The most important geopolitical vector of the first 30 years of my life was the Cold War as the United States and Europe skirmished around the world against the Soviet Union in an ideological battle between socialism and capitalism. The competition ended with the break-up of a virtually bankrupted Soviet Union and a flowering of democracy and liberalism in Eastern Europe and Asia.

One result of the end of the Cold War was a fantastic jump in stock markets once investment efforts turned from militarism to consumerism. The Dow rose to 13,000 from 2,000 in the twenty-year period of 1988 to 2008, a 550% advance. In the previous 20 years, it had only risen 125%.

Now the tables are starting to turn, and it appears that oil and gas riches have extinguished feelings of post-Cold War humiliation among Russian leaders and stoked them with imperial ambitions.

It’s always difficult to see geopolitical change as it occurs in real time, but the latest evidence of a seismic shift in world politics was the invasion of Georgia by Russian tanks last week.

This is not important to us because war is bad for the economy; quite the contrary. (See also: "Global Markets Catch a Cold.")

The 2000-2003 bear market ended when the United States invaded Iraq, and the Great Depression ended when the United States went to war against Japan and Germany. Instead, it’s important to us because of the way it affects investment flows, bonds and the U.S. dollar, all of which can mutate in unpredictable ways to change the way investors value future corporate earnings.

In short, it’s too early to tell if the Russian invasion will be meaningful or not to anyone outside Georgia, but in the meantime we do need to think about how it may change the investing landscape.

So what is worth fighting for in Georgia?

Don’t be shocked here, but the cynics are likely right on this one: It’s oil.

A key petroleum conduit known as the Baku-Tbilisi-Ceyhan pipeline snakes around Russia and Armenia to carry oil from the Caucasus to the Eastern Mediterranean, from which it then moves on directly to Europe and Israel, as well as to the Far East via an Israeli port on the Red Sea.

A new NATO-protected pipeline in the works would carry oil directly to the Far East from the Caucasus via Georgia, and according to analysts at TIS Group, the Russians consider that a move to outmaneuver its own ambition to move oil and gas to the Far East via a pipeline through Iran.

It’s fairly clear that Russia wants to reassert its control over Georgia to control the Baku pipeline. And it seems equally clear that the U.S. goal is to both protect the Baku pipeline supplying Europe and Israel as well as to prevent Russia and Iran from cozying up more than they already are. 

Yet there’s more at stake here than just this one pipeline. Russia appears to want to show Europe and the United States that it can act with tough-guy impunity to protect its interests. The Kremlin aims to maintain its stranglehold over European access to energy by reassembling the old Soviet empire that buffered the homeland from enemies.

In a Wall Street Journal editorial this week, Garry Kasparov, the retired chess grandmaster who has become a strident Russian dissident, scolded the West for allowing the Kremlin to act badly. He said the invasion was "the direct result of nearly a decade of Western…delusion" over the character and intentions of former president Vladimir Putin. He added that country had "reverted to a KGB dictatorship" while Putin was treated as an equal at summits of the G-8 democracies, and blasted France for blocking the American push to fast-track Georgia’s membership in NATO.

Drawing on his insider knowledge of Moscow politics, Kasparov describes how Putin orchestrated public opinion in Russia to inflame public fears that Russia has been surrounded by enemies and must act now, step by step, to rein in oil-rich Georgia now, and grain-rich Ukraine later.

This is just how major world conflicts begin: With appeasement, nationalism, trade battles and hurt feelings.

The fact that the prices of oil, gas and gold have all declined during the initial stages of this conflict are somewhat shocking—suggesting either that the world either doesn’t care whether Russia acts to augment its near-monopoly on European energy, or just showing that the impulse to sell commodities right now in an environment of hedge-fund deleveraging and rising dollar are stronger. (See also: "Are Global Markets Headed for a Plunge?")

But let me throw out one more theory that may be the most meaningful: This episode shows that major investors are more worried about the economic troubles of Europe now than they are about the area’s oil supplies or political stability.

If that’s the case, then the thinking goes like this: A weaker Europe leads to a weaker euro, which leads to a stronger dollar, which leads to weaker oil.

So buy the dollar, sell the euro and sell oil.

This line of reasoning will likely last for quite a while, though it will also be interrupted from time to time when interrupted by short-term seasonal concerns, such as a build-up of oil inventories for winter.

Jon Markman is editor of Trader’s Advantage and a regular contributor to InvestorPlace.com. To get this type of actionable insight from Jon and other InvestorPlace Media experts visit www.InvestorPlace.com today!