Georgia's decision to seize large parts of Tskhinvali, the capital of the breakaway region of South Ossetia, on the evening of 7 August was a disastrous political miscalculation, even in an era that is increasingly defined by spectacularly poor judgement.

Within three days of the assault, Russian forces had responded by in effect neutralising Georgia's military capacity, which President Mikhail Saakashvili's government in Tbilisi had spent several years and considerable sums of money building up.

Clearly, Russia has been goading and provoking the Georgian government for several years into making the big mistake. The parastates of Abkhazia and, above all, South Ossetia, have been under the control of a toxic coalition of criminals and both former and serving FSB officers. Russian soldiers have been acting as their protectors under the guise of a peacekeeping mission, preventing Georgia's attempts to seek a negotiated reintegration of the two areas. The Georgian crisis has benefited the standing of hardliners in Moscow, still aggrieved at Vladimir Putin's decision to place the moderate, business-friendly Dmitry Medvedev in the Kremlin.

But under the influence of an energetic neo-con lobby in Washington, and with considerable support from Israeli weapons manufacturers and military trainers, Saakashvili and the hawks around him came to believe the farcical proposition that Georgia's armed forces could take on the military might of their northern neighbour in a conventional fight and win.

The Georgian minister for reintegration of South Ossetia and Abkhazia, Temur Yakobash vili, revealed the depth of the illusion the day after the conflict broke out when he thanked Israel for its assistance in training Georgian troops. "Israel should be proud of its military, which trained Georgian soldiers," Yakobashvili said, with reference to Defensive Shield, the private company run by Gal Hirsch, a former general in the Israel Defence Forces.

Still unaware of what was really happening on the battlefield, Yakobashvili reported that a small group of Georgian soldiers had been able to wipe out an entire Russian military division, thanks to the Israeli training. "We killed 60 Russian soldiers yesterday alone," he said. "The Russians have lost more than 50 tanks, and we have shot down 11 of their planes. They have sustained enormous damage in terms of manpower."

Warned off

The Russians, of course, knew all about Defensive Shield and the tens of millions of dollars worth of Israeli military equipment that Georgia had been purchasing. Just over a week before the conflict erupted, Putin put in a call to the Israeli president, Shimon Peres. His message, according to a western intelligence source, was simple: "Pull out your trainers and weapons or we will escalate our co-operation with Syria and Iran." Peres does not suffer the same illusions as Georgian ministers and the Israeli set-up left Tbilisi within two days.

The KGB has also been tracking Georgia's clandestine arms procurement in Ukraine (where most weapons dealers work for Russian intelligence anyhow). The Russian army was also fully briefed about the joint US-Georgian manoeuvres, which took place in Georgia last month. Russia was not taking a military risk when responding to the Georgian attack on Tskhinvali - Moscow knew the precise contours of its enemy's capability. David's victory over Goliath was sensational because of its rarity - in the real world Goliath always comes out on top.

So the Russians set a trap and, prodded by Dick Cheney's people, Georgia walked right into it.

The consequences of this egregious error begin in Georgia itself. Not only is it now defenceless, it can kiss goodbye to any restoration of sovereignty over both South Ossetia and Abkhazia. Even though President Sarkozy of France received tentative agreement from both Moscow and Tbilisi for the establishment of international talks to settle the status of the two areas, they are unlikely to rejoin Georgia any time soon. The loss of Abkhazia, with its considerable economic potential, is a huge blow.

The EU and the US will argue that there is no parallel to be drawn between Kosovo and the Georgian breakaway regions. But that is not how much of the world, including China, South Africa and Indonesia, see it. And it is not how Russia sees it. The first chickens of Kosovo's independence are coming home to roost.

Saakashvili is now very vulnerable. The Russian invasion has cut communications between Tbilisi and the main port in Poti. BP has closed down the pipeline running from Baku to Ceyhan in Turkey through Tbilisi, and Georgian banks are freezing all loans and blocking capital flight.

After only a week, the Georgian economy is teetering. "It doesn't look very good for Georgia," Edward Parker from the credit rating agency Fitch told the Moscow Times. "Going to war with Russia is bad for your creditworthiness, to put it mildly." And if the wheels do come off the economy, it is hard to see how Saakashvili might salvage his political position - such a combination of economic distress and military defeat is usually fatal. If he goes, Georgia is likely to fracture politically into a variety of fiefdoms familiar from the 1990s and living standards will plummet.

There is one faint consolation. The west may be impotent when it comes to responding to the situation militarily but it can rally round by offering the country a financial and commercial lifeline.

The foreign implications of the error are graver still. Russia is placing a marker on Ukraine. Do not, Moscow says, even think of allowing Ukraine into Nato, otherwise what we have seen in Georgia will be child's play. So the west will have to think hard how to play Ukraine's application to join the military alliance.

This in turn has accentuated the divisions within the European Union between those countries, including Germany, which remain cautious about a course of open confrontation with Russia, and Britain, which has echoed calls from Washington demanding that Russia's application to join the World Trade Organisation be reconsidered. Speaking from Tbilisi, one senior European diplomat told me that the split on this issue, which was openly on display at the Nato Bucharest summit in April, "is running deeper within the EU than was the case in the run-up to Iraq".

But the Georgian fiasco has implications for politics in the Middle East, the European Union and the United States.

For the Bush administration (or for its hawks at least), the Georgian mistake presents an opportunity - let us recast Russia as a threat to global stability and a potential enemy. Predictably, the toughest response to the Russian invasion came from Cheney. The outbreak of the crisis coincided with President Bush horseplaying with beach volleyball players in Beijing and the vice-president was in operational control at the time.

Cheney immediately announced that the Russian invasion cannot go "unanswered", a choice of words that the American former ambassador to Nato Robert Hunter described as "inflammatory". Cheney has been spoiling for a fight with the Russians for a couple of years, and he and his allies have seized upon Georgia's and Ukraine's stated aim to join Nato as a way of riling Moscow.

This plan came unstuck at the Bucharest summit, when some European countries, led by Germany, blocked the Nato road map for the two former Soviet republics. But the final statement did concede that the two countries' aspirations would eventually be met at some unspecified time in the future.

As a democratic country, Georgia has every right to apply for Nato membership, even though its inability to assert its sovereignty over South Ossetia and Abkhazia presents a problem to some existing Nato members. But the neocons in Washington have been pushing Georgian and Ukrainian membership as a critical goal for the maintenance of the western alliance. By cranking up the dispute with Russia over Nato, Cheney is shifting the political debate in the US away from the state of the economy and towards the issue of national security.

Global dangers

If the presidential election is fought on the former issue, Barack Obama is a shoo-in. But if the central issue is national security and who would be best at dealing with a major crisis like Georgia, then his Republican opponent, John McCain, has to be favourite. McCain's response to Georgia was almost as tough as Cheney's, explained in part by the fact that until May this year his chief foreign policy adviser was working as a lobbyist for Saakashvili.

This political dynamic is driving the west towards a rift with Russia that will polarise a number of other issues, including policy towards Iran. On this latter matter, Russia has played a relatively constructive and, perhaps more importantly, a moderating role. In the next three months, the issues of Ukraine and Iran will loom large in global politics and they may well have a decisive impact on the outcome of the US election. Who set the trap in Georgia? Vladimir Putin and his thuggish pals from the FSB, or Dick Cheney and his equally unflappable neocon friends?

Whether Georgia was defeated by the Russians or lost by the neocons, a touch of diplomatic sobriety on both sides would be a welcome development, if the Georgian conflict is not to mark a very dangerous new phase in the development of global politics - serial confrontation between the west and Russia.