The crisis in the Caucasus is deteriorating fast. European governments may have hoped that the ceasefire negotiated two days after Russia invaded Georgia would eventually stick. US politicians, perhaps distracted by the domestic convention season, may have assumed that Russia would content itself with de facto control of Abkhazia and South Ossetia. Not so.

President Medvedev's recognition of the two provinces' independence claims is as provocative as the original invasion. His willingness to contemplate a new Cold War is reckless and self-defeating. As evidence emerges of continued “ethnic cleansing” by South Ossetian paramilitaries, relations between Russia and the West are more fraught with danger than at any time since 1991.

Against this background David Miliband flew to Kiev yesterday to reassure Ukraine that Britain supported its “democratic choices”, whatever Moscow might make of them. He also said that Russia was “more isolated, less trusted and less respected” than before invading Georgia.

This is true. Western governments were united in their condemnation of Moscow's recognition of the two breakaway regions. The only other country likely to recognise them is Belarus, effectively a Russian vassal state already. And in a sign of things to come, Russia was pointedly left out of a conference call between G7 foreign ministers. The G8 to which Vladimir Putin was so proud to belong is shrinking already.

But Russia is still delighted with the way that the crisis has unfolded. In practical terms, the price of the isolation that the West threatens for Moscow's flagrant violation of international borders, laws and norms has so far been negligible. This will remain the case as long as Mr Miliband and his counterparts talk about Nato membership for Georgia and Ukraine but not about concrete steps towards it. The price of Russia's isolation must therefore be raised.

From the Kodori Gorge that forms Abkhazia's natural frontier with the rest of Georgia, to the new “peacekeeping” posts established by Russian troops a short drive from Tbilisi, Moscow holds a formidable tactical advantage. Its 58th Army has destroyed most of Georgia's military infrastructure. It can continue to hit what remains and to seal off its newly captured territories from journalists with little fear of military reprisals.

This is the reality that has emboldened General Anatoli Nogovitsyn to caution that any attack on Abkhazia or South Ossetia would constitute a declaration of war on Russia. Mr Medvedev has hardly been more temperate. He has threatened military retaliation against Poland and the Czech Republic for agreeing to host US anti-missile defences, and repeatedly declared that he was not afraid of a return to the Cold War.

But he should be. Like his predecessor, Mr Medvedev is fond of saying that there were no winners in the original Cold War. He is wrong. Russia lost that conflict, and with it an empire. Its economy has recovered spectacularly, but its leaders are wilfully blind to the risks of trying to reassert its regional hegemony by force.

Russia's prosperity and the strength that it seems so determined to misuse derive entirely from its integration with the wider world. This is why the threat of isolation can be made effective. Billions have already been wiped off the value of the Moscow stock exchange. Capital flight will pick up and inward investment will suffer as a result of continued Russian recklessness. Meanwhile, visa restrictions for ministers and oligarchs may be necessary. And if Ukraine and Georgia are not yet ready for full Nato membership, their leaders should at least receive consistent, high-profile support as they seek it. Dithering will only make a dangerous situation more so.