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As the Soviet Union disintegrated, NATO was very quick to recognize every independent state that came out of it. The result was a number of countries with large Russian minorities outside of Russia. Those Russians were and still are, in many cases, disliked by their neighbours whose nationalism had been subjugated for 70 years. Many of them only lived there because while the USSR was in existence, Russians had moved to those areas in order to assert Soviet authority. The exact boundaries of the resulting states did not take this reality on the ground into account.
That does not change the fact that Russia has no right to invade a sovereign state. We cannot allow Russia to assert a supposed right to a "Greater Russia". Remember that "Greater Germany" was the initial call of Hitler. However, the fact that Russia has overreacted does not give us a right to ignore the realities of the situation on the ground. I am no expert, but the little bit I know suggests that South Ossetia is full people who want nothing to do with Georgia. We should not punish them in order to punish the Russian government.
I think the answer is to follow the Canadian example. South Ossetians should hold a referendum and vote on whether they want to remain part of Georgia, join Russia or form their own country. Before such a referendum can take place, Russian troops should be replaced by a UN Peacekeeping Force to keep order until the vote is over. When the vote is done, that force can be replaced by the troops of whatever country South Ossetia eventually joins. Unlike Poland following WWII, it is important for the vote to be free and fair. Russia can show that it is a truly democratic and law abiding country by withdrawing its troops and allowing the UN to organize the vote.
At the same time, we cannot allow other Russian populations to believe that they will be entitled to the same treatment. South Ossetia is a special case because the province has been all but independent for over 15 years. The province was never really integrated into Georgia in the first place and I’m not sure that Georgia really has a moral claim to the territory, even though there might be a legal claim. In contrast, eastern Ukraine has been a full part of the independent country since independence in the 1990s. If Russia were to invade, there would be no doubt that it is a full fledged invasion of an independent country that must be met by force. As long as that region is given true democratic rights, as explained by the Supreme Court of Canada in the section on international law in the Reference re Secession of Quebec, there is no right to unilateral succession. South Ossetia, however, does not seem to have been given such rights.
As I wrote earlier this week, our job is not to punish Russia. Frankly, we have no ability to do so unless we want to risk nuclear war. Our job is to show Russia how mature, democratic world citizens handle such problems. Our job is also to remember that how ever much Georgia may be David against Golliath, Georgian hands are not clean. The only true victims in this case are the people of South Ossetia. We need to protect their rights.