Russian President Dmitry Medvedev recently proclaimed Eurasia a Russian "sphere of exclusive interests." Moscow has backed up those words with every available foreign-policy tool: diplomacy (including recognition of breakaway republics), arms sales, defense pacts, base construction—even regime change.

This month marks the second anniversary of the Russian-Georgian war, a conflict that put Tbilisi's NATO and European Union ambitions on hold while cutting off for good the pro-Russian secessionist territories of Abkhazia and South Ossetia.

To further strengthen its dominance in the region, Russia was intimately involved in this April's overthrow of Kyrgyzstan President Kurmanbek Bakiyev. The move was a payback for his refusal to evict the U.S. airbase at Manas airport and a lesson to those in the region who buck the Russian diktat.

Russia is also pressuring Belarus to jettison strongman Alexander Lukashenko in favor of a more pliant, pro-Moscow, but not necessarily more democratic, leader. And just last week, Russia tightened the screws on Georgia and Moldova by ordering its customs-union partners Kazakhstan and Belarus to stop importing Georgian mineral water and Moldovan and Georgian wines.

The U.S. response to all this has been confused at best. During her recent visit to the Caucasus, Secretary of State Hillary Clinton did call the Russian presence in Abkhazia and South Ossetia "occupation" of Georgian territory. But she spent most of the time stressing the importance of "soft" over military power, which still plays a key role in the region.

Unfortunately, the Obama administration rarely goes beyond rhetoric, jettisoning 20 years of often muscular pursuit of a bipartisan freedom agenda, which included opposition to Russia's military presence in the post-Soviet space, support of Georgian integration into Euro-Atlantic security structures, and boosting ties between post-Soviet states from Uzbekistan to Ukraine and Moldova.

While the Obama administration praises soft power, Russia still speaks the language of arms. In the past two years it has built five military bases in Abkhazia and South Ossetia. Later this month, during President Dmitry Medvedev's visit to Yerevan, Moscow will provide military guarantees to Armenia, assuming a "joint" responsibility to protect the country's borders against Azerbaijan and Turkey. Prime Minister Vladimir Putin has prepared a draft protocol for President Medvedev's signature that would commit Russia's troops at its military base near the Armenian city of Gyumri to the country's defense and sell advanced weapons to Yerevan. Baku and Ankara must be livid.

While the previous contract called for the Gyumri base to be dismantled in 2015, the new protocol will allow Russia to stay there until 2049. The arrangement is similar to the renegotiated lease for the Sevastopol naval base in Ukraine, which is extended to 2042 as it, too, prevents the country's future membership in NATO.

Russia's pledge to defend Armenia puts Azerbaijan in an untenable situation. It's a clear warning against any Azeri attempt to regain the secessionist Nagorno-Karabakh region or its seven Armenian-occupied districts. The subtext is clear as well: Azerbaijan should scale back cooperation with the West or face the consequences. The Russian-Armenian protocol makes Russia the dominant power in South Caucasus, as the U.S. and NATO are unwilling to commit to long-term military presence there.

Baku's efforts to reach out to Russia by selling gas and buying sophisticated weaponry so far have not borne fruit. At the same time, Russia is skillfully playing both sides and may have found a way to sweeten the Armenian defense pact for Baku. Russia's Vedomosti newspaper reported last month that Moscow has sold Azerbaijan the state-of-the-art S-300 anti-aircraft missile system. While Russia's Defense Ministry denied the report, the Azeri Defense Ministry did not. If the S-300 sale went through, it probably contributed much to Baku's surprising silence on the Russian-Armenian defense protocol.

While extending its military reach, Moscow is simultaneously trying to assume the role of primary mediator in the territorial dispute over Nagorno-Karabakh. Moscow hopes to retain its historic ally, Armenia, while wooing a new partner, Azerbaijan. That's not to say Moscow is intent on resolving the conflict. Rather, it pursues greater cooperation with Yerevan and Baku—including military cooperation—as a means of increasing its leverage and arms sales to both sides.

The growing tension over Iran's nuclear program may have also played a role in Russia's extension of its lease in Gyumri. In case of a "hot" conflict, Russia would be able to stop the deployment of U.S. military and allied forces in the Caucasus, including the use of air bases. Russian control of South Caucasus airspace from bases in Armenia, Abkhazia and South Ossetia could deny U.S. air operations there without Moscow's consent.

Meanwhile, Washington seems content with preaching the importance of "soft power." Its pseudo-Realpolitik approach of "seeing no evil" only encourages Moscow to expand its hegemony.

To roll back the Kremlin's growing regional influence, Washington should expand its political-military cooperation with the countries of Central Asia and the Caucasus; lift the de facto weapons embargo on Georgia; and engage in meaningful efforts in the realms of energy, security and good governance. Washington should explore sales of Patriot missiles and modern military equipment to Azerbaijan; boost support for the Nabucco and trans-Caspian gas pipelines in coordination with European capitals; and promote greater transparency, democracy and the rule of law in the region. The Obama Administration, in short, needs to reset its Russian reset policy to protect America's interests in Eurasia.

Mr. Cohen is senior research fellow in Russian and Eurasian Studies and International Energy Policy at the Heritage Foundation.