Leading article: A small war in the Causasus which has huge implications

Much remained unclear last night about the precise situation on the ground in Georgia after a weekend of fast-moving and often bloody events. But the broad outlines of what had happened seemed to be these. On the eve of the opening of the Beijing Olympics, Georgian troops entered the pro-Russian enclave of South Ossetia, with the aim of establishing Georgian government control. Russia responded by sending troops and bombarding targets in the nearby Georgian city of Gori – which, incidentally, has Stalin as an infamous son. Amid a ferocious war of words, Russia extended its bombing to the Black Sea port of Poti and a small – Georgia-controlled – corner of a second, pro-Russian enclave, Abkhazia. There have been civilian casualties on both sides, though how many is disputed, as is a great deal else.

Georgia says it entered South Ossetia to stop the escalation of border skirmishing initiated with Russian backing. Russia says Georgia breached a unilateral ceasefire it had initiated. Georgia says that Russia bombed indiscriminately. Russia says it focused on military targets.

What does seem true is that Georgia was yesterday in the process of withdrawing from South Ossetia. If this is so, then the essentials for a ceasefire may be in place, even before a joint US-EU delegation arrives in the Georgian capital, Tbilisi, today. In effect, Georgia's retreat constitutes a return to the status quo ante – the precondition Russia set for negotiations.

The difficulty is that the status quo ante helped precipitate the violence that erupted so suddenly last week. In one of several disputes "frozen" since the collapse of the Soviet Union, South Ossetia and Abkhazia are inside Georgia's borders, but not under its control. Their mainly non-Georgian populations see Russia as their protector, and Russia – for reasons of its own self-interest – has been only too happy to oblige. This infuriates Georgia but is not easy to change peacefully if the local populations do not agree.

What this confrontation shows is that resorting to arms is no solution either. Georgia's forces may be trained and equipped by the US and have combat experience in Iraq, but they are no match for Russia's military, even in its current debilitated state. Georgia may insist its withdrawal from South Ossetia was no defeat, but the truth is that it made an unsuccessful military gamble which will drive the South Ossetians and Abkhaz even further into Russia's camp. Any negotiated solution will be more difficult. Which poses serious questions about the judgement of President Saakashvili – and could in time destabilise his rule.

Georgia may also have a price to pay in terms of its ambitions to join Nato. Had Georgia's preliminary application been accepted earlier this year, Nato could have found itself bound to go to Georgia's aid in what – for all Georgia's efforts to present it as a war for Western values – is a bilateral dispute with Russia. For Nato, is this perhaps a treaty obligation too far?

As for Russia, its swiftness to confront force with much greater force rather than solicit outside mediation sends the clear message that it is not prepared to cede any more power than it already has in what it regards as its own backyard. Georgia's view that a Russia nostalgic for the Soviet empire will do anything to prevent Georgia's integration into the West may be exaggerated, but it should also serve as a warning. The southern fringe of the former Soviet Union is a volatile place. It is not somewhere either the European Union or the US should have to rely on for its energy – or any other – security.