DONETSK, Ukraine—This separatist-held city is staggering back to its feet after a two-month lull in fighting, the longest in a 19-month conflict between government forces and Russia-backed rebels in the industrial east.

But as Moscow’s strategic focus shifts to Syria, people here are wondering what comes next for them.

The fighting has left deep scars, and the city is in an uneasy limbo: Separatist dreams of a rapid annexation or recognition by Russia have faded, and a return to Ukrainian authority seems distant.

“Russia doesn’t need appendices,” said Valentin Venglovsky, a 48-year-old former scrap-metal merchant who is now a major in the separatist army. “And too much blood has been spilled to go back to Ukraine.” Asked what he would do if Ukraine regained control, he drew his pistol from a belt holster and held it to his head. “It will be easier to shoot myself,” he said.

Mr. Venglovsky joined small anti-Kiev protests here in April 2014 that morphed into an armed conflict that has cost some 8,000 lives.

A peace deal signed in February foresees the area returning to Ukraine with additional local powers and properly elected leaders. Still, fighting around Donetsk, the largest city under separatist control, raged through the summer, with both sides trading heavy shellfire.

Both sides now say they have pulled back their big guns and some other hardware, including tanks. But the dynamic really shifted perceptibly after Russia in late September began a bombing campaign in Syria. While clashes have increased in recent days, they are still well below levels seen in the summer.

Some here now say the Kremlin is intent on using the region as a bargaining chip, possibly in the hopes of lifting Western sanctions imposed after Moscow annexed Crimea last year or to hobble Ukraine’s attempts to integrate with the West. Many feel they are in a gray zone.

“Most people don’t care if it’s Russia or Ukraine,” one restaurant owner said. “They just want it all to end.”

On the front lines around Donetsk airport, where gunfire flares occasionally, some rebels are disgruntled with the stalemate.

“I’m sick of it,” said a rebel fighter in his mid-30s who goes by the name Gnome. “What’s the point of this? The guys are tired. We sit in concrete cellars: damned cold, no electricity, no television, no girls and not much to eat.”

In town, a tenuous normalcy has returned. A furnace at the steel mill has fired up again, saturating the air with a familiar, pungent smell. Restaurants are filling up again with patrons other than armed men in camouflage, and the opera house recently opened its winter season.

Mr. Venglovsky, who works for the separatist security service, said the situation with looting was improving.

But dangers remain. The restaurant owner said he sold his SUV after another businessman was snatched by unidentified gunmen and held until he handed over the keys to his car. Another local entrepreneur recently paid a ransom to gunmen who had kidnapped his 7-year-old daughter, the restaurateur said.

The economy is limping, and many residents are living from hand to mouth. Ukraine has limited most cargo entering separatist regions. Goods are cheaper in government-controlled territory, but getting back home means waiting in lines of cars several miles long at de facto border checkpoints.

Owners of large factories here still pay taxes in Ukraine to avoid legal problems, but the rebel leaders allow them to keep operating—and paying salaries—to head off discontent.

The Russian ruble is now the main currency, but businessmen complain that Moscow has been slow to open up trade. Many downtown shops have closed because of lack of demand, security issues or impossible logistics.

“It’s more circuses than bread,” said Sergei Baryshnikov, a history professor and doyen of the tiny separatist movement that existed in Donetsk before the conflict.

Mr. Baryshnikov is one of several local ideologues and independent-minded military commanders who have been gradually purged from leadership positions. He was fired as dean of the university just as he had been appointed last year: by a rebel government minister flanked by two men with automatic rifles.

“They tossed out the ideas people,” empowering more malleable satraps, he complained.

Russia’s influence is pervasive. The Kremlin has plenty of experience managing frozen conflicts on former Soviet territory, including separatist territories in Georgia and Moldova.

Donetsk is developing the trappings of those zones, such as television channels mixing propaganda with entertainment, a porous dividing line with semi-legal flows of goods, and a nascent banking system created with the help of another largely unrecognized region, South Ossetia.

Separatist leaders head across the border to the nearest large Russian town of Rostov-on-Don for consultations. Posters are still plastered across the region advertising elections of mayors and local councils that were canceled last month after Russia held talks with Western leaders.

On a road into Donetsk one recent day, 50 trucks marked “Humanitarian aid from the Russian Federation” rumbled toward the city. Along another road from the east, a dozen new Kamaz trucks with young, professional-looking soldiers in fresh uniforms without insignia headed toward Donetsk.

The peace deal obliges the separatists to hand control of the border with Russia back to Ukraine, but many here say that would mean the end of their venture.

“We will die without the support of Russia,” said Mr. Venglovsky, the rebel army major.

Write to James Marson at james.marson@wsj.com