The big question of the Ukrainian conflict is: what do we want? Peace in Ukraine or teaching Putin a lesson? In the latter case the demands on Russia and the rebels will be much stronger and the preparedness to make concession much weaker.
All sign are that the US wants the latter. Russia is not respecting the rules of the post-Cold War world as the West - and specially the US - understands them. And implementing the logical solutions in Ukraine would mean accepting this Russian behavior. Russia interfering with a treaty between the EU and Ukraine, Russia occupying and annexing Crimea, Russia supporting an uprising in East Ukraine, Russia demanding that Ukraine doesn't become a NATO member: it is all unacceptable. It doesn't matter that the US tends to do similar things. It doesn't matter that Russia is reacting to a US sponsored "coup" (as they see it) in Kiev. It doesn't matter whether Russia's complaints about the authoritarian nature of the government in Kiev are true. For much of the Russian population these are circumstances that justify its policies in Ukraine. But many in the West see only an interference that they consider unacceptable. As a consequence we see in response Western policies that don't take the local circumstances in Ukraine in account but make it a kind of principle that what Russia does is wrong.
A good illustration is when General Breedlove talks about his reasons for wanting to arm Ukraine. He acknowledges that the government can't win no matter how many arms it would receive. "But", he says "we must try to raise the price on the battlefield for Putin to slow this whole problem down so sanctions and other measures have time to work". Freely translated this means that Breedlove is prepared to sacrifice many thousands of Ukrainians at a time when opinion polls show that 70% of the population wants to stop the war. His expectation that in the end Putin will give in under the pressure of sanctions is controversial. In the likely case that he doesn't thousands will have died in vain. The only people benefitting will be some hardliners who can claim that they have done all they could to rein in Russia.
The logical solution for the Ukrainian problem is autonomy for Donbass. Even before the conflict started there were demands for autonomy from both the Eastern and Western ends of Ukraine. It was also part of the Minsk agreement in September and the Ukrainian parliament adopted then a law to implement it. Unfortunately Ukraine's government blocked the law, claiming that it would create yet another Russian supported enclave like South-Ossetia, Abkhazia and Transdniester. That claim is not very credible: unlike those areas Donbass is not ethnically different from the rest of the country. Ukraine is just a very big country where the Western extreme of the country has grabbed the power at the moment and the Eastern extreme doesn't agree. Given time they will find a solution to live together again when power returns to the center.
But just like the demand of the government that the rebels return the land that they conquered since september the rejection of autonomy is in fact an excuse to say no. The same applies to the rejection of the Russian demand that Ukraine shouldn't become a NATO member. NATO membership was - until people got swept up in the heated rhetoric of the war - unpopular and most Ukrainians would happily give up on it if that could bring peace. The Ukrainian government isn't bothered about any of those points as such. It is aiming to win the war and is just grabbing the most credible sounding excuse to reject any peace initiative. It does so both under pressure of Washington - that sees the conflict in Cold War terms - and as it depends for its power primarily on right extremist militias and oligarchs and not on popular support it is afraid that some kind of recognition for Donbass would shift the balance of power.
The Ukrainian government has tried to turn the argument around by claiming that the rebels don't adhere to the Minsk agreement. They like to point to the clause that gives the government control of the borders. However, you cannot see that clause separate from the rest. The idea of Minsk is a situation where Donbass is an autonomous part of Ukraine. In that context it is logical that Kiev controls the borders. However, the clause does not mean that Kiev has the right to encircle and suffocate Donbass.
Merkel and Hollande have now proposed strong autonomy and a 50-70km demilitarised zone.
This proposal faces the risk to be rejected in the same way as Minsk was. The question is how Russia and the rebels will react. It looks like they see this initiative as the last chance. That if this doesn't work it doesn't make sense to once more conclude a truce that will only enable Kiev to rearm and attack once more. Instead they may launch a full scale attack in the hope that a massive loss of territory will bring Kiev to its senses. Given that the Ukrainian army just suffered a major blow at Debaltsevo that might go rather easy and bring less humanitarian costs than waiting.
Merkel and Hollande are supporters of the Maidan revolution and their sudden interest in peace comes mainly from the fact that Ukraine's army is in serious trouble in Debaltsevo. This raises some doubt whether they are really prepared to accept a peace where Russia and the rebels get some of their demands fulfilled. Their proposal contains basic elements like autonomy, but the devil is the details and those haven't been published. One rumor claims that they have set Putin a deadline and threatened with sanctions. Already one can see in pro-Russian media speculation that they may be cooperating with Obama in a good cop bad cop act.
The big question of the Ukrainian conflict is: what do we want. Peace in Ukraine or teaching Putin a lesson?