Russia, according to President Medvedev, is ready for a “new Cold War”. If politicians, including our own, want a new Cold War, they will get one. But the fault will lie as much with us as Russia.

Every move in Russia's foreign policy is greeted by the West with alarm and suspicion. But its policy has been perfectly consistent for years. Russia's aim has been to rebuild itself as a great power, and use that power to regain a dominant position in the old Soviet space it surrendered in the 1990s. In Russia's perception, the United States wants to take over the space vacated by Russia as fruit of its victory in the Cold War, using Nato as a dagger, and Britain to supply moralistic veneer.

Russia has made it clear for years how deeply it resents the expansion of Nato to its borders. One of Stalin's aims was to create “buffers” between the Soviet Union and Germany to stop a repetition of the two invasions that cost millions of Russian lives: the “buffer” reflex explains the militarily useless decision to keep a few Russian troops a few miles beyond the South Ossetian border.

Russia was rightly pushed out of its satellites in 1989-90 by popular uprisings but it created the Commonwealth of Independent States in the expectation that it would provide a buffer against Western expansion. What did the West do? It expanded not just its political but also its military penetration into the CIS area whenever an opportunity presented itself. Most recently, the Anglo-American consortium made it clear that it wanted Georgia and Ukraine inside Nato, though Germany and France succeeded in blocking the move temporarily.

What did Britain and America think they were doing? Pushing Nato deep into the old Soviet Union and setting up a missile defence system in Poland and the Czech Republic on the patently false pretence that it was to counter the (non-existent) threat from Iran was bound to add to Russia's already considerable paranoia, without achieving anything worth having. Significantly, every shade of Russian opinion, from liberal to xenophobic, regards Western policy as crass. Does the British Government realise with what fire it is playing? Have they no memory of how a “local” quarrel in 1914 escalated into a world war?

About a year ago I was at a lunch with the Georgian Ambassador, a delightful man but full of small-country big talk. I pointed out politely that small countries on the edge of big countries had to be careful not to provoke their larger neighbour; but that it is also perfectly possible for them to coexist peacefully if the smaller nation understands its place in the scheme of things.

The conditions for such peaceful coexistence need not be especially onerous. Finland is a classic postwar example of a state that conducted itself so as to retain its independence and liberty even under Stalin's baleful eye. It was not a heroic or romantic stance, but a mature one.

President Saakashvili is a hothead. He invaded South Ossetia aiming to translate theoretical sovereignty into practical sovereignty and lost Georgia's theoretical sovereignty as a result. He ought to be removed by his people, not for war crimes but for gross incompetence.

The West takes its stand on the rule of law. But international law has no enforcement mechanism. So its maintenance depends on the co-operation of the great powers; and this depends not only on the great powers being sensitive to each others' concerns, but small powers recognising that, whatever the UN charter says about equal sovereignty, some states are more sovereign than others. Russia will no more accept international law as binding if it goes against its interests than the US does, as it has shown in Kosovo, Iraq and elsewhere. Kosovo taught Russia an important post-communist lesson: if the West can invade a sovereign state without Security Council sanction, why not Russia?

The last thing Georgia needs is to join Nato. Membership will do nothing to protect its theoretical sovereignty; trying to get in will intensify its bullying by Russia and, will dangerously sour international relations. Russia and China are not natural allies, but Western moralism and geopolitical ambition will drive them together to resist what they see as encroachments on their space.

If that happens, the world would be divided into democratic and authoritarian blocs - with a new arms race, economics turned into politics and globalisation stalled. Is this what David Miliband wants? If not, can he explain his foreign policy?

The solution to the present crisis is obvious enough, but only the Georgians can bring it about. They should replace their hot-headed President with a cooler head. The new president should set about mending Georgia's fences with its giant neighbour. A helpful move would be to suspend its application to join Nato. Russia will cool down and we will all be able to breathe more easily. Mr Miliband might even be reduced to talking sense.

Lord Skidelsky is a columnist for the Russian newspaper Vedomosti and Emeritus Professor of Political Economy at the University of Warwick

Times Recommends

• Care in old age: we won’t pay, the State can’t
• Viewers’ choice: our talentless Everyman
• Memo to the poor: go forth and don’t multiply