By James Kilner
TSKHINVALI, Georgia, Nov 13 (Reuters) - Georgia's breakaway South Ossetia voted overwhelmingly in favour of independence in a referendum tempered by signs that Tbilisi wanted to ease tensions with the separatists and their Russian backers.
Georgian President Mikhail Saakashvili moved his hawkish Defence Minister Irakli Okruashvili to a new post on Friday, giving the strongest indication yet he wants to end a standoff that has poisoned relations with his bigger neighbour Russia.
Election officials in South Ossetia said on Monday that 99 percent of the roughly 50,000 voters said "Yes" to separation from Tbilisi -- a defiant reaffirmation of a split that has existed since a war in the early 1990s.
"South Ossetia's independence must continue," separatist leader Eduard Kokoity told reporters after results were announced. "They (the Georgian government) should listen to the wishes of the South Ossetian people."
South Ossetia has no international recognition and Georgia and the West have called the referendum illegal. Russia says it should be respected.
Local people celebrated the "Yes" vote by driving around the separatists' capital, Tskhinvali, waving the South Ossetian flag and the flags of Russia and Abkhazia, a second Georgian breakaway region.
South Ossetia is an ex-Soviet "frozen conflict" that has become increasingly combustible since Saakashvili came to power in 2004 vowing to restore control. Separatists and Georgian forces are often killed in skirmishes.
European human rights Watchdog the Council of Europe called the vote "unhelpful."
In an interview with Reuters in Brussels, Georgian Prime Minister Zurab Nogaideli said: "This referendum ... can only increase the tensions in the region, nothing else, because nobody is certainly going to take the result of the referendum into account and recognise it."
Nogaideli said Russian rhetoric and rising tension in the region "are making us draw the conclusion they (the Russians) are getting prepared for a war."
IRRITANT
Nogaideli said Okruashvili's move to the post of economy minister did not signal a change in policy. But observers said the switch removed a major irritant in Georgia's relations with the separatists and Moscow.
Okruashvili earlier this year rattled the separatists and the Kremlin by saying he planned to toast the New Year in South Ossetia -- fuelling their fears Tbilisi is planning to restore its control by force. Saakashvili says he has no such plans.
"The departure of the main disturber of the peace is a signal to the Kremlin, a sort of ceasefire offer," wrote Russia's Izvestiya newspaper.
Relations between Tbilisi and Moscow nosedived last month after Georgia deported four Russian soldiers it accused of spying. Moscow hit back by severing transport links with its ex-Soviet neighbour.
But Georgia's conflicts with South Ossetia and Abkhazia lie at the root of the row with Moscow.
Russia has strong ties to the separatists and has pledged to defend them from Georgian aggression, while Tbilisi accuses the Kremlin of effectively annexing the two regions.
In a parallel presidential election in South Ossetia on Sunday, Kokoity was re-elected with 96 percent of the vote.
(Additional reporting by Paul Taylor in Brussels, Margarita Antidze in Tbilisi and Francois Murphy in Paris)
