By Christian Lowe and Conor Sweeney
MOSCOW (Reuters) - Russia accused the Group of Seven nations of "bias" on Friday in a fresh attempt to counter condemnation of Russia's actions in Georgia that has included talk in the European Union of sanctions.
Western governments have criticized Russia for sending troops deep into ex-Soviet neighbor Georgia and recognizing Georgia's two breakaway regions as independent, a step that prompted some in the West to draw parallels with the Cold War.
Responding to a statement this week from G7 foreign ministers that condemned the Kremlin's decision to recognize South Ossetia and Abkhazia, Russia's Foreign Ministry said it had ignored Moscow's arguments.
The G7 condemnation, issued on Wednesday, was "biased and aimed at justifying the aggressive actions of Georgia," the Foreign Ministry said in a statement.
European diplomats said on Friday that Moscow had sent a clear signal it would retaliate if the European Union imposed sanctions to punish the Kremlin for its intervention in Georgia at an emergency summit next week.
A day earlier, in a sign of growing Russian frustration with Western criticism, Prime Minister Vladimir Putin accused the United States of orchestrating the conflict in Georgia, and linked the row to Russia's cooperation with the West on issues like trade and nuclear non-proliferation.
Moscow has expressed alarm at what it calls a Western naval build-up in the Black Sea, an area normally dominated by its own southern fleet.
Russia mounted a huge counter-attack on land, sea and air after its pro-Western neighbor Georgia sent in troops in a failed attempt to retake its breakaway region of South Ossetia three weeks ago.
The Kremlin said it acted to prevent Georgia wiping out the South Ossetian population but Western states accused Russia of using excessive force.
They are also concerned that the presence of Russian troops deep inside Georgia could compromise the NATO aspirant's role as a transit route for oil and gas supplies between the Caspian Sea and world markets.
French Foreign Minister Bernard Kouchner has said sanctions on Russia were among the options being considered before EU leaders meet on Monday to discuss the Georgia row. Diplomats in Brussels have said there is no consensus on imposing sanctions.
Western policy-makers are mindful that Russia supplies more than a quarter of Europe's gas and that its support is vital to maintain pressure on Iran over its nuclear program.
European diplomats said on Friday they were expecting Russian retaliation if the EU took punitive measures.
"They've been saying loud and clear that they feel they could do whatever they want with impunity," said one diplomat.
"But I think any kind of reaction they would take to the EU would be in kind, like visa restrictions or a business contacts freeze. I don't think the retaliation would include the kind of things like restricting oil."
A second European diplomat said the message he had been receiving was that Russia was ready to continue cooperation but was ready to stop it if sanctions were imposed.
Georgia's parliament voted on Thursday to sever diplomatic relations with Moscow in response to the Kremlin's decision to recognize its South Ossetia and Abkhazia regions as independent.
The government has not yet decided whether to cut ties, because it said it had to weigh the interests of the hundreds of thousands of Georgians who work in Russia.
"We'll take the final decision ... within days," State Minister for Reintegration Temur Iakobashvili told Reuters. "I think the decision will be more in favor of cutting diplomatic ties."
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