Georgia and Russia talks "in full swing"

GENEVA (Reuters) - Georgia and Russia made some progress on security arrangements in the Caucasus on Tuesday after Moscow's negotiators returned to the table, but major differences remain, international mediators said.

All sides agreed to meet again on July 1 for talks intended to head off any further conflict in an area seen by the West as a key transit territory for Caspian gas and oil and by Russia as a historic sphere of influence.

"The process is back on the right track after some problems. The process is in full swing...," Pierre Morel, special representative of the European Union for the crisis in Georgia and one of the international co-chairs of the negotiations, told a news conference after about 3-1/2 hours of talks.

The mediators acknowledged that the latest round of talks -- the fifth since they were launched following a brief war between Russia and Georgia in August -- had had a difficult start after Russian and South Ossetian delegations walked out on Monday.

"Emotions are still raw and positions in some cases wide apart," said Charalampos Christopoulos, special envoy for the Organisation for Security and Co-operation in Europe (OSCE).

"HOTLINE" IN PLACE

Morel said that a hotline between the two sides was already in place for incidents in South Ossetia, following an agreement at the last round of talks in February.

Delegations from Russia and the Moscow-backed rebel region of South Ossetia had withdrawn from the two-day talks in Geneva on Monday citing the refusal of another Moscow-backed rebel region, Abkhazia, to attend, due to a delay in a U.N. report.

In the report on the U.N. mission in Abkhazia, U.N. Secretary-General Ban Ki-moon said tensions between Georgia and Russia, who fought a brief war over South Ossetia in August, were weighing heavily on the region.

"The participants expressed the will to tackle all remaining challenges regarding gas supplies," Morel said on Tuesday.

U.S. envoy Matthew Bryza, Deputy Assistant Secretary of State for European and Eurasian Affairs, described the talks as useful "but not always in a constructive tone."

However, he said that it was not entirely clear to him whether the Moscow-backed delegations from Abkhazia and South Ossetia had agreed fully to work on the security arrangements.

"There is insufficient protection of the rule of law in South Ossetia and insufficient protection of human rights. The same goes for the Gali district of Abkhazia," Bryza said.

The U.N. report cites the official title of "United Nations Observer Mission in Georgia" but otherwise skates round the sensitive question of whether Abkhazia is part of Georgia or not.

(Additional reporting by Jonathan Lynn; editing by Ralph Boulton)