A new critical year in East-West relations is fast approaching. It promises to be a year of decision and confrontation. 2008 will present an important challenge for European Union unity, trans-Atlantic cohesion and the determination of the West to stand up to an increasingly assertive and expansive Russia.

The world is waiting for final decisions on the status of Kosovo. Without Russia's involvement during the past year, Kosovo would already be a state, since Serbia by itself could not have resisted Western objectives to legitimize Kosovo's de facto independence. Moscow's calculation to use the disputed territory as a pawn in its "great game" against U.S. interests has made the process of statehood more tense and unpredictable.

Washington continues to demonstrate resolve over Kosovo's final status despite the difficulties in forging an EU consensus and the hesitation evident among some European states in bypassing the UN Security Council, whose decisions are blocked by the Kremlin. The process of independence will most probably be completed by the time of the NATO summit in Bucharest in April. But the recognition of Kosovo's statehood will generate fresh regional and international tensions that need to be competently handled by the trans-Atlantic powers.

The stabilization of the Western Balkans is manageable if NATO, the EU, and the United States work in tandem to prevent Belgrade and Moscow from exploiting latent tensions and militant expectations in Bosnia-Herzegovina, Macedonia and Montenegro. Although Serbian Prime Minister Vojislav Kostunica may act irrationally in response to Kosovo's independence, Belgrade no longer has the capabilities to export war to neighboring states. A display of diplomatic and military force may be necessary by NATO and the EU to convince local actors that the West is serious.

Containing Russian reactions outside of the Balkans, however, may prove more problematic. Some analysts say the Kremlin has drawn a red line across Kosovo's independence. If the West recognizes the new state, the Kremlin may pursue its "national interests" more vigorously in several neighboring regions and intensify its anti-U.S. alliances. Washington and Brussels need to be prepared for all eventualities.

Moscow has already signaled that it will fortify its economic and political ties with Iran. In addition, it will seek a closer relationship with China to counter "U.S. expansionism," and it will develop the Collective Security Treaty Organization into a competitor with NATO in Central Asia and the Caucasus. Moreover, Russia will increase pressure on all former Soviet colonies that seek inclusion in Western institutions.

Georgia has become the most vulnerable outpost of Western interests in the Caucasus, a region that Russia is determined to dominate both for reasons of geostrategy and energy politics. Moscow's military commanders are prepared to assist the Abkhaz and South Ossetian separatist movements and confront the Georgian military if Tbilisi attempts to regain the two enclaves. Indeed, the Kremlin may seek to draw Georgia into a military confrontation to justify an already planned intervention.

The Russian authorities may also seek to apply pressure on Moldova by raising the specter of recognizing the breakaway Transdnestr region once Kosovo becomes independent. They are certain to fortify their military presence in Belarus and Kaliningrad, and they will lean heavily on the new Ukrainian government led by Prime Minister Yulia Tymoshenko to undermine the process of democratic reform and Western integration. In recent days, President Vladimir Putin has warned against Western influences in Ukraine and again raised the prospect of instability and disintegration.

The presidential election in March will not change official policy. Putin's selected successor, First Deputy Prime Minister Dmitry Medvedev, is not an independent actor with his own power base and will remain beholden to the KGB clique that controls the Kremlin. Moscow's policy will remain assertive and aggressive and at times openly confrontational toward the West.

The list of conflict points between Russia and the West expands almost every week. It now includes such contentious questions as the missile defense shield, the Treaty on Conventional Armed Forces in Europe, ballistic missile accords, the role of the Organization for Security and Cooperation in Europe, NATO enlargement, energy security and even the ownership rights to the Arctic. Tensions also persist over Kremlin pressures on the three Baltic states and its escalating confrontation with London. It is not surprising that the EU and Russia have been unable to arrange a new partnership agreement.

The Putin leadership has deliberately created a sense of danger through its anti-Western rhetoric. It claims that the United States and its closest NATO allies, such as Britain and Poland, are seeking to encircle Russia and prevent the country from regaining its rightful position as a major global player. The expansion of Western alliances and the promotion of liberal democracies are depicted as direct threats to Russia's interests.

In these testing circumstances, the U.S. presidential election in November will be a good time to decide which direction the United States is heading. The next U.S. president will inherit a heavy agenda in seeking to restore Washington's prestige and authority around the world and in rebuilding effective alliances that can counter the major security threats.

Among the priority items for the United States will be dealing with an expansionist Kremlin that is once again seeking to divide the Western alliance and diminish U.S. influence. The decision on Kosovo's statehood will be an early indication of whether Washington is determined to stand by its principles and is capable of ensuring trans-Atlantic cohesion -- even at the cost of exacerbating the inevitable confrontation with Russia.

Janusz Bugajski is director of the New European Democracies project at the Center for Strategic and International Studies in Washington.