CELEBRATORY FIRE: Abkhazians rejoice in the center of Sukhumi at the news of Russia’s recognition of their region as an independent country. (EPA)

SOCHI, Russia: Russia recognized two rebel regions of Georgia as independent states yesterday, escalating tension in the volatile Caucasus and putting Moscow on a collision course with the West.

Flanked by a Russian flag and a presidential banner, President Dmitry Medvedev said Tbilisi’s desire to seize back Abkhazia and South Ossetia by force had killed all hopes for their peaceful coexistence in one state with Georgia.

“(Georgian President Mikheil) Saakashvili chose genocide to solve his political tasks,” Medvedev declared in a statement broadcast from his summer residence in the resort of Sochi.

“The peoples of South Ossetia and Abkhazia have more than once spoken in referenda supporting the independence of their republics. We understand that after what had happened... they have the right to decide their fate themselves,” Medvedev said.

He ordered the Foreign Ministry to open diplomatic ties with the two regions and told the Defense Ministry to guarantee peace there.

Saakashvili, after a meeting of his National Security Council, branded the move “completely illegal.”

“This decision has no legal basis,” he said in an address to the nation. Russian tanks and troops are still occupying parts of Georgia after a brief war over South Ossetia earlier this month.

In an interview with CNN, Medvedev later said Russia would help defend Abkhazia and South Ossetia if they were attacked, and said Moscow had no plans to intervene militarily in other conflicts in former Soviet states.

In a BBC interview, Medvedev cited the West’s recognition of Kosovo’s independence to justify Moscow’s decision. “We did it as some other states did in the case of Kosovo and some other problems,” he said.

Russia was fiercely opposed to Kosovo’s unilateral declaration of independence in February, which has so far been recognized by some 45 countries, including the United States and most European Union states.

Speaking in an interview with the Russia Today television channel, Medvedev said he was not frightened by the prospect of a new Cold War.

“Nothing scares us, including the prospect of a Cold War, but we don’t want it,” Medvedev said. “In this situation, everything depends on the position of our partners.”

The United States, NATO and the European Union swiftly attacked Moscow’s recognition move.

US President George W. Bush urged Russia to reconsider its “irresponsible decision”. Already rebuffed by Medvedev, Bush warned Russia to change course and respect the borders of its Georgian neighbor.

“Russia’s action only exacerbates tensions and complicates diplomatic negotiations,” the president said in a written statement from Texas, where he is vacationing.

“We expect Russia to live up to its international commitments, reconsider this irresponsible decision, and follow the approach set out in the six-point agreement,” Bush said.

EU president France joined in condemnation of the Russian move. “It (the EU) calls for a political solution to the conflicts in Georgia. It will examine the consequences of Russia’s decision from this point of view,” President Nicolas Sarkozy’s office said in a statement.

Jubilant residents in the Abkhaz capital Sukhumi fired shots into the air and wept after the news from Moscow. “We feel happy. We all have tears in our eyes. We feel pride for our people,” said Aida Gabaz, a 38-year-old lawyer.

Hundreds of people gathered in the main square of the South Ossetian capital Tskhinvali, hugging each other and waving the separatist flag. There was a deafening roar of celebratory gunfire from Kalashnikov guns and antique hunting rifles.

The value of Russian assets tumbled as the tension grew. Russian stocks lost 4.2 percent, putting them down 31 percent so far this year.