When Mikheil Saakashvili was elected President in 2003, he made his goals clear to return the two breakaway regions of Georgia under central control. He chose NATO, especially the U.S. as his key allies in foreign policy, in exchange he received financial and material support from western countries. U.S. advisers started to train Georgian forces to make them professional in unequal style fighting against militants under the aegis of "War on Terrorism". Georgia became the third largest participant of U.S. coalition in terms of numbers after U.S. and U.K.. Georgia received free weapons from U.S., Israel, Germany, and Baltic states. The country's military budget, replenished with U.S. aid increased steadily since Saakashvili's entering to office. In this situation, tensions between Georgia and its breakaway republics was on the rise. In May 2004, following the success in another poorly-controlled province of Ajara (the Ajars are closer to ethnic Georgians), President Mikheil Saakashvili's government turned their attention to South Ossetia. Saakashvili offered humanitarian aid to both the Georgian and Ossetian population and promised to give the region broad autonomy.[8]

In mid-June, Georgian police shut down the Ergneti market, which was a major trading point for tax-free goods from Russia. These Georgian actions made the situation more tense. In retaliation, South Ossetian forces closed the highway between Russia and Georgia for several days. Georgia's regional administration began to restore the roads between Georgian-populated Patara Liakhvi and Didi Liakhvi gorges by-passing separatist-controlled capital Tskhinvali and dispatched military patrols to control them. On July 7, Georgian peacekeepers intercepted a Russian convoy, which led to tensions between Tbilisi and Moscow. The next day, around 50 Georgian peacekeepers were disarmed and detained by the South Ossetian militias. In retaliation, Saakashvili refused to attend peace talks. Large numbers of Georgians moved into the border areas, and there was frequent artillery fire for several days. The Georgian soldiers captured were all released on July 9, with three exceptions.


A Georgian sniper takes aim at Ossetian rebels.Tensions between Tbilisi and Moscow continued to worsen when the Russian Duma passed a resolution supporting the South Ossetian secessionists. The fellow unrecognized states Abkhazia and Transnistria, Cossack communities of Russia and the North Ossetians promised to support South Ossetia if Georgia attacked. Hundreds of Russian volunteers, mainly Cossacks, arrived in South Ossetia to defend the separatist government.

A ceasefire deal was reached on August 13, after three nights of gun and mortar fire. The agreement was signed by Georgian Prime Minister Zurab Zhvania and South Ossetian de facto President Eduard Kokoity. However, the agreement was violated shortly after the signing. The bloodiest clashes occurred on August 18 and August 19. On August 19, after the overnight fighting with several killed and wounded on the both sides, Georgian forces seized a strategic hill near the Ossetian village of Trianakhana. However, shortly after the successful operation, President Mikheil Saakashvili announced that Georgia will give "a last chance for peace" to the South Ossetians and added that Tbilisi will pullout its non-peacekeeping troops from the conflict zone in exchange of peace. Georgian troops handed over strategic hilltops in the conflict zone to the joint peacekeeping forces late on the same day. As reported,[who?] 16 Georgians and dozens of Ossetian and Russian volunteers died during the August fighting.

At a high level meeting between Georgian Prime Minister Zurab Zhvania and South Ossetian leader Eduard Kokoity on 5 November in Sochi, Russia, an agreement on demilitarisation of the conflict zone was signed. Some exchange of fire continued in the zone of conflict.[citation needed]