The war in the South Caucasus sent shockwaves throughout the post-Soviet world, European capitals and across the Atlantic, making more urgent the demand for a re-evaluation of policies towards Russia. The projection of hard power in Georgia generated a number of unintended consequences for the Russian state. The crisis and war unveiled many of Russia’s weaknesses and vulnerabilities across four crucial dimensions: the military, the ‘power vertical’ and federalism, the economy and Russia’s international position. This paper aims at reassessing Russia’s military, political, economic and diplomatic might after the battle in the South Caucasus. The research concludes with proposals for a new Western strategy on Russia and the EU’s Eastern Neighbourhood which would ensure an undivided and sustainable European order.