Putin and his party of criminals remain in government in Russia because they seem competent, strong (like previous Soviet leaders remembered with fondness) and stand up for Russia. The problem is when there's no-one to stand up to. In order to maintain that, Putin needed his country to remain in isolation from the West to maintain an "Us and Them" environment.
It is one of the most effective ways for pretty awful people to stay in power. You know, Putin will protect the Russian people from the big bad West and all those who will seek to exploit them. Western fat cats and big Western corporations. That kind of ruse allows Putin's corporate buddies in Russia to suck the country dry and basically run the place without worrying about Western competition.
Why doesn't Putin just allow the West to compete with Russian companies, you ask? Surely it would be easier and allow for more money to be spread around? Is it because Putin is genuinely concerned about the Russian economy being dominated by the West for
nationalist patriotic reasons? No. Putin couldn't have functioned in a democratic society that isn't corrupt to the core. Putin's rise to power involved a lot of very, very shady things and he wouldn't last a year in a country like the United States or Germany. No matter how shady shit was with guys like Bush and Blair and all the oil deals and wars, they don't have a patch on Putin and his cabal.
Remember how bad the '90s were, my Russian friends? They're so bad you talk about them as if they were a different country? Remember all the corruption, all the poverty, the mafia? The wars? Where do you think Putin was in all this? Do you think Putin just appeared out of thin air on a white horse to save the day, conveniently just as Chechen rebels seem to lose their minds and start committing terrible terrorist attacks during yet another flaring-up of the Chechen conflict? Yeltsin just appoints this unknown ex-KGB/FSB guy as his Presidential successor and... he's the best leader you've had in decades. Come on.
Putin was steadily climbing to power, behind the scenes, all the way through the darkest years as the favoured figurehead-candidate of the criminally-linked oligarchy that ruled Russia. To this day he remains to be a figurehead for that same oligarchy, and I'm not talking about Oleg Deripaska,
never mind that show Putin put on on TV. There will be guys behind Putin so powerful you don't even know about them. Putin owes these guys everything, he's nothing without them and they would be under threat if Russia wasn't isolated. In a Westernised Russia where democracy is "unmanaged" and the political system is transparent, as I said before this set up wouldn't last a year.
You may understand that in the modern world it's hard to maintain a situation like that. It's hard to stay isolated in the modern world due to globalisation and interdependence and all that stuff. The only realistic model that Putin's government have for that is the old USSR; that's also the model that the people of Russia would be most comfortable with due to the Soviet nostalgia that's everywhere and it reminds them of a time when Russia was number 2 in the world.
How did the USSR stay strong, while isolated? How did they hold together? They created a ring of buffer states around themselves; the Warsaw Pact countries and also some attempts at ones in the East like Mongolia and Afghanistan. The point isn't necessarily to prevent invasion (though that was the original reason), it's also to maintain a sphere of influence that is at odds with the West, ensuring that the oligarchy's grip on power in Russia will remain secure.
It's really hard to create a ring of pro-Russian buffer states these days when the West is so unified and strong with a very large and successful entity like the EU sucking up countries that would have been up for grabs at one time, e.g. Latvia, Lithuania and so on. Countries like Latvia and Lithuania were also lucky enough to join NATO pretty quickly due to the fact that Russia was in disarray (the dark times, mid '90s and such) and their governments were very pro Latvian/Lithuanian etc.
Countries like Ukraine, Belarus, Kazakhstan, Uzbekistan, Kyrgyzstan where the old Soviet leadership remained in power were less lucky and did not join NATO when they could. Now it is too late. For the last 20 years the Russian establishment has been trying to mold those countries into new Warsaw-pact like satellite states, united through neo-Soviet entities like the Union State, CSTO (Russian NATO) and the Commonwealth of Independent States. The Russian language is promoted as much as possible and the goal has always been to maintain a level of Russification in these countries to make the very close ties with Russia seem natural. It allows for greater levels of integration and, who knows, maybe one day the Union State could be come a "sovereign state" just like the USSR, absorbing all those countries. That's another matter though.
Just as the USSR created allies in the Caribbean (Cuba) and South America and all over the world, there are other countries that Russia has tried to court, notably Venezuela and Syria.
Though at first glance the relationship between Russia and the Assad government in Syria seems a bit anachronistic, a bit neo-Soviet, it's actually very logical because both Assad and Putin are kindred spirits with very similar problems. Assad can remain in government in Syria because he will protect the Syrian people from Islamic extremists; not only that, he will also protect them from the Israelis and the West as a whole who are supplying the FSA with weaponry. Similarly, Lukashenko in Belarus is basically a taller, broader, cruder (but no less intelligent) clone of Putin. A red Putin, basically. He also has similar problems and uses the Us and Them method of staying in power despite pretty powerful anti-government protests and an opposition movement that refuses to quit. Islam Karimov, the President of Uzbekistan, is again in exactly the same position, though with an Islamist twist to the threat he faces.
Anyway, you get the picture.
The problem with these guys though is that, sometimes, they start to go a bit rogue. They're also fundamentally crooked and less competent at hiding it than Putin. Guys like Karimov and Yanukovych are good examples of this. Yanukovych was becoming quite a liability until 2013; he was visibly incompetent, crude and obviously pretty corrupt. He also got a bit above himself and thought he could play both Putin (his master) and the EU while dancing around over that EU deal last year. That failed miserably and led to the Euromaidan protests.
Putin knew that the situation was lost and that the buffer state that he'd been trying to create in Ukraine wouldn't last long under an idiot like Yanukovych. He therefore allowed it to fall, then chose this as his big moment to show the people of Russia and the world what he was capable of. The occupation of Crimea began, the annexation and so on. The fact that Putin calmly annexed a part of a neighbouring country in 2014 is impressive enough, but now we've got this flashpoint in Eastern Ukraine.
Russia may or may not be fueling the crisis in the East directly i.e. with soldiers disguised as protestors. They are definitely fueling the crisis
indirectly though; the Crimean take-over alone was more than enough to do all the damage Putin could have wanted.
Now as some of us have said before, Putin has the perfect scenario. Ukraine is going to blow up, or is in the process of blowing up. It's going to get very ugly. If the Ukrainian government tries to stamp out the protests, the "war with the people" will become a reality and Easterners will fight Westerners and it will basically be an all-out civil war. Why is this a good thing? It's so terrible it will deter any border country with the USSR like Latvia, Finland or anyone else from doing something stupid that will piss Russia off. It shows them that Russia means business and could possibly drive them into pretty terrible levels of crisis and there's nothing they can do about it.
Putin has his negotiating points; Ukraine becomes a federation, the East forms some kind of Donbass Autonomous Republic within the country and Crimea is recognised by the international community as a part of Russia. Ukraine must also remain neutral for at least 20 years, meaning that they will not be able to join NATO or the EU for two decades, putting a dampner on the entire Euromaidan thing and rendering it all pointless for the pro-Ukrainians. They would also be unable to maintain their attempts to make Donbass Ukrainian again; despite the region being something like 80% Ukrainian during WW1, due to events like the Holodomor and migration the East is very much Russian now. The Ukrainian nationalists were trying to change that with language laws - hence the opposition when Yanukovych's language laws were scrapped which allowed them to basically never use the Ukrainian language.
If Ukraine becomes a Federal state, it will be very unstable. The East and the West will always be at odds with one another, the East being a little Russian Ulster within Ukraine while the West will probably become more Ukrainian. There will also be problems with areas like Odessa where there are many Russians but they aren't necessarily in the Donbass region. That means even the Western province won't be very stable.
If the Ukrainian government ever tries anything that Putin doesn't like, he can ignite tensions in the region pretty easily which could conceivably lead to the Donbass Republic holding an independence referendum then joining the Russian Federation. Regardless of what Putin says right now about the fact that the East is Ukrainian, just Russian speaking, so too was Crimea. The words are meaningless.
What is there left to do? Nothing. We can try putting sanctions on Putin but Western Europe is pretty dependent on Russian oil supplies and it's against the interests of people like the ruling Conservative Party in Britain who have very close ties to Putin-linked oligarchs in the UK.
Russia is also fairly resilient and even if sanctions are put on them, what will happen, realistically? Putin will just give up Crimea? No. Crimea is lost. Totally lost. Even if it remains unrecognised for years we will probably recognise it in 20 years as part of a future negotiation over oil or another crisis or something. The East will never be stable until they become an autonomous Republic just like Crimea, but that will be the kiss of death for the Ukrainian state.
I'm looking at this situation and I just see that Ukraine is totally and utterly fucked and so are we. Putin has just showed the world that he can screw us in ways that nobody else can besides maybe the Chinese. Russia may not be as economically powerful as the USA or China, but they're still asserting themselves as a super power on the diplomatic stage. He now looks like a hero to the Russian populace and he's just antagonised the West so badly that this probably won't lift for another 20 years. This means god knows how many strong terms for Putin's government in office in Russia and the grip of the oligarchy is strengthened hugely. Though the Ukrainian government might not be a satellite anymore, they're as good as one and will be held hostage for years to come. Those other satellites e.g. Nazarbayev and Karimov's governments will be far less likely to drift away now.
No matter what we do, Putin has won the day and will come out of this better off than he was when this started.