Oh, I cannot resist taking that phrase from a recent Economist article about the separatist Donbass republics, the Luhansk Peoples’ Republic (LPR), and the Donetsk Peoples’ Republic (DPR). The official recognition by V.V. Putin of their independence brings about the end of the Minsk II Accord negotiations that have been going on since 2015. These accords were supposed to bring peace to eastern Ukraine, but they failed to do so. This recognition brings them to an end, the Minsky Moment, as it were (which is also being associated with sharply falling financial markets around the world, if not full-blown Minsky level collapses).
This recognition, accompanied by a completely off-the-wall speech by Putin, who seems to be consumed by bizarre and unfortunate fantasies about history, has opened the door for the open entry of Russian military into the LPR and DPR. Of course, Russian military forces have been in them this whole time since they were established in 2014. Indeed, it is widely thought that the masked men who initially seized government buildings that set these republics up back then were mostly actually Russians. But all of this has been deniable, the official line out of Russia that they were all locals.
I note that both sides blame each other for the failure of the Minsk Accords. These were negotiated through the Normandy 4 venue with France and Germany involved as well as Russia and Ukraine, and a bit, Belarus. These republics were supposed to remain part of Ukraine, but have a high level of autonomy. Apparently what put the Ukrainian government off was that they could have separate authority over Ukrainian foreign policy, as well as the ongoing presence of the Russian military. On the other side, the Russians denied they had military there and complained about the Ukrainians not accepting that autonomy. And, of course, there was ongoing low-grade warfare along the boundaries of control.
Those boundaries are now a major matter. Putin recognizes that these republics claim to consist of the total oblasts bearing their names. But the current reality is that these republics each controls only about a third of its respective oblast. This opens the door to a possible Russian military attack on the portions of those oblasts not under the control of the republics. Probably the most important place to get conquered in that case would be the port of Mariupol, a part of the Donetsk oblast.
The US and NATO allies have issued some initial economic sanctions as a result of this latest development. Russia will not be able to raise or trade IRS debt on western markets. Certain individuals have been forbidden from operating in western markets. Two banks have been targeted, one associated with the Russian military and VEB. Finally, and most significantly, Germany has canceled the NordStream 2 natural gas pipeline. This leaves many other possible sanctions that can be used if Russian troops further advance into Ukraine.