Hot Peace

In the first 100 days of Dmitry Medvedev's presidency, Europe seized on his liberal rhetoric as the promise of burgeoning economic possibilities. But the war between Georgia and Russia that erupted in the next 10 days sent shockwaves through Europe.

And with Medvedev's decision to recognize the independence of Georgia's two rebel regions on Tuesday -- day 111 of his tenure -- experts say relations hit a historical turning-point.

Turning point

That act routed Russia's last advocates in Europe, uniting Western powers in scandalized and impotent demands for Russia to "reverse" its policy.

Russia's decision is "outside the law" and raises fears it could take similar measures against Ukraine and Moldova, French Foreign Minister Bernard Kouchner said in a Wednesday interview.

Had Russia intended reconciliation with the West, it would have gained more from holding out the threat of recognizing the Georgian territories in the future, analysts in Moscow said, calling the decision a "watershed."

"To me this looks like burning a very important bridge," said Masha Lipman of the Moscow Carnegie Center.

She and other experts said the conflict now pits Europe and Russia in a new struggle to push one another out of the countries which lie between them -- without damaging their relationship so much that it ends up hurting their own interests.

Economic incentive

Much has changed since the 1989 fall of the Berlin wall. With the collapse of the Soviet Union, its triumphant enemy, NATO, and the European Union both swept across Europe, taking in a dozen new members in a great arc through former-Communist territory.

But at the same time, EU states boosted trade ties with Russia in a bid to make cooperation more attractive than confrontation.

That process has gone so far that cutting off trade links with Russia "would be damaging (Europe's) own economy," Professor Hans-Henning Schroeder, Russia expert at the SWP German Institute for Foreign and Security Policy, told DPA news agency.

And the combination of explosive EU and NATO expansion with a hungry drive for new business ties with Russia means that the two sides are, paradoxically, both allies and rivals in Europe.

Medvedev, despite biting rhetoric that raised the specter of a new Cold War, said "Russia does need good relations with the West.

"We live in a global economy. We want foreign investment, and there can be no doubt about this. We cannot build a developed country on energy prices alone," he told broadcaster Al-Jazeera.

Russia relies on Europe for more than half of the hard currency it makes from trade and investment -- but as the mid-August war in Georgia showed, it has now decided that if it has to risk a war to keep its influence over its former vassals, it will.

"The war sent the Russian equity market down sharply," Vladimir Osakovsky, an economist with UniCredit, said in a note. "We believe the move intended to show that Russia is willing to put economic and other interests on the table in order to defend its policy toward Georgia."

High-octane tug-of-war

Europe, meanwhile, relies on Russia as its largest energy supplier and a key export market -- but is increasingly at odds with Moscow over its treatment of those same former vassals.

"The image of Medvedev as a liberal has been terminally devalued in the eyes of Europe. He has become a figure rousing provocation rather than sympathy," Alexei Mukhin, head of the Moscow-based Center of Political Information, said Wednesday.

Both sides are keen not to push one another so far that their pragmatic alliance in places such as Afghanistan falls apart.

"We do not want a new Cold War. No one has ever gained from it," Medvedev stressed in a BBC interview after his declaration.

But that still leaves Russia and Europe vying for influence over the tangled web of regional, separatist and ethnic conflicts along their common border -- with the risk of more bloodshed to follow the Georgian crisis no longer an unthinkable possibility.

And that high-octane blend of cooperation and confrontation means that, for good or ill, the security situation in Europe looks likely to become a lot more volatile in the next few years.

The Cold War is over. Welcome to the Hot Peace.