Why Putin could get ‘cold feet’ over Ukraine

With Russia hit hard by a slump in the ruble, tumbling oil prices and Western sanctions, could President Vladimir Putin be wondering whether Ukraine was worth the pain?

"Putting a few things together, I am beginning to think that Putin might just be getting cold feet about Ukraine, and what it has cost him," Timothy Ash, head of emerging markets research at Standard Bank, said in a note Monday.

A ceasefire is due on December 9 and the Russian president is reportedly confident that a truce can be agreed.

"I very much hope that in the nearest future a final decision on ceasing fire will be taken," Putin told reporter after talks with French President Francois Hollande this weekend, according to Reuters.

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In addition to a tanking currency and substantial capital outflows, Ash said Russia could have suffered weightier military losses than anticipated during its incursions in Ukraine—particularly during the fighting last week between Russian separatists and Ukrainian troops around Donetsk airport.

Dmitry Kostyukov | AFP | Getty Images

Overall, more than 4,300 people are estimated to have been killed in eastern Ukraine since in mid-April, according to the UN Human Rights Office, with nearly 10,000 wounded.

"The scale of Russian military losses may just have made Putin think that his military options may be more limited than he had assumed," Ash said.

"The combination of oil price drops and sanctions is now devastating Russian markets," he added. "The economy is pushing into recession and inflation looks set to push back into double digits."

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The country's central bank has made several downward revisions to growth forecasts this year and the economy ministry now forecasts a recession in 2015.

The ruble has also depreciated against the greenback by nearly 50 percent since the fighting began.

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"Capital flight is running at an accelerated pace of at least $140 billion and the Russian Central Bank has fritted away at least $100 billion in scarce FX reserves (to try to support the currency)," Ash added.

Putin's domestic approval ratings remain high, coming in at 85 percent in November. However, Russia's economic straits mean experts like Ash are wondering how long this can last for the former KGB officer with an uncompromising, tough-guy image.

"Nationalism might serve to rally the nation, but this crisis is beginning to hit them in their purses and their bank accounts," Ash warned. In addition, Russia are concerned that lengthy isolation from the West could mean their international credit cards cease to work.

"Russians are set to feel a lot poorer, with per capita gross domestic product (GDP) set to fall from over $14,000 last year, to around $10,000. This latter fact matters as many Russians have got used to buying their flash cars and high-end apartments."

The west should not expect Putin to surrender too easily, however, according to Ash. "I don't think Putin's strategic objectives have changed that much, which are all about ensuring his place in Russian history, a Greater Russia, and a weakening in the EU and NATO as a means to achieve that."

"To read Putin you have to go back to basics and his KGB training—as a spy his skills are in the art of subterfuge, cloaking his intentions, double bluffs, shifting around all the time to put his opponent off guard. So one can never really know if he is actually planning to step back from the brink," Ash added.

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—CNBC's Matt Clinch contributed to this report