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LONDON (Reuters) - Markets might have moved on after their initial shocked reaction to last year's Georgia war, but the legacy of the brief conflict remains that war in Europe is much less unthinkable than it once was.
Russia's stockmarket lost roughly a quarter of its value in August 2008, while the cost of insuring sovereign debt in the credit default swaps market rose as far afield as Poland as investors reappraised regional risk.
The war had such market impact because it was so unexpected. Investors -- and many analysts -- had assumed that conflict risk in emerging Europe was close
When arguments broke out again around the Black Sea Fleet last month -- with diplomats expelled and Ukrainian police halting Russian military vehicles -- there were no discernible market movements at all.
"There was a strong initial reaction to the war," said Michael Ganske, head of emerging markets research at Commerzbank in London. "But markets are now looking at other things."
SUMMER WAR RISK REMAINS
Some suggest there was also a knee-jerk overreaction.
"In the immediate aftermath, there were a lot of analysts saying things would escalate and Russia would take similar action in other regions such as Crimea but I think that was too quick an analysis," said Sabine Freizer, head of the Europe program at International Crisis Group. "Russia wants to keep some of these areas unstable but that is not the same thing as intervening militarily."
Certainly, few would now dare rule out any further war, most likely erupting over a summer period when better weather makes fighting ground wars more appealing.
"It is a risk that is always worth watching," said Joanna Gorska, deputy head of Eurasia desk at risk consultancy Exclusive Analysis. "But if we get through to September or October without anything, we are probably safe for another year."