"As a result of his meeting with permanent security council members, the president termed the actions of Georgia's leadership as an act of state terrorism with hostage-taking," said a statement on the presidential Web site www.kremlin.ru.

Georgia's Foreign Ministry reacted by calling statements from Moscow "an explicit threat to use a military force."

Since the row broke last week, Russia has pulled out its ambassador from Tbilisi, evacuated dozens of officials and stopped issuing visas to Georgians.

Putin did not say what additional measures Russia might take but his use of the terms "hostage-taking" and "terrorism" suggested a tough response. Moscow has traditionally taken an uncompromising stance to whatever it sees as terrorism.

But after making his tough statements, Putin told the Defense Ministry to continue a long-planned pull-out of Russian troops from Georgia, news agencies quoted his spokesman Alexei Gromov as saying.

Russia's Defense Ministry said on Saturday it was suspending the scheduled withdrawal, because its troops' security could not be fully guaranteed when they crossed Georgia. Russia is to pull out its troops from two local bases by the end of 2008.

The commander of Russian troops in the region that covers Georgia, Major-General Andrei Popov, told reporters his forces had been issued with instructions on how to defend their bases if necessary.

"All military units have been put on alert and ordered to take adequate measures in case of a threat, including shoot-to-kill," Popov said.

'BERIA'S POLITICAL LEGACY'

Putin also compared Georgia's moves against the officers to the actions of Soviet dictator Josef Stalin's feared secret police chief, saying they were "a sign of the political legacy of Lavrenty Pavlovich Beria."

Beria, an ethnic Georgian like Stalin, ran the NKVD secret police which purged millions of Soviet citizens in the 1930s and 1940s and supervised Moscow's atomic bomb program.

Georgian parliamentarian Giga Bokeria, a close ally of President Mikhail Saakashvili, called Putin's statement "an act of open aggression and hysteria."

"Russia just cannot stand the fact that Georgia is an independent country," he told Reuters.

EU foreign policy chief Javier Solana and the 56-member
Organization for Security and Cooperation in Europe (OSCE) have urged a solution.

Putin will discuss the situation in Georgia with Russia's main political parties later this week, Gromov said.

WORSENING RELATIONS

Although the arrest of the army officers last Wednesday was the trigger for the latest row, relations between Russia and its small southern neighbor had been steadily worsening for months.

Russia dislikes Saakashvili's openly pro-Western policies, including seeking NATO membership, and his criticism of Moscow.

Georgia accuses Russia of stoking separatist sentiment in Abkhazia and South Ossetia, two regions of Georgia which broke free from central rule in the early 1990s and want to join Russia. Saakashvili wants to bring them back under his sway.

Georgian authorities said Putin had met the leaders of Abkhazia and South Ossetia on Saturday in the Black Sea resort of Sochi. Putin was working from Sochi last week.

Asked about the accusations, a Kremlin spokesman said: "We can neither confirm nor deny this information."

However both Abkhaz leader Sergei Bagapsh and Eduard Kokoity of South Ossetia were on a list of "foreign guests" at an investment forum in Sochi on Friday that was attended by Putin.

Russian moves against Georgia are likely to cause considerable financial hardship in its poor southern neighbor.

Georgia is a nation of only 5 million people where many families rely on remittances sent back by relatives or friends working in Russia. The country also depends on Russia for gas and electricity supplies.

In the immediate aftermath, investigators blamed disaffected Indian Muslims with links to old foe Pakistan, and named Lashkar-e-Taiba as a prime suspect.

On Saturday, Mumbai's police chief said his team had cracked the case and found solid evidence as a result of what he called one of India's biggest and most widespread investigations.

"We have solved the July 11 bombings case. The whole attack was planned by Pakistan's ISI and carried out by Lashkar-e-Taiba and their operatives in India," A.N. Roy, Mumbai's police chief, told a news conference.

ISI or the Inter-Services Intelligence agency is Pakistan's military spy agency while Lashkar is a frontline Islamist group fighting against Indian rule in the disputed region of Kashmir.

Although Lashkar was banned by Pakistan in early 2002, security analysts suspect it is still in favour with the ISI.

"These blasts were executed very professionally and with high precision and were well planned," Roy said.

"But we made slow progress, used scientific methods, followed every small lead ... it has been a beautiful piece of highly professional investigation."

PAKISTAN DENIAL

Pakistan reacted angrily to Roy's announcement.

Tariq Azim Khan, Pakistan's Minister of State for Information, called it India's knee-jerk reaction in blaming Pakistan for militant acts when there are several groups running insurgencies within India.

"India has always chosen this path of pointing fingers at Pakistan without evidence," he said. "If they have any evidence, they should provide us evidence and we will carry out our investigations."

A spokesman for Lashkar also denied involvement.

"We reject the Indian allegations. They have named us in an effort to cover up their own failure and security lapses," said Irbaz Khan by telephone from an unknown location.

The Indian announcement came a day after Mumbai police said they had arrested four more people in connection with the seven blasts that ripped through commuter trains and platforms.

The arrests took the total number in custody for alleged roles in the blasts to 15, Roy said. He said that at least 12 Indian men and 11 Pakistanis were involved in the bombings.

While all the 12 Indians were in custody, one Pakistani man was killed in the blasts, another was shot dead in a gun battle with Mumbai police and the rest had either returned to Pakistan or were at large in India, he said.

Many among the Indians alleged to be involved had visited Pakistan several times and had trained at Lashkar bases in Bahawalpur town in Punjab province, close to the India-Pakistan frontier, Roy said.

TESTING PEACE PROCESS

One of the Pakistani men brought about 15-20 kg (33-44 lb) of RDX explosives to make the bombs in Mumbai which were kept in pressure cookers, placed inside bags and covered with newspapers or umbrellas after being left to explode through timers.

Funds to carry out the attack also came from Pakistan via a Lashkar operative in Saudi Arabia, Roy said.

The first lead came from tracking telephone conversations. A call from a Mumbai man to an Indian village near the India-Nepal border talking about the blasts led to one of the first arrests of a man from the village, he said.

Two weeks ago, Pakistan President Pervez Musharraf and Indian Prime Minister Manmohan Singh agreed on the sidelines of a Non-Aligned summit in Havana to resume a peace process which India had frozen following the Mumbai attacks.

Some Indian analysts said they expected New Delhi to remain committed to the peace process but step up pressure on Pakistan to crack down on groups like Lashkar.

"This is not a setback. India can't afford to close shop," said C. Raja Mohan, strategic affairs editor at the Indian Express newspaper.

"In fact, this will be a test for the joint mechanism set up to fight terrorism and see whether it will work," he said referring to an agreement in Havana to set up a joint agency to tackle terrorism.

But an MoD spokesman said "the academic research notes quoted in no way represent the views of either the MoD or the government".

Gen Musharraf spoke to the BBC's Newsnight programme ahead of a meeting in Washington with US President George W Bush and Afghan leader Hamid Karzai.

He said that he was "fully satisfied" with Pakistan's co-operation in the fight against terrorism.

"There is perfect co-ordination going on - intelligence and operational co-ordination at the strategic level, at the tactical level," he said.

And he rejected the suggestion in the report that the ISI should be dismantled.

"I totally, 200% reject it. I reject it from anybody - MoD or anyone who tells me to dismantle ISI.

"ISI is a disciplined force, breaking the back of al-Qaeda. Getting 680 people would not have been possible if our ISI was not doing an excellent job."

'Recruiting sergeant'

The Pakistani president rejected allegations by the Afghan leader that Pakistan was not doing enough to fight extremism in its border region, calling Mr Karzai someone who "can't even get out of his office".

He also refused to withdraw his statement that then US Deputy Secretary of State Richard Armitage threatened to bomb Pakistan "back to the stone age" unless it co-operated with America in the wake of the 11 September 2001 attacks.

"I don't withdraw the claim at all," he said. "Why should I withdraw it now that Mr Armitage is denying it?"

The research paper is understood to have been written by a man with a military background who is linked to the UK's Secret Intelligence Service.

On Afghanistan, the paper said the UK went in "with its eyes closed", and revealed that a secret deal to extricate UK troops from Iraq so they could focus on Afghanistan failed when British military leaders were overruled.

The paper also said that the Iraq war had "acted as a recruiting sergeant for extremists across the Muslim world".

But the bombers stayed within international airspace.

The U.S. response "was appropriate," said Adm. Timothy Keating, commander of NORAD and U.S. Northern Command.

"We have a near-sacred responsibility to protect and defend the United States and Canada against any and all threats. We will not waver in this responsibility," Keating said.

Four U.S. F-15 fighters, supported by two Canadian CF-18 fighters, found and intercepted the bombers. A U.S. pilot snapped a photo of the silvery Russian craft with a red star on its tail.

U.S forces, too, have been conducting training exercises over Alaska and Canada.

Russian authorities confirm that pilots of the bombers made visual contact with the U.S. pilots during recent test flights, but they claim there were also regions where the bombers flew unnoticed.

"During the flights, part of a test of long-range aircraft, the bombers' crews saw NATO fighters, which were flying parallel to them in their airspace," Russian Air Force spokesman Alexander Drobyshevsky told Interfax news agency.

"But there were also segments of flights, including close to Alaska, where our planes were flying unaccompanied," he added.

The encounter happened despite a new initiative led by Keating to get Russian commanders to notify U.S. officials more fully about training missions.

Better communications are necessary "to develop better ways to understand each other's concerns and common issues and to ensure safety of flight for aviators from both countries," Keating said.

He hosted Russian Lt. Gen. Igor Khvorov, commander of Russia's long-range bombers, in Colorado in December. Keating planned to visit Russia this fall to pursue this initiative, but that trip was postponed, NORAD spokesman Mike Kucharek said.

It was unclear whether Russian military officials notified U.S. officials directly of Thursday's bomber flights. But U.S. officials knew about Russia's training exercises from scanning media reports from Russia, Kucharek said.

Russian commanders had announced an exercise in Atlantic, Pacific and Arctic regions Sept. 26-30 involving 70 bombers and the test-firing of 18 cruise missiles.

NORAD forces charged with deterring, preventing and defeating threats to North America planned to practice maneuvers at the same time. Since Sept. 11, 2001, all NORAD patrols have been conducted using fully armed fighters.

During the Cold War, U.S.- Soviet confrontation led to close encounters of this sort, with fighters scrambled to intercept and eye opposing forces. But that's been uncommon in recent years.

"They were flying a route. Obviously we were monitoring those flight routes," Kucharek said. "We had to watch to see what they were doing."

"General Surayud agreed to accept the position," coup leader General Sonthi Boonyaratglin told reporters.

"The next prime minister will need to sacrifice for the people, and General Surayud is truly a good man," he added.

Surayud's appointment still requires the approval of the nation's revered King Bhumibol Adulyadej, who he was due to meet at 4:00 pm (0900 GMT).

But the approval was considered a formality as the monarch has already endorsed the coup.

Surayud's powers as premier will be sharply checked by the junta, which has enshrined itself in an interim constitution that the king approved earlier Sunday.

The charter formalizes the junta's role in government by placing them on a new Council for National Security, which will oversee the nation's security affairs and has the power to sack the prime minister.

The military will also appoint all 250 members of the new parliament, and will approve all members of a new assembly tasked with writing a permanent constitution for Thailand before the promised elections.

The charter bars political parties from participating in the drafting of the constitution, and grants the military complete amnesty for the coup.

Sonthi said the junta had to remain in place to encourage national unity after months of turmoil surrounding Thaksin's government.

"National unity may seem abstract, but we have to make it as tangible as possible to make the Thai people have a greater sense of patriotism," he told reporters.

The interim charter and the prime minister were announced 12 days after the military's bloodless September 19 takeover. The junta had promised to set up a civilian government within a fortnight.

The appointment of Surayud places a prominent military man in a post that Sonthi had earlier said would go to a civilian, although Sonthi and other junta members have repeatedly said they consider retired officers as civilians.

But their choice of Surayud means they will have to overcome at least the perception that the premier's office has become little more than an extension of the military.

That concern has already been voiced by the United States, Thailand's top trade partner and a close ally which last week suspended 24 million dollars in military aid in protest at the coup.

Surayud, a career military man, had previously spoken out against the military playing a role in Thai politics after troops under his command shot dead more than 50 pro-democracy protesters in 1992.

He became army chief in 1998 and was credited with professionalising the armed forces. Surayud later clashed with Thaksin and was sidelined in a less powerful post, before he retired in 2003.

He now sits on the Privy Council, the king's inner circle of advisors, but will quit that post in order to become prime minister.

The junta has justified the takeover by saying military intervention was needed to weed out systemic corruption under Thaksin's administration.

The generals say they want a permanent constitution that would strengthen the powers of institutional watchdogs to prevent the abuses that they say marred Thaksin's five years in office.

Thaksin's ouster came after months of political turmoil following his family's tax-free sale of nearly two billion dollars in stock in the telecoms firm that he founded.

The junta has moved swiftly to investigate alleged corruption under Thaksin, who is staying in exile in London. The junta says he has no immediate plans to return home.

Sonthi said Sunday that four top aides to Thaksin, who were detained shortly after the coup, had been released. They were freed one day after Sonthi strengthened the powers of his new anti-corruption panel.

Bush had told his followers, including some assassins, that they could do whatever was effectual to remove him from office, said Chavez at a campaign rally on Sunday.

He added that Bush had expressed his intention to see him ousted before his term as U.S. president expired.

Chavez vowed to win the Dec. 3 elections and resume his tenure until 2021. He was reelected in 2000 for a six-year term following his first election in 1998.

On Sept. 23, Chavez, speaking before the UN General Assembly, called Bush the "devil," a "liar" and a "tyrant" at the same podium where Bush stood the day before.

U.S.-Venezuela tensions have been escalating over the past year, and Chavez has increased his anti-U.S. rhetoric.

Thus, loss of the support of Blair is being anticipated as an event that could have major implications for U.S. foreign policy. The British leader and President Bush have been supportive on a wide range of issues over the past six years, including missile defense and fighting Libya's quest for weapons of mass destruction as well as troop commitments in Afghanistan and Iraq.

This steadfast support of U.S. policy by Blair has not been well received by many members of his Labor Party colleagues, noted Helle Dale, a foreign policy expert at The Heritage Foundation. It has been tolerated, however, because Blair has managed to maintain high polling numbers.

Since the arrival of Conservative leader David Cameron last year, however, Blair's fortunes have started to change, Dale said. Cameron has been trying to move the Tories toward the middle, of past the middle in some views, of British politics. The result has been to give the Tories a substantial lead over Labor in opinion polls.

In response, a revolt developed in the left wing of the Labor Party over Blair's support for the U.S. position on the conflict between Israel and Hezbollah in Lebanon. Labor MPs demanded Blair's resignation, and the prime minister declared he would step down sometime in the coming year.

Chancellor of the Exchequer Gordon Brown is expected to be Blair's successor, and very little is known about his views on foreign policy.

Cameron, who looms as a future prime minister prospect, has tried to establish a position different from both his Tory predecessors and from that of Blair, Dale said. In a recent speech, Cameron said, "Britain does not need to establish her identity by recklessly poking the United States in the eye, as some like to do. But we will serve neither our own, nor America's, nor the world's interests if we are seen as America's unconditional associate in every endeavor."

Thus the future strong support of America in the global war on terror by Britain under Blair's leadership has become an uncertainty in the near future.

But that might not be reason for panic, Dale suggested, because there also could be major implications for U.S. foreign policy in the election of a new French president next spring.

French presidential contender and Interior Minister Nicholas Sarkozy was in Washington a few days ago. Judging by his remarks, France could become a major ally in the future, potentially replacing Britain in that role, "which would be a surpassingly strange turn of events," Dale said.

Speaking at the French-American Foundation, Sarkozy mentioned "the friendship between our two peoples," and talked in glowing terms about the heroes of Sept. 11, and about America's success as an immigration country and as a world leader and its leadership in the arts and sciences.

He also suggested that the virulent anti-American sentiment in the French media and among "a portion of the French elites" arises from envy. Current French President Jacques Chirac denounced Sarkozy's speech as "lamentable."

There is no way to anticipate how Sarkozy's approach will be received by French voters.

But with speculation that Britain may be on the verge of taking a different path, the notion that the United States again could wind up looking to "America's oldest ally" as a new partner has "stranger than fiction" potential.

In a low-key ceremony before a U.S. Navy jet bore the remaining base residents back to the United States, a handful of U.S. military personnel faced Icelandic police as the Icelandic and American flags snapped briskly in the wind.

Both flags were lowered, and base commander Captain Mark Laughton presented the folded Stars and Stripes to the U.S. ambassador. Icelandic police then sent their country's flag back up its flagpole to fly alone.

The island nation of 300,000 has no army of its own and while most residents sounded unworried about the lack of visible defences, some expressed concern at the swift U.S. withdrawal.

Iceland learned in March that the base was to close.

"I think that says something about what they think about defending us," said Johann Stefansson, who owns a pizza restaurant in the town of Keflavik.

U.S. officials said this was the inevitable end of the Cold War chapter in the U.S.-Icelandic relationship. The two countries have signed an agreement that includes a U.S. promise to rush to Iceland's aid if needed.

"The kind of dangers that the people ... at the base worked to counter are no longer critical in the 21st century," U.S. Ambassador to Iceland Carol van Voorst said, adding that the two nations would still work closely to combat terrorism and crime.

"If we had something of a conventional threat, I can tell you we'd be here fast," she added. "We have very mobile and agile forces now and we can move men and materiel very fast."

COLD WAR TOWN

In an interview with Reuters on Friday, Icelandic Prime Minister Geir Haarde expressed similar confidence.

"We don't perceive a threat from any other country in the old sense," he said.

"(U.S.) fighters can get up here pretty fast," he said, then added: "Of course obviously longer than before, but still I am sure sufficient in case there is a danger."

The base on this windswept Icelandic peninsula housed some 6,000 at its peak, including military, families and local staff. From 1980 to 1991, its fighters intercepted some 130 Soviet bombers a year.

After his second summit with Mikhail Gorbachev ended in disappointment in 1986, U.S. President Ronald Reagan celebrated Keflavik's importance in a speech there.

Before Saturday's ceremony, U.S. Lieutenant Colonel Randy Weirs, commander of the Iceland Defense Force, drove through empty streets that once hummed with activity.

The base is a town in itself, complete with a primary school with a 650-student capacity, a high school, fast-food restaurants and the only baseball fields in Iceland.

Iceland is looking at ways to re-use the residential buildings, perhaps as a campus or health facility, while businesspeople are eyeing the hangars and service buildings for commercial development.