August 12, 2008 / 10:31 AM / 11 years ago

INSTANT ANALYSIS: Winners and losers in S.Ossetia crisis

LONDON (Reuters) - Russian President Dmitry Medvedev ordered a halt to military operations in Georgia on Tuesday after five days of fighting, just before French President Nicolas Sarkozy was to hold peace talks in Moscow.

Here are some of the implications for Russia, Georgia and the West.

* Russia has shown once again it calls the shots regionally, whether it is turning off gas supplies to Ukraine, turning off oil supplies to Lithuania or rebuffing a Georgian attempt to retake the pro-Russian, breakaway region of South Ossetia.

* Moscow tuned out calls by the United States, NATO and the European Union to halt its offensive in Georgia until it was satisfied the timing was right and it had achieved its objective of driving Georgian forces out of South Ossetia.

* Moscow’s announcement of a unilateral halt to its military operations came shortly before French President Nicholas Sarkozy was due to speak to Russian President Dmitry Medvedev in an effort to broker a peace deal. It looks to have made the shuttle diplomacy by France, the EU and OSCE largely irrelevant.

* Analysts say the United States’ unwavering support of Georgia’s pro-Western President Mikheil Saakashvili encouraged him to overreach himself and ultimately left Washington with little room to maneuver.

* The European Union, reliant on Russia for much of its oil and gas, showed itself relatively powerless against the will of Moscow.

* Russia may feel emboldened by its perceived success, but it may pay a price in terms of foreign investment. The rouble fell one percent against a dollar/euro basket on Friday and extended losses on Monday, though some of this was reversed after Medvedev’s ceasefire announcement. Russian stocks hit their lowest level in two years on Monday. Foreign investors fear a deteriorating climate in Russia. They were already unnerved by the battle for control of oil firm TNK-BP and Prime Minister Vladimir Putin’s attack on the pricing policies of New York-listed coal and steel firm Mechel.

* Anyone wondering who calls the shots in Russia will have noticed Putin’s lead role in articulating Russian policy, his appearance on the front line and his two conversations with U.S. President George W. Bush compared with Medvedev’s one. Putin handed over the presidency to Medvedev last year but many observers suspected the prime minister would continue to wield the power. It may become more difficult for Medvedev to command authority, though it was he who announced the unilateral ceasefire on Tuesday.

* For Georgia’s Saakashvili the future looks very uncertain. Defeat in South Ossetia could mean Georgia has lost the province for good, a bitter blow to Saakashvili who had promised to restore central control there and in Abkhazia, the other breakaway Georgian region. His military has been humiliated.

* Saakashvili’s political currency has been debased. Longer term that could lead Georgians to question the wisdom of such stridently pro-Western policies. Even before the conflict, some opposition leaders had criticized his policy of confrontation with Russia.

* The crushing setback over South Ossetia could fuel domestic opposition to Saakashvili’s rule. Tens of thousands of people attended a protest rally in May challenging the results of a snap January presidential poll and spring legislative elections, saying they were rigged.

* Moscow has made clear it no longer sees Saakashvili as a reliable partner and believes he should resign.

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