Ethnicity, history and smuggling fuel tensions in mountainous region

The Caucasus is one of the most ethnically diverse and conflict-ridden regions in the world, and it has the history to prove it.

Geographically, this knot of mountains between the Black and Caspian Seas spans the fault line between Europe and Asia. Lush valleys, barren uplands and ancient trade routes crisscross the region.

Patterns of human settlement are as complicated and challenging as the terrain itself.

Today's borders, even those widely accepted by local and international opinion, don't even begin to reflect the stew of languages and tribal loyalties found in the region.

That giant Russia and middle-sized Georgia would fight battles over a tiny enclave South Ossetia two-thirds the size of Prince Edward Island is no surprise to Caucasus scholars. The region has been awash in tensions, disputes and war for centuries.

The Ossetian people, who speak a language akin to Persian and hugely different from Georgian or Russian, probably arrived in the Caucasus about 700 years ago, migrants from further east in Asia.

Ossetians loyal to Russia

Unlike other inhabitants of the region, they didn't consistently and violently oppose 18th century Russian expansion. In fact, Ossetians fought alongside invading armies from the giant and growing empire to their north and were seen by Russian rulers as loyal, a favoured people.

Under Soviet Communism, they lived in the autonomous provinces of North and South Ossetia.

Starting in the late 1980s, the slow-motion collapse of the Soviet Union gave rise to open ethnic tensions across the Caucasus.

South Ossetia was part of Georgia, home to a fiercely nationalistic people whose history stretched back millennia.

For most of the 20th century, under Moscow's yoke, Ossetians and Georgians had lived in relative peace, even intermarrying and living in each others' areas.

But moves to emphasize the Georgian language and win freedom from Russian domination were rejected in South Ossetia. The region declared itself at first autonomous and then independent of Georgia in the early 1990s.

First fighting in early 1990s

In Tbilisi, the Georgian capital, fiercely nationalist leaders rejected these moves and violence broke out in 1991.

Tens of thousands of Ossetians and Georgians fled to their respective homelands an eerie precursor to the "ethnic cleansing" in the Balkans that would shock the world a few years later.

What was supposed to have been a moment of joy across the former Soviet Union, freedom from communism and self-determination for people who'd long chafed under foreign rule, was turning into a dangerous quagmire.

Long-dormant ethnic fractiousness was breaking out across the Caucasus and Central Asia.

Armenia and Azerbaijan were also fighting over enclaves within each other's territory; the first of the vicious wars in Chechnya broke out; Abkhazia began moves to break away from Georgia. Other, smaller conflicts raged in Dagestan, Ingushetia and elsewhere.

The view from Moscow was worrying. Russia itself is an ethnic patchwork with various regions, peoples and languages who might be tempted to fissiparousness of their own by Caucasian splintering.

Russians regard their country's territory as sacred ground, a legacy of empire and czarist nationalism, as well Communist triumphalism.

Moscow renews old friendships

The Kremlin, the centre of political power in Moscow for centuries, reached out to ethnic Russian leaders and traditional loyalists of other nationalities and renewed old alliances.

In South Ossetia, that meant Russia as the military guarantor of the enclave's breakaway leadership.

By 1992, newly independent Georgia realized it could not end Ossetian separatism by force of arms so Tbilisi reluctantly accepted a ceasefire.

Tensions waxed and waned throughout the 1990s with Georgia's own often violent politics providing a backdrop to a series of largely futile attempts by European and U.S.officials to establish peace.

South Ossetia, backed by Russia, enjoyed a de facto sovereignty and raised most of itsstate revenue from taxing traffic on the most important road tunnel through the Caucasus mountains.Moscow also sent generous subsidies.

Unofficially, the enclave was also a major boon to local smugglers wanting to trade in untaxed cigarettes, drugs and other contraband in Georgia, Russia and beyond.

Other Russian-protected ethnic enclaves in the region, including Abkhazia along Georgia's Black Sea coast, are also havens for smugglers and organized crime, according to international police officials.

Russia is hugely sensitive about its network of alliances across the territory of the old Soviet Union and resents outside interference of any kind.

Yugoslavia's bloody collapse in the 1990s still resonates in Western capitals, and how the latest crisis in the Caucasus is handled there will have repercussions for relations with Moscow for years to come.