Russia, Georgia seek control of South Ossetia capital

By Nikolai Pavlov

GORI, Georgia (Reuters) - Russian forces battled pro-Western Georgian troops in South Ossetia on Friday in an escalating conflict that threatens to engulf a key energy transit route to Western Europe.

Both sides ignored pleas from world leaders for calm as Moscow and Tbilisi blamed each other for the fighting in South Ossetia which began after several days of skirmishes. Georgian forces shelled the capital of its breakaway region, which separatists said left 1,400 people dead.

Moscow said its troops were responding to a Georgian assault to retake the region, which broke from Georgia as the Soviet Union was collapsing but has no international recognition.

The crisis, the first to confront Kremlin leader Dmitry Medvedev since he took office in May, with violence flaring in a region seen as a key energy transit route where Russia and the West are vying for influence. The hostilities dampened investor confidence and hit the Moscow stock exchange.

Georgia said Russia bombed airfields and Poti port deep inside its territory and Tbilisi and rushed tanks and troops into South Ossetia, formally still a part of Georgia, to reinforce its small force of peacekeepers.

"If the whole world does not stop Russia today, then Russian tanks will be able to reach any other European capital," President Mikheil Saakashvili said.

A top Georgian official said Saakashvili was planning to declare martial law within hours, a move that will gives him a free hand to manage the conflict.

The U.N. Security Council held a second meeting on the conflict on Friday, and diplomats said they hoped the council would unanimously call for a ceasefire.

A Reuters correspondent near Gori -- the birthplace of Soviet dictator Josef Stalin between South Ossetia and the Georgian capital -- saw Georgian troops heading back towards Tbilisi on otherwise empty roads, kicking empty ammunition cartons away from their lorries.

Checkpoints usually manned by the international peacekeeping force in the region were abandoned on the darkened road. Two tanks stood unguarded by the roadside. Georgian soldiers said little and appeared exhausted.

RIVAL CLAIMS

The conflict over Georgia's breakaway regions of South Ossetia and Abkhazia has bedeviled Georgia's relations with Russia, angered by Tbilisi's moves towards the Western fold and its pursuit of NATO membership.

Both the Russian-backed separatists and the Georgian government said they were in control of the regional capital Tskhinvali.

"Tskhinvali and the heights around Tskhinvali and the majority of the villages in South Ossetia are under the control of Georgian forces," Saakashvili said in a televised address.

Irina Galgoyeva, spokeswoman for separatist South Ossetia, denied the report. "The entire town of Tkshinvali is currently controlled by units of South Ossetia's self-defence," Russia's Interfax news agency quoted her as saying.