Suddenly, both the dispute and the wider implications are getting serious. Russia's saber-rattling over the small former Soviet Republic of Georgia has been escalating in the last days of Vladimir Putin's presidency.

A Russian missile shot down an unmanned Georgian reconnaissance aircraft that was in recognized Georgian airspace. Reinforcements have been sent to join 3,000 Russian "peacekeepers" in the breakaway Georgian province of Abkhazia, on the pretext of a Georgian troop buildup that independent observers have failed to discern.

It is not clear whether the Kremlin is seeking a full-scale confrontation, but the provocations are becoming unpleasantly obvious. And so is the reason for them. Last month's NATO summit pointedly decided not to offer Georgia and Ukraine membership in the alliance.

Russia seems to have taken this as a signal that NATO will not directly oppose its assertion of a sphere of influence in the oil-rich Caucasus region, where Georgia offers the only oil pipeline to the West that is not under Moscow's direct control.

NATO did not say "No" so much as "Yes, but later." And it did so because of Germany, which made it plain that the imminent change of Kremlin leadership was no time to be provoking Russia with yet a further advance of NATO into Russia's back yard.

This may have been the most portentous German foreign policy decision since its ill-starred insistence in 1991 that Europe should recognize the independence of Slovenia and Croatia. That was the event that kicked off the breakup of Yugoslavia and launched a decade of Balkan wars.

James Baker, who was U.S. secretary of state at the time, later admitted to this reporter his greatest regret about his term of office was not to have fought harder against the German move. But in the immediate wake of German reunification and the new European Union's claim that it should be allowed to run affairs on its own continent, he backed off.

The Americans, distracted by a financial crisis, the Iraq and Afghan conflicts and their own presidential election, were this time not inclined to force the issue of NATO membership for Georgia and Ukraine when they ran up against German opposition.

But the EU of today is no longer the Europe of 1991. The former Warsaw Pact countries of Central and Eastern Europe and the three former Soviet republics of the Baltic region, Latvia, Lithuania and Estonia, are now full members of NATO and the EU. Memories of the Soviet yoke keep them in a state of constant and alert suspicion over Russia's motives and its use of its energy supplies to apply political pressure.

They were appalled when Germany agreed to the Nord Stream deal to build a gas pipeline that would go under the Baltic Sea directly from Russia to Germany, deliberately and expensively skirting Poland. Dismay became disgust over "Moscow Gold" when former German Chancellor Gerhard Schroeder was then hired by Nord Stream in a leading role.

They were also appalled last week when Greece agreed to a similar South Stream pipeline deal, and their suspicions were not entirely abated when outgoing Italian Premier Romano Prodi turned down -- a least for the moment -- a Schroeder-style job offer from the Kremlin to run the new company.

So Germany's new partners are now seeing Georgia as a test case, not just for Russian intentions, but for German appeasement and European resolve. But it is also a test case for the readiness of the United States to stand up for small nations like Georgia (and, next, Lithuania) when the Europeans hesitate. It is the kind of Russian stance that has the Republican presidential nominee, Sen. John McCain of Arizona, calling for Russia's expulsion from the Group of Eight summit group.

With oil at $120 a barrel, this should be a problem the new Russian leadership does not really need, least of all with the current or next U.S. administration. But the Russian pressure on Georgia started on Putin's watch, and the policy of using energy as a strategic tool took off while Dmitry Medvedev was chairman of Gazprom. And there are enough strategic hard-liners in Moscow to argue that this is the perfect time to take advantage of European divisions and U.S. distractions.

But does it make sense when Russia's domestic agenda is so compelling? At the operational level, Russia needs to repair the dismal state of its infrastructure, fix the leaky oil and gas pipelines and try to develop a real and rounded industrial economy rather than depend on oil and gas and mining.

In the business of governance, the new administration needs to tackle inflation, attack corruption, bring back something like a functional health service and improve schools and housing.

And if Medvedev fulfills his inauguration pledges to reform the system of "legal nihilism" and cultivate a healthy civil society, then Russia's future could look bright. Certainly it would look like a better neighbor and a better investment option than a sour-headed old Russian bear bullying the neighbors as it starts taking over the old neighborhood.

But the temptations for the Kremlin to reassert the great-power authority that it lost after the collapse of the Soviet Union are compelling, particularly when the Europeans and Americans are too divided, too distracted and too worried about energy security to make common cause.

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