This totally unexpected step caught the rest of the world off the guard, Russian foes and friends alike. This was evident in just ended Shanghai Security Organistaion summit in Tajikistan where according to local reports leaders agreed to pledge only unofficial support to Russia. Leaders of authoritarian Central Asian states were not quite ready for formal recogniton of the breakaway republics. (So far only Hamas-controlled Gaza officially recognized them). Their unwillingness to fully endorse Russian action (diplomatic recognition not punishment of Georgia since most speakers denounced invasion of South Ossetia by Georgia) is unsurprising taking into consideration that even rich Western countries in NATO and EU are deeply divided how to react to the mysterious Kremlin move.

Russian rulers have calculated that they have more aces on their hands in this game and hope that in future they will gain some more irrespective of what kind of decision will be taken in Western capitals. Is this true? Just have a look at these cards.

Russia thinks she has not only logistics advantage in her near abroad (It takes so long time to reach Georgia or Ukraine from US or Western Europe) but also support of local people. If in 1979 in Afghanistan or in 1968 in Czechoslovakia population was obviously hostile to Russian aggression the same cannot be said about Abkhazians and Ossetians and potentially ethic Russian majority in Crimea.

Second factor is economics. Somehow Russia became more integrated in the world economy than in Soviet times. Many Western MNCs have started business in Russia and have been earning good money. It's not only oil and gas if you think. Wall Street banks earn almost 100 mln dollars each of pure profit from their Russian operations. Western auto giants in Russia sell more new cars than in Germany. One of the latecomers ailing American giant Chrysler is planning to move in later this year. Turkey, once a stauch Western ally, now contemplating neutral strategy keeping both Washington and Moscow at bay - Turkey's economy became so much dependant on Russia, on gas, construction, tourism. Europe tries hard to bridge enormous 100 bln dollars deficit in their trade with Russia. Asian countries desperately need Russian natural resources to fuel their economies.

OK, what the West can do with Russia? So far in Western capitals policy makers are contemplating only symbolic political measures like expulsion from G8, blocking WTO accession, etc, which will have no effect on Russian policy but only antagonize Kremlin. More practical steps are all painful and for many in the West undesirable.

One is militarization for Europe. Since many European economies slipped into recession it would be difficult to upgrade and enlarge national armies. And there is no guarantee that Russians will be impressed by European muscle flexing. Second thing is energy security. Russia here almost outplayed Europeans already. It's not possible to find alternatives for Russian gas and more expensive for oil. Gas cannot be delivered from elsewhere in one day, one needs to invest blns of dollars to build pipelines. Oil is easier to transport but who will give Western companies subsidies? Then comes suppliers, Iran in many ways is more difficult partner to deal with than Russians, her oil contracts are less attractive. Nabucco pipeline from Iran was abandoned. Still many steps for economic war with Russia are possible, including visa restrictions for Russian businessmen, gradual withdrawal of Western businesses out of Russia and stalling new projects. The question is who will pay for this? US with its ailing economy and two wars on hands? Russia in response may withdraw WTO-like regime for Western goods and raise tarriffs.

By her irrational (as called in the West) actions Russia has narrowed options of the West in short term. The West has to either follow Russian suit and take irrational action of starting new Cold War or admit political defeat and impotence and delay hostile actions till better times, at least till new American administration takes office in January 2009. Admitting failure will be especially bitter since Russia, it seems, abandoned 6-point plan to allow Europe to save the face. And this failure happened in Eastern Europe where the West has historical advantage over Russia and there are widespread anxieties about Russian policies and motives.

So what will happen? I think the West will drag its feet, will be indecisive, will try again to lobby Moscow again for concessions in order to gain face saving measures. Americans will be frustrated but they cannot do much but issue hollow threats. There are indications that in White House think that crisis went just too far. Hollow threats did not work.

Also it will be interesting to see what other players like Iran will do. Iran was overcautios in its reaction to Georgia crisis, even critisized Russia for recognition of South Ossetia and Abkhazia. Russia baited Iran with admission into Shanghai Security Organization. She even secured agreement in Dushanbe to start negotiations with other countries like Iran about their entry. However much will depend on whether Iran will accelerate its nuclear program or not. Iran is in my mind is at bigger risk to be invaded by Western countries than Russia is at risk of full-fledged Cold War because this defiant country might seem to be a safe easy target for regime change, gaining energy security (from Russia) and completion of Middle Eastern acquisitions. How this may be achieved we already know in Iraq. However Iran adventure is regarded as quite risky without sound preliminary measures.

Long term strategy of containing Russia is not easy as well. In Asia many think that it was the West who first violated international law, invaded and occupied other countries. Russia with her action in Georgia has good chances to join the West in such unenviable position. However to hope that Asian countries join the West in obstructing and isolating Russia is wishful thinking. Remember what happened with the West after invasion and occupation of Iraq - no Asian country severed ties with the West over Iraq and Russia may well hope for the same treatment.

Then there are other reasons more important for these countries. To get India on anti-Russian board is difficult given her preoccupation with domestic problems (like her crumbling rule in Kashmir, 400 mln people living on less than 1 dollar a day, etc) and rocky relations with Pakistan and China. Courting Beijing by the West will alienate India for sure. It's unclear what course Beijing will take in face of Western ouvertures. Will scaling down critics over Tibet and human rights violations be enough to secure Beijing a role in anti-Russian alliance? The West must offer something more substantial. So most likely Chinese (and other Asian giants) will take neutral course, taking favours from both sides. The same is true for India which is heavily dependant on Russian military hardware (it's cheaper and it works). Asian countries are more and more interested in Russian natural resources. But without Asian giants' willing cooperation the strategy of containing Russia won't work especially as they provide new big markets for Russian resources.

Central Asian countries will be the main battleground for new Cold War between the West and Russia. So far there Russia has had an upper hand, controlling majority of energy routes and providing security cover for local authoritarian regimes. Another battleground may be Russia herself, where Western powers will energize anti-Putin activities (good news for specialists on Russia!). However the main opposition to Putin's regime is coming from Communists who are not necessarily in agreement with Western policies. It will take time to nurture viable pro-Western political group with pan-Russian appeal. It's unclear what kind of ideology the West should export to Russia, maybe Gandhi's ahimsa or Tibetan Buddhism? And the last thing concerning the Cold War is to keep Western unity intact, not allowing Finlandisation of members of the alliance, preventing separate deals with Russia. This will be challenging task too.

What about positive scenarios of future? Are they possible at all, after incredible demonisation of Russia by Western media and politicians? Many think that Cold War is well under way. The area of differences is Eastern Europe, namely Georgia and Ukraine. Do antagonists have anything in common and if yes where? Besides economical relations Russia and the West have identical goals in Afghanistan, converging to some extent in Iran and Middle East and Russia is not a player in many parts of the world like Africa, Latin America, South East Asia. Thus there is ground for a sort of reconciliation, at least in short and middle term, but much will depend on course of events in Eastern Europe.

Instead of conclusion. We live in the world where strong and mighty is always right (proved by the West in former Yugoslavia and by Russia in Georgia). It was always so (no need to go far away, take Chinese invasion of Tibet in 1950 which is unfortunately universally recognized or Indian occupation of Kashmir since 1947). Russian recognition of independence of Georgian rebels (and previously Western recognition of Kosovo in violation of numerous UN Security Council resolutions) tore down not only international law but also unmasked hypocrisy in international relations. So far it was the one and only positive outcome of the ongoing Western-Russian crisis.