Russia piles more pressure on Georgia but rules out force

Russia has tightened the economic noose around Georgia, escalating a bitter dispute but ruling out use of military force against its neighbour. In the latest twist to a row which broke out when Georgia arrested four Russian military officers, Moscow has frozen work permits for Georgians and closed a casino owned by Georgian businessmen.

With transport and postal links to Russia already cut, Georgians also face the prospect of paying more for their energy, because Gazprom, the Russian monopoly, is poised to increase the price of gas supplied to Georgia.

Unofficial reports suggested that Gazprom wants to raise 2007 prices from its $110 (£59) to between $170 and $250 per 1,000 cubic metres. But is is unclear whether this was linked directly to the crisis, since they were negotiating on energy prices before the row broke out.

But the work permit ban could hit hard because the Georgian economy is heavily dependent on its Soviet-era partner. A fifth of Georgia's 4.4 million population work in Russia, many sending their earnings home to support families.

One senior Georgian diplomat suggested that the rift could lead to military conflict. Zurab Tchiaberashvili, the Georgian ambassador to the Council of Europe, said: "We have a cold war in the Caucasus and we fear that this cold war will transform into a hot war which will threaten peace and security in the region."

But asked about the possibility of the use of the military, Russia's Deputy Foreign Minister Alexander Yakovenko said: "Of course there can't be any talk about it." But there was no let-up in the war of words between the two sides and Mr Yakovenko said Moscow would ease the pressure on the Georgian president, Mikhail Saakashvili, only if Tbilisi changed its attitude.

He said: "Russia does not want to be provoked; Russia wants to be respected. Russia wants the anti-Russian campaign to stop. If Sakaashvili's regime changes such policies, then this would be a different conversation."

Thomas Gomart, head of the Russia programme for the French Institute of Foreign Relations, said: "We are in an extremely worrying situation. We are not at the point of military confrontation but we need to pay close attention to the situation.

"The government in Georgia was already in a weak position because of the impact of internal reforms. The Russian economic blockage will weaken it further and could provoke instability".

Tbilisi has freed the four Russian officers after accusing them of spying. But Moscow has been infuriated by Mr Saakashvili's pro-Western rhetoric and overtures towards Nato.