Frederick Forsyth could not have made it up. The past week's escalating tension in the Caucasus would be all too plausible as a fictional prelude to open war between two former Cold War superpowers. In real life, it presents a grave threat to international security that now demands the utmost restraint from all sides.

On Tuesday it appeared that Russia would withdraw its troops from Georgia just in time to claim victory with honour. Yesterday it became clear that the ceasefire signed by President Medvedev was nothing of the sort. Witnesses reported Russian armour conducting a scorched-earth policy instead of an orderly retreat. Tanks and troops were seen in at least three major towns from which they had been expected to pull back. Not wishing to abandon its Georgian ally - or be seen to - Washington has sent military aid flights to Tbilisi and ordered naval vessels to the Black Sea.

The ceasefire brokered by President Sarkozy of France was clear in its broad outlines. It required both sides to desist immediately from using force; to renounce military action in the region in the future; to give free access for humanitarian aid; and to withdraw their troops to pre-conflict positions.

These requirements must be enforced at all costs. The idea of a proxy conflict between Nato and Russia in the Caucasus may seem surreal. This does not make it impossible. With the prospect now looming of US “advisers” and Russian “peacekeepers” competing for control of Georgia's only deep-water port, the price of a false move by either side could be inordinately high.

Russia has so far justified its apparent violations of the Sarkozy agreement with a loophole allowing it “to implement additional security measures” after the agreed ceasefire deadline. It is hard to see what additional security Moscow needs either for its troops or for South Ossetia's civilians, having routed the Georgian Army and driven most of it back to Tbilisi.

In strategic terms the Kremlin has achieved more in South Ossetia than even Vladimir Putin will have dared hope. Tactically, it has broken not only the spirit of Tuesday's agreement but also a promise by President Medvedev, before Mr Sarkozy arrival in Moscow, to halt his military operations and withdraw.

In light of these realities some of the rhetoric that has emerged from Mr Medvedev's administration in the past 24 hours has been little short of outrageous. Sergei Ivanov, the former Defence Minister and current First Deputy Prime Minister, has likened unconfirmed Georgian atrocities against South Ossetian civilians last week to those of September 11, 2001, on New York and Washington. Vitali Churkin, the Russian Ambassador to the UN, has embraced an equally offensive parallel with the murder of 8,000 Bosnian men and boys in Srebrenica 13 years ago. Most inflammatory of all has been the peremptory declaration by Sergei Lavrov, the Foreign Minister, that the world “can forget about any talk of Georgia's territorial integrity”.

The revised ceasefire being negotiated yesterday by Condoleezza Rice, the US Secretary of State, must pave the way for peace talks without preconditions. Russia and the US, meanwhile, must reassess the basis of their relationship. Dr Rice has already concluded, rightly, that the price of further Russian recklessness must be isolation. For its own part, Moscow may have found that in the short term it needs no foreign approval for its adventures. But its long-term prosperity depends critically on membership of international bodies such as the G8 and on broader integration in the global economy.

Russia faces a stark choice: its place in the Caucasus or its place in the world.