Russian President Dmitri Medvedev announced on Tuesday that Russia recognizes the independence of South Ossetia and Abkhazia, the two Russian-dominated separatist regions in Georgia, according to international news agencies. The announcement comes following a reunion of the Russian Security Council attended by PM Vladimir Putin.

Medvedev said he signed decrees on the recognition of the independence of South Ossetia and Abkhazia and that Russia was urging other countries to follow suit. He argued that authorities in Tbilisi made a choice in this regard when they launched the military offensive in South Ossetia and that Georgian President Mikhail Saakashvili thus chose genocide to accomplish his political goals.

Shortly after the announcement the Moscow stock exchange reported a shart fall with its key index RTS down to 1550.

Medvedev had said on Monday that Russia was prepared for any action on NATO part while both chambers of the Russian Parliament adopted unanimously resolutions demanding Medvedev to recognize the independence of the two territories.

Britain was one of the first to reject Russia's decision, while German Chancellor Angela Merkel had reaffirmed Georgia's right to preserve its territorial integrity. France said the Russian decision was regrettable.