TBILISI, Georgia — Georgia released four Russian officers whose arrest on spying charges has angered its giant northern neighbour, but a vengeful Russia pushed ahead Monday with punitive sanctions aimed at dealing a painful blow to the economically struggling Caucasus country.

The tension reflected Moscow's difficult relations with Georgia, which has defied President Vladimir Putin with a pro-western stance, hosts unwanted Russian troops on its soil and is facing two Russian-backed separatist movements that could flare up in new violence.

Georgia's agreement to release the men, even as it reaffirmed the spying allegations against them, appeared to be a capitulation that underscored its vulnerability. To many Russians, however, the very fact that the former Soviet republic dared detain the men was an affront to Moscow's prestige and its ability to project power and influence across an area many Russians still call "the near abroad.''

The questions now on the table are how long the sanctions will last, whether Russia will go ahead with plans to withdraw its military presence in Georgia by 2008, and whether the crisis can be ended without new violence in the separatist regions of South Ossetia and Abkhazia. The two regions have run their own affairs without international recognition since the early 1990s.

Russia has granted its citizenship to many residents of the rebel provinces, which have enjoyed de facto independence since breaking away from Georgia in bloody wars the early 1990s. Separatist leaders have regularly travelled to Russia for meetings with top officials.

The Kremlin's willingness and ability to provide strong backing for Georgia's breakaway regions is watched closely elsewhere in the former Soviet Union. The Soviet collapse left a kaleidoscope of ethnic groups clamouring for autonomy, independence or greater links to Russia.

"We won't forgive those who spit at us,'' Russian parliament's upper house speaker Sergei Mironov said.

Infuriated by Wednesday's arrests, Russia has put its troops in Georgia on high alert, recalled its ambassador and evacuated its citizens. And even though Georgian officials announced early Monday that the officers would be handed over to the Organization for Security and Co-operation in Europe and sent home, Russia's transport and communications ministries declared that all air, road, rail sea and postal links with Georgia would be suspended starting Tuesday.

Visiting Belgian Foreign Minister Karel De Gucht, who holds the rotating OSCE chairmanship, urged Russia to respond to the officers' release by restoring transport and postal links.

But in a potentially even more crippling blow, Russian legislators scheduled debate this week on a bill that could bar Georgians living in Russia from cabling money home. Russian officials say about 300,000 Georgians live in Russia; some estimates put the number far higher, at about one million of Georgia's 4.4 million population.

Russia's lower house speaker, Boris Gryzlov, said Monday that Georgians living in Russia send home the equivalent of about C$1.1 billion a year. In June, Putin put the amount at an estimated $1.65 billion to $2.2 billion annually, an amount comparable to Georgia's state budget.

Monday's sanctions follow a government session at which Putin denounced the arrests as "state terrorism involving hostage-taking'' and ordered top cabinet members to draw up retaliatory measures. "These people think that under the roof of their foreign sponsors they can feel comfortable and secure. Is it really so?'' Putin questioned ominously.

Russia's chilly relations with Georgia have worsened steadily since President Mikhail Saakashvili came to power following Georgia's 2003 Rose Revolution, vowing to take the country out of Russia's orbit, bring breakaway provinces back into fold and join NATO in 2008.

Russia last week tried to exert international pressure on Georgia by proposing a UN Security Council statement expressing grave concern at Tbilisi's actions. But the United States balked, adding to Russian suspicions that it was behind the latest tensions.

Despite the tensions, Putin said Russia would stick to a deal signed last year to withdraw its troops from Georgia by the end of 2008. Along with some 2,500 peacekeepers in Abkhazia and South Ossetia, Russia has 3,000-4,000 troops at two military bases in Georgia.