Although Tbilisi officially handed over Monday four officers charged with espionage to officials from the 55-nation Organization for Security and Cooperation in Europe, tension remains high in the wake of the affair as relations have plummeted.
But President Mikheil Saakashvili, a U.S.-educated media-savvy operator who came to power after the 2003 "rose revolution", said he thought there was little danger of war.
"I rule out any military steps from Russia but we are not afraid of them," he told an open-air joint news conference with the Chairman-In-Office Karel De Gucht, who arrived in Tbilisi in a bid to defuse the growing crisis with Moscow.
Georgian police handed over the handcuffed Russian officers to the OSCE Monday evening before they boarded a plane to their homeland. Russia has also put on the plane another officer, Alexander Pichugin, who Georgian authorities had also sought during a tense standoff around a building housing Russia's military contingent in the South Caucasus late last week.
Saakashvili, who has often portrayed his "small" nation as all but being at the mercy of Russia over energy and other matters, said Georgia was not afraid of a war with Russia. "We are not the country that can be so easily scared," he said.
Russian President Vladimir Putin had chaired a meeting of his security council Sunday, where he asked for an assessment of what could be done to resolve the situation. In a thinly veiled reference to the United States, which has trained Georgian troops and announced Sunday $10 million for the country's bid to join NATO, Putin hinted that all options were at his disposal.
"Evidently those who are doing this believe that an anti-Russian direction in foreign policy serves the interests of the Georgian people. I do not think this is so," he said. "These people think that, being under the protection of their foreign sponsors, they can feel comfortable and safe."
The Kremlin press service also said Monday that Putin had told his U.S. counterpart, George Bush, that any third country should avoid taking steps that the Georgian leadership could interpret as encouragement to pursue a destructive policy.
But Saakashvili also denied any military mobilization at a base in Senaki near the administrative border with self-proclaimed Abkhazia.
"I was there today with journalists - soldiers are doing their usual duty," said the president, who has consistently called for the return of the breakaway regions of Abkhazia and South Ossetia to the central government's jurisdiction.
In what may be seen as a step away from the espionage crisis, Saakashvili called on his Russian counterpart to maintain mutually advantageous economic cooperation, and described the two countries as "historical partners."
"We do not want the Russian military but we want Russian tourists. We do not want Russian spies but we want Russian business," he said.
The Russian government suspended travel to Georgia earlier on Monday, which could hit the economy of the South Caucasus state hard because many Georgians work in Russia both legally and illegally and send money home to relatives.
"Our countries share cultural, national traditions and have always lived side by side," Saakashvili said, but urged Russia to withdraw its peacekeepers from the two breakaway republics, where they have been stationed since the conflicts in the early 1990s.
Saakashvili and his government have been seeking to replace the peacekeepers with an international contingent as part of Georgia's ambition to join NATO and the European Union.
"We need a direct dialogue between the Georgian government and the governments of South Ossetia and Abkhazia," he said. "And Russian peacekeepers must leave the region."
Georgia has accused Russia of trying to install control over South Ossetia and Abkhazia.
Relations also took a major hit earlier in the year after Moscow banned Georgian wine and mineral water from Georgia - the main export products of the South Caucasus republic - in what some Georgian politicians called a trade blockade.
Saakashvili said Russia had nothing else left to ban.
"Food supplies have been blocked already, and now transportation as well," he said. "It is not the right decision because our territories must be open."