Asia Crisis

Russia says EU right to avoid sanctions

* Russia's Medvedev says summit result "double-edged"

* Russia says EU realised need for cooperation

* Russia hopes for "positive agenda" from U.S.

* Cheney to visit allies on Russia's borders

By Denis Dyomkin

SOCHI, Russia, Sept 2 (Reuters) - Russia on Tuesday praised the European Union's "responsible" decision to avoid imposing sanctions on Moscow over its conflict with Georgia, but said the bloc had failed to understand why it had intervened.

Leaders from the 27 European Union states met in Brussels on Monday and threatened to postpone talks with Russia on a new partnership pact if Moscow did not withdraw its troops to pre-conflict positions in Georgia by mid-September.

But they were unable to reach a consensus on the sanctions that some members, including the Baltic states, had been pushing for, highlighting the bloc's divisions on whether and how best to punish its largest energy supplier.

"In my view, the outcome is double-edged," Russian President Dmitry Medvedev said in an interview with the Euronews television channel recorded at his Black Sea summer residence.

The EU did not understand what motivated Russia to move into Georgia and to recognise the breakaway regions of South Ossetia and Abkhazia as independent states, Medvedev said.

"This is sad, but not fatal because things change in this world.

"Another situation, in my opinion, is more positive. Despite certain divisions among the EU states on the issue, a reasonable, realistic point of view prevailed because some of the states were calling for some mythical sanctions," he said.

Russia says it was forced to intervene to prevent what it has called a genocide of the separatist regions by Tbilisi, and that it is honouring a French-brokered ceasefire deal.

The latest Russian statements have contained none of the stridency used by Kremlin officials in the run-up to the EU summit and appeared designed to signal Moscow's readiness to take a conciliatory stance with western countries if they also avoid confrontation.

In an effort to show it can still act as an honest-broker in ex-Soviet regions, a senior Kremlin aide said Russia would encourage Moldovan separatists to strike a deal with the government there.

"Our position is to support the efforts of (Moldovan) President (Vladimir) Voronin in the Transdniestria peace process, and the readiness of Russia to offer help was recently expressed," Sergei Prikhodko told reporters.

"To continue our efforts, we are preparing for a serious discussion with (separatist leader Vladimir) Smirnov in the next few days," Medvedev's chief foreign policy advisor said.


U.S. Vice President Dick Cheney on Tuesday began a trip to visit American allies in the region, and Prikhodko said Moscow hoped Washington would also avoid sanctions and that "a positive agenda" would prevail between then.

Cheney, who visits to Azerbaijan, Georgia and Ukraine, has been an outspoken critic of Russia, saying last month its push into Georgia could not go unanswered.

Georgia is strategically important to the West because it hosts oil and gas pipelines that bypass Russia.

The International Monetary Fund is expected to reach a deal this week to lend Georgia $750 million to finance rebuilding, a source familiar with the negotiations told Reuters.

Russia crushed its southern neighbour in a brief war last month after Georgia tried to recapture South Ossetia by force.

It drew Western condemnation by pushing beyond the disputed area, bombing and deploying troops deep inside Georgia proper and recognising South Ossetia and Abkhazia as independent.

Medvedev told Italy's RAI broadcaster on Tuesday that U.S. support for Georgia's leaders helped provoke the crisis and should be ended.

"Unfortunately, at a certain point they gave (Georgian President Mikheil) Saakashvili carte blanche for any actions, including military. All that was translated into aggression.

"This is very sad, and I think it is time for our American partners to re-evaluate their relations with the current regime, if only because he (Saakashvili) has put Georgia in a very awkward situation," Medvedev said in the interview.

British Foreign Secretary David Miliband said Russia would suffer politically and economically for its military actions against Georgia, but conceded that it did not make sense for the EU to isolate Russia, a major supplier of European oil and gas.

"Isolating Russia would be counter-productive because its international economic integration is the best discipline on its politics," Miliband wrote in the Irish Examiner newspaper.

French President Nicolas Sarkozy plans to travel to Moscow with other EU officials on Sept. 8 to discuss its adherence to the ceasefire plan and then decide whether partnership talks set for Sept 15-16 in Brussels can go ahead.

Moscow has withdrawn most of its forces in line with a ceasefire deal but has kept soldiers in "security zones", which include Georgian territory around South Ossetia and Abkhazia.

Talks on the EU-Russia accord, meant to regulate ties in the energy sector and trade, started in July after an 18 month delay. Russian officials have dismissed the EU threat to suspend the talks, saying the bloc needs the pact as much as Moscow. (Additional reporting by Oleg Shchedrov in Moscow, Jonathan Saul in Dublin) (Writing by Noah Barkin and Jon Boyle; Editing by Robert Hart)