The champagne corks were popping and there was dancing in the streets yesterday as the tiny Georgian territories of South Ossetia and Abkhazia celebrated Russia’s decision to recognise them as independent states.

But President Medvedev’s announcement was greeted elsewhere with widespread condemnation, and President Saakashvili of Georgia likened it to the way the Nazis carved up Czechoslovakia in 1938 — which led to the Second World War.

In a sombre television address, Mr Medvedev declared: “I have signed decrees on the recognition of the independence of South Ossetia and Abkhazia. Russia calls on other states to follow its example.”

In Sukhumi, the capital of Abkhazia, office workers thronged the streets, drinking champagne while celebratory gunfire rang out. A giant green, white and red Abkhazian flag adorned the main square. “We feel happy. We all have tears in our eyes. We feel pride for our people,” said Aida Gubaz, a 38-year-old lawyer. “Everything we went through, now we are getting our reward.”

As America, Britain, France and Germany denounced Russia’s unilateral move, President Saakashvili held an emergency session of Georgia’s national security council. He described the Russian declaration as an annexation and accused his giant neighbour of seeking to provoke renewed fighting that would allow Russian armoured divisions to move around Tbilisi, the capital, and wipe Georgia off the map. “I have appealed to all leaders concerned to speed up Georgia’s Nato and EU integration,” he said — adding that he had received some positive signals from Western allies.

Russia’s recognition of the two disputed territories is seen widely as a payback for the West’s recognition of Kosovo’s independence from Serbia, a Russian ally. That stinging blow to Russian diplomacy, combined with the eastwards expansion of Nato in recent years, has raised the stakes in a power struggle that now stretches from the Balkans and Eastern Europe to the Caucasus and beyond.

Earlier Mr Saakashvili had told The Times that Russia was trying to build up forces near Akhalgori, only 20 miles (32km) from Tbilisi. From there, he said, they could control the hills around the capital in the same way the Serbian forces ringed Sarajevo in the Bosnian war. Asked if he feared a fresh Russian invasion, Mr Saakashvili said: “If there is no strong reaction from Europe, at any moment.”

He said that Vladimir Putin, at the time the President of Russia, had threatened him in 2006 with turning South Ossetia into “northern Cyprus”, a breakaway republic that has endured for three decades despite being recognised only by Turkey.

“I think the West has to rethink its strategy, Putin has been thinking about his strategy for a long time,” said Mr Saakashvili, who claimed that Russian forces had deployed SS20 missiles aimed at his chancery in the South Ossetian capital of Tskhinvali.

He called on the West to squeeze Russia by freezing foreign assets and denying Russian officials visas. “These are people in Moscow for whom there are two things, nationalism and capitalism,” he said. “All their money is in the West.” Mr Saakashvili said Britain had already denied visas to several senior Russian officials, without naming them.

He also called for the international community to cancel Russia’s right to host the 2014 Winter Olympics in the Black Sea resort of Sochi, just up the coast from Abkhazia.

“It reminds me of the 1936 Olympics,” he said, referring to the games held in Berlin and hosted by Adolf Hitler. He also compared Moscow to Hitler’s regime when he likened Russia’s diplomatic and military backing for South Ossetia and Abkhazia to Nazi Germany’s annexation of the Sudetenland in 1938.

The best way for the West to halt Russian encroachments, he said, was to accept Georgia into Nato at a December meeting and grant a massive reconstruction project to jumpstart the shattered economy.

“We are in a very precarious situation right now,” he said. “We need assistance now.”

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