The region, a breakaway patch of land between Russia and the Republic of Georgia, is home to about 70,000 people, but if fighting resumes there, it could jeopardize U.S. efforts to resolve other strategic threats, like nuclear programs in rogue countries such as North Korea and Iran.
Georgia is strategically located.
It is a democratic American ally in a region of closed governments and sits atop oil and natural gas pipelines that supply western Europe while bypassing Russia and Iran, two countries that have threatened to cut off supplies for political reasons in the past.
The pipelines carry only a tiny fraction of the world's oil, but oil prices are sensitive to even the possibility of a small interruption in supply.
So far oil markets appear to have ignored the crisis, as deliveries had been relatively unaffected by fighting. That could change: the London-based oil company BP announced Tuesday that it's shutting down its Baku-Supsa oil pipeline as precautionary measure.
"There was hope that if Georgia could get it right, then it could have a stabilizing presence there," said Steven Pifer, a former ambassador and expert in the former Soviet Union, now a visiting fellow at the Brookings Institution.
At the same time, the United States has strong interests on the other side of the conflict.
It relies on Russian support in efforts to rid Iran and North Korea of their nuclear programs, and Russian support is vital on the United Nations Security Council, where it holds veto power.
As Russian troops continue to advance through Georgia, the United States has strongly condemned its attacks. On Sunday, President George W. Bush warned that if Russia did not pull out, it risked damaging relations between Washington and Moscow.
The United States, however, risks alienating Russia at a time when its fragile support is needed to lean on Iran, in particular, to abandon its nuclear ambitions. Russia has been reluctant to agree to additional sanctions on Tehran.
Georgia's strong military alliance with the United States adds to the importance of stability there.
Until the fighting in South Ossetia erupted days ago, Georgia maintained 2,000 troops in Iraq, the third largest contingent after American and British forces. Georgia has since pulled all of them out to reinforce troops fighting the advancing Russians.
The United States has pushed for Georgia to be accepted into the NATO military alliance, something that has further angered Russia, which is wary of the organization whose guns were trained on Moscow for 40 years.
The recent fighting, however, may squash any appetite among current members for Georgian accession, lest the alliance become drawn into a future conflict with Russia. If that happened, all NATO members would be obligated to defend Georgia and fight Russia, something it avoided doing during the Cold War.
"The end game, for the Russians in my view is to dissuade Georgia from this relentless pursuit of alliance with the west," said Cliff Kupchan, Director of the Eurasia Group.
South Ossetia's status has been a flashpoint for decades.
After the breakup of the Soviet Union, South Ossetia fought for independence from Georgia. After war ended in 1992, the region won de facto independence and stability had been enforced by peacekeepers ever since.
