The first incursion allegedly took place Aug. 6 and involved a missile fired at a Georgian village. Whether intentional or not, the missile didn't explode. That incursion occurred near another Georgian breakaway region, South Ossetia.

The Russians have denied both incidents, claiming the first was a Georgian provocation. Ignoring the fact that parts of the missile could be identified, Georgia has little reason to create a crisis. It is fully aware that U.S. intervention against Russia is unlikely at this point, and that anything more than rhetorical support from European countries is equally unlikely. At least for now, a crisis would leave Georgia alone. Therefore, antagonizing the Russians at this point really doesn't make a great deal of sense.

But increasing Georgian insecurity does make sense for Russia. With the collapse of the Soviet Union, Moscow withdrew from most of the Caucasus region, leaving behind Armenia, Georgia and Azerbaijan -- all former Soviet republics that are now independent states. It also left behind a series of dispute fragments in a region where ethnic and religious strife is endemic. Russia lost its secure frontier with Turkey, replacing it with an unstable and frequently violent border.

The direct threat to Russia was the part of the Northern Caucasus that it continued to control, which included Chechnya. If Russia had abandoned Chechnya, it would have lost its foothold in the Caucasus and, along with it, any natural defensive position. But the Russians decided disintegration stopped there and fought to hold their position.

The Russians believed, with substantial reason, that arms were reaching the Chechen guerrillas via Georgia through the Pankisi Gorge. The minimal Russian charge was that the Georgians, closely aligned with the United States, were not doing enough to stop the flow of weapons. The maximum Russian claim was that the Georgian government was facilitating arms smuggling, supported by the United States, which wanted to see the Russian Federation disintegrate.

The Russians therefore have historically viewed Georgia, allied as it is with Washington, as a direct threat to their national security. First, there was the Chechen issue. Second -- and far more important in the long run -- was the entire matter of the Russian frontier in the Caucasus. The old Soviet-Turkish frontier allowed Russia to secure the Caucasus and limit insurgencies among ethnic groups. The current frontier is an invitation to insurgency and constantly threatens to draw Russia into conflicts in the region.

Russia is aligned with Armenia, which is afraid of the Turks. It has good relations with Azerbaijan, having military facilities there, as well as trade relations. Georgia is Moscow's problem. It destabilizes Russia's southern frontier and is seen as facilitating instability in Russia itself. Georgia's close relationship with the United States has in the past made it immune to Russian pressure, but close relationships with the United States are not worth what they used to be, or what they might be in the future.

We have spoken before of Russia's current window of opportunity. The two incursions into Georgia -- both of which we believe were intended to be noticed -- put the Georgians on notice that, in Russia's mind, Georgian autonomy is no longer a settled matter. Russia might not be planning to occupy Georgia, but it is letting the Georgians know that it believes they have freedom of action. The moves were designed to make the Georgians extremely concerned -- and it is working.

The Russians want to see an evolution in Georgia in which Tbilisi acknowledges that it is within the Russian sphere of influence and, as such, retains its independence to the extent that it is prepared to accommodate Russian interests. Those obviously include collaboration on the issue of Chechen weapons -- now a bit of a dated subject. But this specifically means Georgia should shift its relationship with the United States. The Russians do not want to see Washington using Georgia as a foothold in the Caucasus.

Russia is rewriting the post-Cold War rule book. Georgia is one of the places that matter to Russia, and Russia is signaling the Georgians to reconsider their national security interests. It will be interesting to see what the Georgians do, and -- assuming they maintain their current stance -- what the Russians do next. Moscow did not carry out these incursions without a plan. The Russians have started small. We would be surprised if they restrained themselves in the face of a continuation of Georgian policies toward the United States and the region.

Situation Reports

1137 GMT -- UNITED STATES -- Bank of America Corp. (BoA) purchased $2 billion of preferred stock from Countrywide Financial Co., eroding fears that the company could go bankrupt, a Punk, Ziegel & Co. analyst said Aug. 23. Countrywide is the largest mortgage lender in the United States; it lost 24 percent Aug. 15-16 driven by fears connected to the subprime mortgage crisis. As a response to the cash injection, U.S. stocks gained value Aug. 22 while both the European and Asian markets advanced Aug. 23. BoA will not get any seats in the board of Countrywide in connection with the investment.

1134 GMT -- EU, UNITED KINGDOM -- The European Union on Aug. 23 lifted a ban on British beef imports. The United Kingdom can resume its exports of cattle, meat and diary products apart from a restricted zone in Surrey county, where the initial outbreak of foot-and-mouth disease was confirmed Aug. 3.

1132 GMT -- PAKISTAN -- The Pakistan Lawyers' Forum (PLF) has moved the Supreme Court in order to restrain President Gen. Pervez Musharraf from getting re-elected, the Dawn reported Aug. 23. Musharraf is not eligible to contest since "he suffers from inherent pre-election disqualification," the PLF said, citing a recent court ruling that states the position of president is nonpartisan. The PLF says Musharraf is therefore supposed to keep out of politics and not make deals with political parties to ensure his re-election.

1128 -- PAKISTAN -- Pakistan's Supreme Court, chaired by Chief Justice Iftikhar Mohammad Chaudhry, on Aug. 23 resumed hearings on the petitions of former Prime Minister Nawaz Sharif and his brother, Shahbaz Sharif, seeking their return to the country. President Gen. Pervez Musharraf ousted Sharif in 1999 after a military coup. Sharif, who leads the largest Pakistani opposition party, Pakistan Muslim League-Nawaz, now seeks to contest Musharraf in the presidential elections.

1125 GMT -- BELGIUM -- Overnight coalition talks between the Belgian Christian Democrats and liberals ended futilely Aug. 23, but a new meeting is expected to be held later the same day. Flemish Christian Democrat leader Yves Leterme has failed to set up a governing coalition since the June 10 elections because Flemish and Walloon liberals and Christian Democrats cannot agree on a constitutional reform for Belgium.

1119 GMT -- JAPAN -- The Bank of Japan decided Aug. 23 to keep its short-term interest rate unchanged at 0.5 percent. Interest rates that are too low encourage risky investments, Bank of Japan Governor Toshihiko Fukui said, signaling that he eventually could return to his policy of gradually increasing rates. Meanwhile, the Japanese yen fell to a one-week low against the dollar while the Japanese Nikkei 225 index closed 2.61 percent higher. All Asian benchmark indices ended sharply up.