Georgia, Russia to hold first bilateral talks since war

(Warning: Strong language in paragraph 4)

TBILISI (Reuters) - Russia and Georgia will hold the first bilateral talks since their 2008 war this week marking an improvement in ties after bitter Russia foe President Mikheil Saakashvili's party lost control of parliament in October elections.

Diplomats from Moscow and Tbilisi will meet in Switzerland this week for an "informal meeting mediated by the Swiss", Zurab Abashidze, a new Georgian envoy tapped by the recently-elected government to head ties with Moscow, told reporters.

Relations between the two former Soviet states remain fraught four years after Russia crushed a Georgian assault on the breakaway region of South Ossetia. Each blames the other for starting the conflict.

Russian President Vladimir Putin, who once threatened to "hang Saakashvili by the balls", has repeatedly said Moscow would never hold talks with him.

Russia welcomed the outcome of elections that ended Saakashvili's nine-year dominance and swept to power an opposition coalition led by billionaire Bidzina Ivanishvili, who has said he wants to improve relations with Moscow.

But the two sides are at a political stalemate over South Ossetia and another breakaway region of Abkhazia, which Russia recognized as independent states shortly after the war.

Among the issues on the agenda for talks, Abashidze told Reuters last month, were lifting politically charged Russian import bans on Georgian wine, mineral water and other products barred by Moscow two years before the 2008 war.

Georgian wine and mineral water have been popular in Russia since the Soviet era and made up almost a third of total Georgian exports prior to the trade ban.

(Reporting by Margarita Antidze; Editing by Alissa de Carbonnel and Myra MacDonald)