The August 2008 war between Georgia and Russia briefly catapulted the tiny Caucasian republic onto newspapers’ front pages worldwide before swiftly returning it to its former status as an international affairs backwater. So few paid attention when, on October 15, the Georgian parliament overwhelmingly approved constitutional amendments that will transfer most governmental authority from the president to the prime minister by 2013—precisely when President Mikhail Saakashvili’s second and final  presidential term ends.

The president himself contends that this is part of his constitutional reform package aimed at improving the balance of power within the Georgian government. Yet speculation is rampant that Georgia’s charismatic and controversial leader has pulled a move right out of Russian Prime Minister (and former two-term president) Vladimir Putin’s playbook, providing himself with job security and governmental authority once his presidential term concludes.  The final opinion on the new constitutional amendments by the Venice Commission—the constitutional advisory body of the Council of Europe, invited to mentor the Georgian State Constitutional Commission—gently alluded to these allegations, and called for further strengthening the powers of the parliament.

The fact that President Saakashvili’s good intentions are so widely doubted underscores the fragility of Georgia’s democratic transformation since the 2003 Rose Revolution. The president has tried to reassure critics that he remains committed to his country’s reforms, and that Georgia under his leadership has achieved significant gains in terms of economic development, press freedom, and the fight against corruption. But, in fact, there has been a decline in press freedom according to Reporters without Borders’ 2010 Press Freedom Index, and a high level of corruption persists according to Transparency International’s Corruption Perception Index. The use of excessive force to quell anti-government demonstrations in 2007 and 2009 has not helped to reassure the skeptics, and the domestic political climate remains charged.

Serious unresolved issues remain between Georgia and Russia. The October 18 withdrawal of Russian troops from the Georgian village of Perevi is a step in the right direction. Still, the EU-brokered ceasefire agreement is yet to be fully implemented, as over 3000 Russian troops continue to be stationed in South Ossetia and Abkhazia, and the build-up of Russian hardware in the breakaway regions only further exacerbates the tension. In Russia’s  Northern Caucasus region, too, violence is on the upswing, and threatens to destabilize the entire region.

It therefore came as something of a surprise when President Saakashvili unveiled a vision for a united Caucasus region in his speech at the United Nations’ General Assembly meeting in September. Calling Georgia “a laboratory for political reform and social transformation,” Saakashvili appealed for solidarity among the nations of the Caucasus. Unfortunately, the Georgian government decided at the same time to introduce a 90-day visa-free entry for residents of the Northern Caucasus. This decision, as much as the speech itself, has done little to improve relations with Russia, who sees it as giving potential freedom of movement to terrorists and possibly reigniting clashes in a conflict-prone region.

Constructive engagement by the European Union and the United States in the region is now, more than ever, the key to preventing conflict and promoting real political and economic breakthroughs. U.S. Secretary of State Hillary Clinton’s visit to Tbilisi in July—when she referred to the Russian troop presence in Georgia and the two breakaway regions as an “occupation”—reassured those who worried that Washington’s “reset” of relations with Russia had come at the expense of a downgrading of relations with the smaller countries on Russia’s periphery. An important further step by Washington would be to finally nominate U.S. ambassadors to key countries in the region, like Azerbaijan and Turkey. Meanwhile, the European Union’s Eastern Partnership (created in 2009 as a framework for economic, social, and political programs in the EU’s eastern neighborhood), its Monitoring Mission in Georgia, as well as continued efforts towards free-trade zones and visa liberalization, could all help to stabilize the region around Georgia.

As for Russia, the Obama administration’s “reset” policy has enabled a more constructive dialogue with Moscow, for example on Russia’s entry into the WTO. Georgia, however, is a member of the WTO, and therefore holds a veto power. What might be an acceptable deal for both sides? Illusions about Russian withdrawal from Abkhazia and South Ossetia and a full return to mutual respect for the internationally recognized borders are perhaps unwarranted. Still, there is room for maneuver. One possibility could be the return of international monitors along the countries’ borders.

This is not an opportunity the international community—or, for that matter, Georgia—can afford to mishandle.  Georgia, with its vibrant and Western-looking civil society, still has the potential to be—if not George W. Bush’s “beacon of liberty for the region”—at least an exemplar of genuine political transformation. But for that to happen, the United States and Europe must enhance their roles in Georgia’s volatile neighborhood.  Saakashvili, for his part, must also prove his commitment to the democratic promises of the Rose Revolution. One thing is certain: emulating Vladimir Putin is not the way to do it.

Dakota Korth and Mark Cunningham are Senior Program Officers with the German Marshall Fund in Washington, DC, and Bucharest, respectively.

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