The new Cold War: Crisis in the Caucasus

Russian troops advanced further into Georgia, moving to within 25 miles of the capital at one point yesterday, even as the Kremlin announced that it had signed, and would abide by, a ceasefire stipulating that it withdraws its troops from the territory it has occupied.

At the end of a tumultuous nine days, there was deep uncertainty about what unfolds next in the war in which Russian warplanes had bombed a European ally of the US and revived the spectre of the most tense days of the Cold War.

As he conferred again with his top advisers, George Bush yesterday delivered his toughest attack yet on Moscow, accusing it of invading a sovereign neighbour and "threatening a democratically elected government". Such behaviour was "completely unacceptable to the free nations of the world", the US President declared.

Returning from her emergency visit to Tbilisi, Secretary of State Condoleezza Rice flew directly to Mr Bush's ranch at Crawford, Texas, while Robert Gates, the Defence Secretary, joined the talks by video-conference.

But Washington was still struggling to find an effective response to what it condemns as blatant Russian aggression. Moscow, however, takes exactly the opposite view, and is exploiting the West's discomfort to the hilt.

It has seized the opportunity presented by the Georgian President Mikheil Saakashvili's ill-judged attack on the breakaway province of South Ossetia to show that Russia will no longer tolerate Nato and Western encroachment on its sphere of influence.

It rammed home that message last week by warning that Poland had placed itself at risk of attack – even nuclear attack – by agreeing to the installation of part of a US anti-missile defence system its territory, a plan that has long infuriated the Kremlin.

In Georgia itself yesterday, Russian troops remained in control of the central Gori region, a strategic area that effectively bisects the country; the port of Poti, a vital economic lifeline; the city of Senaki; and in the separatist republics of South Ossetia and Abkhazia.

Last night, however, there were signs that Russian commanders were pulling back from their most forward position at Igoeti, less than half an hour's tank drive from the capital, Tbilisi, and where a column of armoured personnel carriers from the 71st Motorised Rifle Regiment had been deployed from Chechnya. It had driven in unchallenged, before cutting the road.

Soldiers of the Georgian army, who had been waiting for permission from the Russians to go back into Gori, but instead saw the front line move even closer, could only watch, powerless, from the roadside. Lightly armed Georgian policemen, however, mingled with the Russians.

In what the Georgian government angrily described as steps to dismantle the country's economic and military structure, the Russians removed equipment and installations from Poti after sinking five patrol boats and ships, blew up ammunition stocks at Georgian army bases, and destroyed a railway bridge.

Meanwhile, the humanitarian crisis continued to grow, with more than 115,000 people fleeing the conflict. Ossetian, Cossack and Chechen militias which had come in behind the Russian troops had been on a spree of killings, looting and burning in the villages around Gori, and dead bodies had been left piled up in the heat, leading to fears of an outbreak of disease.

In Tbilisi, refugees from Georgian villages in South Ossetia crammed into makeshift centres with few facilities. Around 500 people had taken up residence in a former governmental building without even basic amenities.

The stench of body odour hung in the air, as growing numbers of destitute Georgians arrived. Most slept on the hard, dirty floors, and had no possessions with them, save for the clothes they were wearing when they fled. Phone calls to those left behind in their villages brought only bad news – Ossetian militias were looting and torching their houses, making sure they could never return.

Both sides have been accused of atrocities in the war. The Independent was the first Western media organisation to reach Tskhinvali, the capital of breakaway South Ossetia. They found a city in ruins following the initial pulverising Georgian bombardment and the ferocious Russian counter-attack. Homeless people, many of them injured, were seeking sanctuary. Stray dogs, according to local inhabitants, were chewing the flesh from human bodies.

In a sign of the ferocious sectarian divisions, the South Ossetian paramilitaries who held the Independent reporters at gunpoint repeatedly threatened to kill their Georgian driver, Merabi Chrikishilli, and vowed retribution on all Georgians when the Russians crossed the border.

This threat was carried out – with devastating effect on civilians – as the Georgian army panicked and fled from Gori, its main base in the region, amid streams of refugees fleeing the violence. The victims were mainly the old and infirm, unable to undertake the arduous journey to safety.

Merabi Chrikishilli's elderly relatives are among many people now hiding in cellars, with little food and water, while armed gangs roam through the villages. Some refugees who had fled from Georgian enclaves, under attack in South Ossetia, have now found themselves trapped in the Russian-controlled zones at the mercy of the militias.

Dr Georgia Abramishvili, a 28-year-old surgeon who had treated those injured when the Russians carried out their first bombing of Gori, died in the final strikes, when an air-to-ground missile smashed into the grounds of the hospital, despite a Red Cross flag flying on the roof to deter any such attack.

Russian officers in Georgia denied that their forces had carried out attacks on civilians. Some admitted, however, that atrocities were being carried out by the militias. Major General Vyacheslav Nikolaevich Borisov, the commander in charge of Gori, said: "Ossetians are running around and killing poor Georgians. This is a problem and we are trying to deal with it. I have ordered my men to arrest anyone carrying out looting and other criminal acts."

In Tskhinvali yesterday, the South Ossetians paraded around 40 haggard and frightened-looking Georgian civilian captives through the city. Most were elderly men, many with cuts and bruises on their faces, walking with their shoulders slumped. A militiaman hit one of the men on the head as he walked by.

For many in Georgia, there is the bitter feeling that President Mikheil Saakashvili's assiduous courting of America has been a one-sided love affair. Over two-fifths of the country is in Russian hands, and the truce brokered by the French President Nicolas Sarkozy gives Moscow significant freedom in moving its troops around supposedly sovereign Georgian territory.

The Georgian President is now a beleaguered figure, engaged in increasingly erratic public acts. The day after his army panicked and fled from the strategic city of Gori, he held a victory rally in Tbilisi. And even after his army fled Gori without the Russians even firing a shot, he led a patriotic rally in central Tbilisi promising never to surrender.

On Friday, after five hours of negotiations, Ms Rice persuaded Mr Saakashvili to sign up to the ceasefire, promising a package of economic aid but making very clear there would be no military help. Nor did she say what would happen if the Russians did not sign up to the ceasefire.

But the Secretary of State then stood stony-faced as the Georgian President appeared to lose control at the press conference, repeatedly calling the Russians "barbarians" who were raping his country. Local analysts say that opposition to Mr Saakashvili has been muted during the conflict, but may grow afterwards, making his position untenable.

Even the ceasefire, to which Russia has now agreed, contains ambiguities that Moscow is likely to exploit to keep up the pressure on Mr Saakashvili, whom it detests, and to maximise the embarrassment for Mr Bush. Only after "additional security measures" are in place would Russia withdraw its forces from the conflict zone, Russian Foreign Minister Sergei Lavrov, said yesterday, claiming this proviso formed part of the ceasefire signed by President Dmitry Medvedev.

Earlier, Mr Lavrov bluntly warned the West it could "forget about" the sanctity of international borders in the case of Georgia – strongly implying that Russia would establish South Ossetia and Abkhazia as virtually independent, or even incorporate them into Russia itself.

While the US is determined to "punish" Moscow for its actions, its options are limited. Mr Gates last week ruled out the use of force. But other reprisals might see Russia expelled from the G8 (Mr Bush last week referred to the "G7" and not the G8), or being turned away from the World Trade Organisation. And David Cameron, who is visiting Tbilisi, has added his voice for Russia to be expelled from the G8. There are also calls for moves to rescind the award of the 2014 winter Olympics to Sochi, the southern Russian city just a few miles from the border with nominally Georgian Abkhazia.