Georgia is now mired in the worst crisis since the end - or rather suspension - of the civil wars of the early 1990s, with several factors having combined to precipitate trouble. The internal reform process has effectively come to a halt amidst corruption on a kleptocratic scale. In turn, this has helped prevent the economy from re-orienting towards the West, leaving Georgia dependent on Russian markets for exports both of goods and labor. In addition, smuggling and organized criminal activity is rampant, as much of the country operates beyond the government's control.

Russia is also once again playing a significant role in Georgian affairs. The limited reestablishment of Russian power under Vladimir Putin has enabled Moscow to put pressure on Georgia. At the same time, the presence of Chechen refugees and some fighters in Georgia has given the Kremlin a major new incentive to meddle. Russia's repeated interruptions of supplies of natural gas to Georgia (the excuse being Georgia's unpaid debt of $179 million) has had a severe effect on the economy and people. And if effectively administered, the introduction in December of a visa regime for Georgian visitors to Russia could have an even worse effect in the longer run, as remittances from Georgian workers in Russia (estimates for whose numbers range as high as 850,000) are of great importance to many Georgian families and the economy as a whole.

How has Georgia landed in such a desperate situation? Before 1989, the Georgian SSR enjoyed a relatively favorable position within the Soviet Union. Georgia was one of the few Soviet producers of wine, brandy, and many kinds of fruit. Similarly, the ban on travel to the outside world meant that Georgia, with its mountains and beaches, also attracted a share of Soviet tourists out of all proportion to its size.

However, forced isolation in the shoddy Soviet economy meant that by the late 1980s, Georgian products were hopelessly uncompetitive on world markets. Even more disastrous have been the moral and cultural effects of Soviet rule. Georgian products were those most prized on the Soviet black market, which grew enormously during the Brezhnev years but which was still legally banned. Combined with local traditions of defiant individualism and contempt of state authority, this meant that Georgians came to play a leading part in the "criminal" economy. Under Soviet rule, this contributed to Georgians' surprisingly high real living standards. However, it also bred a contempt for law. As the chairman of Georgia's anti-corruption commission, David Usupashvili, told me,

"People were naturally utterly cynical about Communist laws and rules; but unfortunately, that fed a nihilistic mentality in which under independence they still do not respect any laws or rules at all. ... Corruption is a way of life. People don't believe that the state will ever provide services or enforce the law, so they don't pay taxes. There are only two ways to survive here. To become financially strong yourself, or to place yourself under the protection of someone who is stronger. But there is no way to be a citizen, there is only a kind of feudalism, in politics, government, business."

In the early 1990s, as the Soviet Union collapsed, tension among Georgians and the aspirations of Georgian ethnic minorities combined with manipulation from Moscow to produce disastrous conflicts in the Georgian regions of South Ossetia and Abkhazia. In other areas too, the writ of Tbilisi barely runs: the Autonomous Republic of Ajaria, ruled by its local strongman Aslan Abashidze; the mountainous region of Svanetia; the Armenian-populated district of Akhalkalaki (also home to a Russian base); and most recently the Pankisi Gorge near the Chechen border in Georgia's eastern mountains, which Chechen refugees have turned into a no-go area for the Georgian security forces, and a base for kidnapping and other criminality.

In October 1993, Georgia's defeat in Abkhazia led to a new revolt in western Georgia by the followers of President Zviad Gamsakhurdia, deposed in a coup in January 1992 and replaced by Eduard Shevardnadze, the former Georgian communist boss and Soviet foreign minister. The "Zviadists" were defeated with the help of Russian tanks and other equipment, in return for which Moscow extracted a promise from Shevardnadze that Georgia would join the Commonwealth of Independent States and generally accept renewed Russian hegemony.

In the following years, however, Russia's defeat in the first Chechen War, and continued economic decline, seemed to give Georgia a new chance to escape from Moscow's hated tutelage. Concurrently, US interest in the Caucasus, and commitment to supporting Georgia and Azerbaijan against Russia, greatly increased. Georgia then took a series of steps to distance itself from Moscow and align itself with the West: reducing co-operation with the CIS to a minimum.

As part of its re-orientation towards the West, Georgia helped establish a US-sponsored counter-organization, the "GUUAM" group of former Soviet states; participated in NATO's Partnership for Peace Program, declaring its desire to join NATO itself; strongly endorsed the US-backed Baku-Ceyhan pipeline; and sought help from the West and the OSCE to pressure Russia to withdraw its military bases from Georgia (two were partially closed last year, but Russia appears determined to hang on to the others).

These steps, or at least their more ostentatiously anti-Russian aspects, may have been a serious miscalculation. The Russian army is bogged down in Chechnya, but still looks a good deal stronger than in the aftermath of the defeat of 1996 (I should say with due humility that in my book on the first Chechen War, I too exaggerated the extent of Russian weakness). Georgian hopes of direct Western military support, leading to NATO membership, have proved a wild fantasy, if only because of the disastrous condition of the Georgian army.

No natural gas supplies have become available that could replace those from Russia, on which the Georgian economy is utterly dependent; and under Putin, the Russian government has shown a new ability to create a coherent energy policy with partly geopolitical goals. Azerbaijan's oil reserves have so far proved much less than hoped and Western oil companies have strongly resisted agreeing to pay for the Baku-Ceyan pipeline across Georgia. Under President Clinton, despite its strong rhetorical support for Baku-Ceyhan, the US state also refused to invest directly in the project.

The West, and especially the United States, have indeed provided relatively large sums in aid to Georgia, in part because of hostility to Russian hegemony, and in part because of continued gratitude to Shevardnadze for his role in helping peacefully to end Soviet control over Eastern Europe in 1989-90. In recent years, Georgia has been the third largest recipient of US aid in the world in per capita terms. Unfortunately, the greater part of this aid appears to have been stolen or otherwise squandered by the Georgian ruling elites.

In the course of 2000, the Shevardnadze government came under heavy pressure from Western governments to tackle corruption, leading to the creation of an anti-corruption commission headed by respected intellectuals; but privately, Western diplomats in Tbilisi admit that it is pointless to aim at the prosecution of high-level offenders. Instead, they are trying only to limit some of the opportunities for corruption. Western disillusionment was deepened by the massive rigging of the April 2000 presidential elections, in which Shevardnadze officially received 79.8 per cent of the vote on a 75.8 per cent turnout.

Acute energy shortages have continued for several years, and have been made worse by the latest Russian pressure. In early December, a widespread blackout led to thousands of citizens of Tbilisi taking to the streets in protest. Other demonstrations have demanded that the Georgian government take stronger measures against criminal acts by Chechen refugees and the Chechen minority in Georgia (the Kists). However, the Georgian security forces are in a very poor position to respond to the crisis.

With Georgia's capacity for internal regeneration low, the key questions for the next months are how far Russia is prepared to go in re-asserting hegemony over Georgia? Also, how far can Georgian government go in compromising with Russia, and what the West is prepared to do to help Georgia against Russia? One thing that no Georgian government can do is to allow Russian troops to operate on Georgian soil against Chechen guerrillas (a demand made by Moscow at the start of the latest war), for this would badly damage Georgian sovereignty and risk spreading the war deep into Georgia. On the other hand, some compromise on leasing the remaining Russian bases for an extended period may be possible, along the lines of the Russian-Ukrainian deal over the Black Sea Fleet base at Sevastopol.

Under pressure from Russian public opinion, President Putin recently announced that Russia is reducing its military presence in Chechnya and scaling down its campaign there, which in principle is obviously good news from Georgia. However, the Chechen fighters are far from finished. If they inflict humiliating defeats on the remaining Russian troops, then Moscow may be tempted once more to seek a scapegoat in Georgia and in Chechen fighters allegedly based there.

Failing this, Russian pressure seems unlikely to escalate to a point where it threatens to destroy the existing Georgian state. On the other hand, given Georgia's record and the priorities of the new US administration, it seems unlikely that US commitment to Georgia will increase to the point where it could transform Georgia's geopolitical position, let alone its economy or system of government. More likely is that this country will remain for the foreseeable future a kind of unhappy geopolitical no-man's-land.