By Michael Stott

MOSCOW, Aug 21 (Reuters) - The Russian tanks which rolled into Georgia this month did not just crush a troublesome former Soviet neighbour. They also squashed hopes of a more liberal agenda back home in Moscow.

Kremlin leader Dmitry Medvedev, an Internet-savvy 42-year-old former corporate lawyer, took office in May pledging to fight corruption and lawlessness at home, promote democracy and set a softer tone overseas.

Medvedev's arrival aroused hopes among Western powers of a more liberal, investor-friendly Kremlin after what they saw as eight years of eroding democracy and hawkish foreign policy under his predecessor and mentor Vladimir Putin.

Those hopes lasted just three months.

Then Moscow unleashed its biggest show of military might since the 1991 collapse of the Soviet Union to crush an attack by neighbouring Georgia on the pro-Russian separatist province of South Ossetia.

Now, the Kremlin chief's complex, lawyerly phrases have given way to the clipped expletives of a military leader.

"Bastard" and "lunatic" have entered the Medvedev vocabulary, and the rule of law has given way to the rule of war.

Showing a tough streak that seemed unthinkable only a month earlier, Medvedev promised war veterans in televised comments that Russia would deliver a "crushing response" to any future aggressor.

One of his top generals threatened Poland with a possible future nuclear strike after it agreed to deploy a U.S. anti-missile system.

"There is no doubt the hardliners are totally in control," one senior Moscow diplomat said, speaking on condition of anonymity. "This intervention in Georgia has changed the game."

DIFFERENT SCRIPT

Medvedev's stated agenda of encouraging democracy and economic reform is now firmly on the back burner, along with hopes of a better relationship with the European Union, Russia's biggest trade and investment partner.

Liberal reformers such as First Deputy Prime Minister Igor Shuvalov, who enthused investors with a strong pro-market message at a business summit in June, have dropped from view on state television.

Hawks such as Foreign Minister Sergei Lavrov dominate the airwaves, along with highly emotive pictures of victims and refugees from Georgia's initial attack on South Ossetia. Reports attack "biased" and "false" Western news coverage of the conflict.

This was not the script which Medvedev's advisers had written for his presidency, an administration which stressed policy continuity with Putin but added softer edges and a more modern tone.

Only two months ago, Medvedev shared the stage at a summit meeting with a relaxed and smiling EU Commission president. Jose Manuel Barroso hailed a "new chapter in our relations" as the two sides launched long-delayed talks on a key new partnership accord.

Barroso now finds himself presiding over a Union alarmed by Moscow's military might and divided over how to respond.

Medvedev, meanwhile, is decorating war heroes and looking at ratcheting up Moscow's military spending still further. "The prospect of a really cosy, friendly relationship with Europe has gone," said Chris Weafer, chief strategist at Moscow brokerage Uralsib.

LONG-TERM PLAN

Although a pragmatic business relationship would survive, driven by Europe's dependence on Russian energy, Putin's long-term plan to modernise Russia and make it a leading world economy by 2020 could also be at risk, he added.

"If we end up with a much more belligerent and less cooperative relationship between Brussels and Moscow, then I do believe the plan would be seriously disrupted or delayed," Weafer said.

Further complicating any chance Medvedev might have had of promoting liberal reforms, analysts criticised his performance as a leader in the initial stages of the war with Georgia, saying he failed to take control fast or firmly enough.

It was Putin who dominated in the crucial first weekend of fighting, flying from the Beijing Olympics straight to the garrison town of Vladikavkaz to meet soldiers and refugees.

In a telling sequence on state television, compared by one diplomat to a father guiding his son, Putin was shown briefing Medvedev back in Moscow on the war and telling him what needed to be done. Medvedev agreed eagerly.

Diplomats also noted Putin was present in the background at a key meeting in Moscow where French President Nicolas Sarkozy negotiated with Medvedev a six-point ceasefire plan.

The behaviour of the Russian leadership during the first big crisis of Medvedev's presidency has reinforced an already widespread view among ordinary Russians, political analysts and diplomats that Putin and the coterie of former security service men close to him remain firmly in charge.

"Yes of course the hawks are running the show in Moscow," a second diplomat said. "But then, they always were."

(Editing by Mark Trevelyan)

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