Two confiscated Georgian military banners were thrown down in the middle of the square, an apparent parallel to the 1945 Victory parade on Moscow's Red Square. The ceremony was followed by a parade of the region's military.
The event took place after the Georgian rebel republic was recognized as independent state by Russia on August 26 following a five-day war with Tbilisi, which attacked the region in a bid to bring it under central control on August 7.
"Today marks 18 years since the Republic of South Ossetia was proclaimed," South Ossetian leader Eduard Kokoity told a crowd on the square ahead of the parade. "For 18 years, the people of South Ossetia have been proving their right to an equal place among other nations."
Kokoity said the great day was overshadowed by sorrow for those who were killed in the recent Georgian offensive.
South Ossetia, then an autonomy within Soviet Georgia, proclaimed independence on September 20, 1990, when the Soviet Union was disintegrating. The region broke away from Georgia after a bloody armed conflict that followed.
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If attempts to drag Russia into a direct military conflict in Ukraine are successful, it would be a catastrophe for Russia comparable to the 1979-1989 Afghan war. There is no direct evidence that the US is trying to bring about a second Afghan war, but indirect evidence abounds.