Two months after invading and occupying large portions of Georgia, Russian troops have begun to dismantle their positions and retreat back to the disputed provinces in the Caucasus.  The Russians will comply with the terms of a cease-fire agreement that requires them to return to their positions status quo ante in South Ossetia and Abkhazia.  They will rely on EU monitors in the formerly occupied areas, but not in the disputed provinces:

Russia says its troops are pulling back from a “buffer zone” around Georgia’s breakaway region of South Ossetia.

Russian forces were seen dismantling and leaving one checkpoint in the area.

Moscow must pull its troops out of areas around South Ossetia and Abkhazia – another breakaway region in Georgia – by Friday under a ceasefire deal.

President Dmitry Medvedev said the pullout would be completed by midnight. Moscow has kept troops in the region since ousting Georgia’s army in August.

Unfortunately, this does not return the region to the status previous to August 7th.  Russia has recognized the independence of Abkhazia and South Ossetia, although few if any other countries have joined Moscow in that recognition.  They refuse to allow the EU or other international monitors in either province to determine their actual status or the Russian activities within them.  Georgia’s military has been left in a much weaker position, and the damage inflicted on the country and its citizens will likely create political instability for years.

With the Russian adventure in Georgia almost at an end, at least militarily, they may be free to create their next adventure.  Michael Totten reports from the “forgotten war” in Nagorno Karabakh, the disputed region between Azerbaijan and Armenia that stokes passion far beyond anything Totten experienced in Georgia:

Immediately following Russia’s invasion of Georgia and its de-facto annexation of the breakaway regions of Abkhazia and South Ossetia, the phrase “frozen conflicts” was bandied about so often among the world’s foreign policy commentariat that it briefly became a cliché. Yet there is another frozen conflict in the South Caucasus that few have even heard of, fewer know much about, and even fewer have thought to include in any analysis. This war, the forgotten war of Nagorno (or “Mountainous”) Karabakh, has so far racked up a much higher body count – tens of thousands – than any in Georgia lately. Many more people – more than a million – were displaced. An uneasy ceasefire holds most of the time, but the conflict itself is not even close to being resolved. It’s a Mideast- and Balkan-style ethnic bomb that could easily blow up the region again and tempt Russia with another imperialist adventure in its “near abroad.”

If Russia wants to rebuild its empire, this would provide a logical pressure point.  The Azeris could get pushed quite easily into war with Armenia, which would give Vladimir Putin an excuse to occupy Azerbaijan on behalf of their Armenian allies.  In fact, as Totten discovers, the Russians have been provoking the Azeris much the same way they provoked the Georgians, but the Azeris have wisely chosen to ignore them.  However, popular sentiment runs heavily towards war, and eventually the Azeri government will have to reckon with that.

One potential obstacle exists for Russia.  The collapse of the financial markets has cut the price of oil in half.  Russia relies heavily on crude oil exports to fund their adventures.  If the price of oil continues to drop, Moscow may not have the cash to maintain its current positions, let alone conduct adventures in the former Soviet republics.  Recall that the Russian military was near collapse until oil prices began rising a few years ago, and Russia began making fortunes on energy exports.  Oil gave them the money to be aggressive, and now the financial situation may force them to retreat.

Be sure to read all of Totten’s excellent dispatch, and keep an eye on southwest Asia.  More potential powder kegs may blow up in the near future.