Flags flew at half mast as Russia and Georgia mourned their dead on Wednesday in five days of fighting over the separatist region of South Ossetia, with an EU-sponsored ceasefire taking hold on the ground.
The breakaway region and adjacent areas of Georgia were mostly quiet overnight after the warring sides signed up in principle on Tuesday to a plan brokered by French President Nicolas Sarkozy on behalf of the European Union.
Russia`s far greater military might humiliated Georgia, which last Thursday launched an unsuccessful strike to try to retake the pro-Russian region of South Ossetia, provoking massive retaliation from Moscow.
The conflict opened a diplomatic gulf between the United States and Britain, who condemned Moscow`s "blatant aggression," and France, Italy and Germany, who were careful to avoid criticising Russia, a key energy supplier and business partner.
Analysts said Saakashvili`s failed attempt to seize South Ossetia by force last week made it much less likely that the breakaway territory, along with a second rebel region, Abkhazia, would return to Tbilisi`s control in the future.
In Brussels, European Union foreign ministers heard a report from France`s Bernard Kouchner on the peace mission. He urged the bloc to send peacekeeping monitors to South Ossetia to help uphold the ceasefire.
In and around South Ossetia`s capital Tskhinvali, which was devastated during the Georgian attack, occasional small-arms fire resounded but there were no major incidents.
"The situation is purely a post-war one," said South Ossetian spokeswoman Irina Gagloyeva. "Taking advantage of this lull, we are reburying those killed in the Georgian aggression.
"Many were buried in a hurry just where they were killed - in orchards and kitchen yards. Yesterday, we recovered 18 decomposing bodies from under the rubble in Tskhinvali. Today we found another four."
Russia says 1,600 civilians died when Georgia attacked South Ossetia, though the figure has not been independently verified. Moscow`s General Staff says it lost 74 soldiers in the fighting, with 171 wounded and 19 missing.
Tbilisi puts deaths on its side at over 175, with hundreds injured. That figure does not include South Ossetia.
Moscow announced an emergency aid package for South Ossetia on Wednesday, with Finance Minister Alexei Kudrin pledging 10 billion roubles ($414 million) to rebuild the shattered region.
Meanwhile, Georgia accused Russia of sending dozens of tanks on Wednesday into the Georgian town of Gori, 25 km (15 miles) south of Tskhinvali.
Moscow strongly denied the claim and a witness in the town, the birthplace of Soviet leader Josef Stalin, told Reuters no Russian military could be seen. "I`ve been all over town. No tanks. No Russians," he said.
Witnesses said Russian forces had in fact set up two checkpoints on the outskirts of Gori and had occupied an abandoned Georgian artillery base 4-5 km (2-3 miles) from Gori town centre.
Tens of thousands of Georgians rallied on Tuesday night to denounce the Russian operations, which included bombing raids against mainly military installations in the country and limited incursions out of the separatist regions into Georgia proper.
Russia was unbowed, claiming a military triumph against its troublesome former Soviet vassal.
"The aggressor has been punished and suffered great losses," the Russian daily Izvestiya declared on its front page, echoing the words of President Dmitry Medvedev the previous day.
The EU-brokered peace plan would provide the basis for a U.N. Security Council resolution to settle the conflict.
But analysts said Georgia may yet have to make painful concessions, having been routed on the battlefield and forced to concede precious ground in both South Ossetia and Abkhazia.
French media said the peace plan mentioned respect for Georgia`s "sovereignty and independence" but had no reference to "territorial integrity" -- possibly allowing for discussion about the future status of the separatist territories.
The self-styled president of Abkhazia, Sergei Bagapsh, said on Wednesday that the region`s forces had pushed out Georgian troops and captured the disputed upper reaches of the Kodori Gorge on the region`s boundary with Georgia proper.
That was a major blow to Tbilisi, since the gorge was the only significant portion of Abkhaz territory under its control.
The West indicated it would call for a multinational peacekeeping force in South Ossetia and Abkhazia to replace the Russian-Georgian joint force, and a new process to settle disputes that have simmered since both regions broke away from Georgian rule in the early 1990s.
REPUTATION AT STAKE
The United States, which has taken a back seat to EU efforts to end the conflict because of its poor relations with Moscow, has accused Russia of a heavy-handed and brutal offensive aimed at toppling its close ally Saakashvili.
In a first retaliatory move, Washington on Tuesday cancelled a Pacific Ocean naval exercise set for next week involving Russia, Britain and France.
"There is no way in good conscience that we could proceed with a joint naval exercise given the state of this crisis," a senior U.S. defense official said on the condition of anonymity.
A senior official in Washington said events could weigh on Russia`s bid for WTO and Organization for Economic Development and Cooperation membership, and its current presence in the Group of Eight industrialized nations.
A senior EU official in Brussels said foreign ministers were likely to tell Moscow its use of military force in Georgia would affect EU-Russian relations, without spelling out how. They will also consider how to send in more humanitarian aid.
Russian Foreign Minister Sergei Lavrov again questioned NATO`s commitment to offer membership to Georgia, a move that has angered Moscow, which does not want the Western military alliance extended around its borders.
"For decision-makers in the NATO countries of the West, it would be worth considering whether in future you want the men and women of your armed services to be answerable to Mr Saakashvili`s declarations of war in the Caucasus," he told the Financial Times.
(Additional reporting by Sue Pleming in Washington, Francois Murphy in Paris, Dmitry Solovyov in Vladikavkaz, Margarita Antidze and James Kilner in Tbilisi, Oleg Shchedrov in Moscow and Paul Taylor in Brussels; Editing by Janet McBride)
