The OSCE said Monday it would start shutting down its mission in Georgia on January 1 after Russia blocked a proposal to extend it in a standoff over the status of the breakaway South Ossetia region, according to Reuters.

Moscow wants to split up the international democracy and human rights group`s mission in Georgia to reflect Russia`s recognition of South Ossetia as an independent state after crushing Georgia`s bid to re-take the separatist territory.

The United States and European allies in the 56-nation Organisation for Security and Cooperation in Europe have not recognized the independence of pro-Russian South Ossetia, which enjoyed autonomy when Georgia was part of the old Soviet Union.

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They sought a short-term "technical extension" of the OSCE`s Georgia mandate beyond December 31 to allow time for negotiations on a solution but Russia rejected the idea. The OSCE takes decisions by consensus only.

An OSCE meeting at its Vienna headquarters Monday failed to overcome the stalemate over Moscow`s bid to strip OSCE operations in Georgia of any mandate over South Ossetia.

"A consensus for a three-month technical extension was not possible today so it means we have to start withdrawing the mission, ceasing activities, on January 1," Ambassador Antti Turunen of Finland, the current OSCE chairman, told reporters.

"We had one side defending the territorial integrity of Georgia and the other the `independence` of South Ossetia. The sides are so far apart it made no sense trying to bridge the gap before December 31," he said.

TALKS TO RESUME DESPITE IMPASSE

In Helsinki, Finnish Foreign Minister Alexander Stubb said the deadlock was regrettable but he held out the prospect of negotiations resuming after the New Year as it would take two to three months to dismantle the 200-person mission.

Around two dozen military monitors can remain until February 19 under the provisions of an August cease-fire brokered by the EU.

Finland`s proposal was for the OSCE mission to be revamped to restore monitors` ability to cross internal conflict lines -- they have been barred from South Ossetia since August -- and be overseen by a special OSCE envoy based in Vienna.

Russian Ambassador Anvar Azimov said that was a non-starter. He blamed the breakdown in negotiations on a Western refusal to accept "the new political reality that exists for us and that is the independence of South Ossetia..."

He told reporters talks after the New Year should focus on a "mutually agreeable compromise, but added: "Russia favours an independent presence of the OSCE in South Ossetia... Even if we do not come to a deal, it is no tragedy."

Georgian deputy Foreign Minister Giga Bokeria accused Russia of pursuing a "consistent policy of infringement of Georgia`s sovereignty, independence and interests.

"The presence of international organizations in Georgia impedes this process. That`s why they are against any international presence in our country. It`s one more demonstration of their uncivilised attitude," Bokeria told Reuters.

U.S. Ambassador Julie Finley said Russia`s stance was a "debacle" for the OSCE but that Moscow was isolated.