Nearly 10 weeks into the war and with its troops making only marginal gains in Ukraine’s east, Russia is focused on cementing both military and political control over the territory it has taken so far.

The Kremlin is installing occupation governments, ordering locals to use rubles for transactions and, according to three people involved in the efforts, planning hastily organized referendums in some areas to open the way for full annexation. The people spoke on condition of anonymity given the risk of retribution discussing sensitive information. The Kremlin did not respond immediately to a request for comment.

Though far short of President Vladimir Putin’s original aims of ousting President Volodymyr Zelenskiy and installing a pro-Russian regime in most of Ukraine, the latest efforts pose a new obstacle for already-stalled peace talks, in which Kyiv has insisted Russia give up the ground it has taken since invading on Feb. 24. Zelenskiy’s military, backed by infusions of heavy weapons from the U.S. and its allies, plans a push to retake territory.

Kremlin officials, in public and private, are still confident their advance will pick up speed and Russian forces will at least conquer the entire Donetsk and Luhansk regions. Moscow is also seeking to tighten its grip in the southern Kherson and Zaporizhzhia regions, parts of which it has seized. That would leave about a fifth of Ukraine’s territory and most of its coast under Russia’s control — and create a land link to Crimea, which Moscow annexed in 2014.

In recent days, Russian officials have started talking down public expectations for a major battlefield breakthrough by May 9, the World War II Victory Day holiday and military parade that have become a touchstone of the Kremlin’s campaign to whip up public support for the invasion.

Still, in a sign of its ambitions for Donetsk and Luhansk, the Kremlin has turned responsibility for them over to its domestic politics division from the one that was responsible for neighboring countries, according to people familiar with the situation. Sergei Kiriyenko, the deputy chief of staff responsible for domestic politics, visited the region late last month to lay out his plans with officials there.

Russia’s recognition of the breakaway republics in late February – including swathes of territory it does not control – paved the way for the invasion.

Why Mariupol and the Donbas Region Matter to Putin: QuickTake

While a U.S. official said Monday that votes on becoming part of Russia could be held in Donetsk and Luhansk as early as mid-May, people familiar with the planning in Moscow said they’re likely to be put off until Russian forces extend control at least to the administrative boundaries of the regions. That could take weeks or months.

Formal annexation of those two territories would make them irrevocably part of Russia, in the Kremlin’s view, permanently fracturing Ukraine as other occupied areas moved to secede.

In the interim, Moscow is replacing local officials loyal to the government in Kyiv, rerouting the occupied regions’ internet connections through Russian servers and censors and mandating the use of the ruble instead of Ukraine’s hryvnia. Kyiv has accused Russia of stealing 400,000 tons of grain from the areas it controls.

“We’ll absorb Ukraine region by region,” Konstantin Malofeev, a wealthy backer of Putin who’s helping fund the war effort including by sponsoring an army of volunteer soldiers, said in an interview.

He conceded that the scale of military aid to Kyiv from the U.S. and its allies “has been far greater than anticipated.” Together with determined Ukrainian resistance, that means a grinding war that “will drag on at a slow pace” for at least months to come, he said.

Sanctioned Tycoon

The U.S. Justice Department unsealed an indictment against Malofeev in April for violating sanctions first imposed on him for his role in Russia’s 2014 annexation of Crimea. At the time, the Treasury Department said he was “one of the main sources of financing for Russians promoting separatism in Crimea.”

The Evolution of Sanctions as Financial Warfare: QuickTake

While Russia since Feb. 24 has increased its grip on Donetsk and Luhansk from 30% to 75% of the territory of the two Ukrainian regions prior to 2014, according to London-based defense research group Janes, the offensive is currently making relatively little progress.

Russian troops are still fighting to complete the takeover of the port city of Mariupol, where a pocket of Ukrainian resistance is holed up in a giant steel plant after a brutal weeks-long siege that leveled much of the city to ruins.

The Kremlin is preparing for a long, grinding campaign, according to people close to the leadership. With the U.S. and its allies steadily increasing sanctions – reaching the Russian oil and gas exports that had long been thought too vital to touch – Moscow sees little reason to compromise. A Russian general said in late April that Moscow’s goals are now to take over the south as well as the east of Ukraine, which would cut off the country from the sea and its main export routes. No senior official has publicly endorsed that ambition, however.

Privately, some Russian officials concede the situation on the ground in the occupied territories is chaotic and they haven’t yet been able to assert control and impose order.