From the terrace there are views of the Crimean peninsula, with fir trees, dark green cypresses and a shimmering bay. Inside – through a pleasant Italian courtyard – is the room where Churchill, Stalin and Roosevelt sat together around a wooden table and divided up postwar Europe.
But almost 65 years after the "big three" met in the Crimean seaside resort of Yalta – now in Ukraine – the question of zones of influence has come back to haunt Europe. Russia has made it clear that it sees Ukraine as crucial to its bold claim that it is entitled to a zone of influence in its post-Soviet backyard.
Last month, a group of east European leaders and intellectuals gathered in the Livadia Palace, where Britain, the US and the Soviet Union held the Yalta conference in February 1945. The idea was to discuss Ukraine's strategic future. But the discussion was overshadowed by one question: will there be a war between Russia and Ukraine?
The scenario is not as daft as it seems. In August, Russia's president, Dmitry Medvedev, gave his Ukrainian counterpart, Viktor Yushchenko, an unprecedented diplomatic mugging. In a seething letter, and subsequent video message, Medvedev reprimanded Yushchenko for his "anti-Russian" stance. He told him that, as far as Russia was concerned, the pro-western Yushchenko was now a non-person.
After reeling off a list of grievances, Medvedev said he would not be sending an ambassador to Kiev. He also said he was reviewing Russia and Ukraine's 1997 friendship treaty – a hint that Moscow may no longer respect Ukraine's sovereign borders. The message was blunt: whoever wins Ukraine's presidential election in January has to accept Russia's veto over the country's strategic direction.
"The letter was most unfortunate," Volodymir Gorbulin, Ukraine's former national security adviser, said. Gorbulin, now the director of the National Security Problems Institute in Kiev, wrote an article last week suggesting that, 18 years after Ukraine got its independence, Russia may be ready to dismember it. "We have to find a way of mutual coexistence," he warned.
The flashpoint, Gorbulin says, is Crimea, the lush peninsula beloved by 19th-century Russian writers and Soviet tourists. It is Ukraine's only Russian-majority province. It is also the home of Russia's Black Sea fleet – anchored just around the coast from Yalta in the historic port of Sevastopol. Under the terms of a lease agreement with Ukraine, Russia is supposed to vacate the base in 2017. But it doesn't want to.
In recent weeks, pro-Kremlin newspapers have been speculating that Crimea might soon be "reunited" with mother Russia, solving the fleet issue. The best-selling Komsomolskaya Pravda even printed a map showing Europe in 2015. The Russian Federation had swallowed Crimea, together with eastern and central Ukraine. Ukraine still existed, but it was a small chunk of territory around the western town of Lviv.
In a symbolic gesture, several Russian restaurants in Moscow have stopped selling Ukrainian borsch. They are still serving up the dishes of tasty purple beetroot soup, but they have renamed it "Little Russia" soup. Little Russia, or Malorossiya, is what Kremlin ideologists are now calling a post-independent Ukraine, back under Russia's grasp.
Ukrainian diplomats are worried. One said: "We are seeing [from Moscow] a resurrection of re-integrationist rhetoric and ideology." He added: "It isn't just about replacing Yushchenko, but about changing the trajectory of Ukraine's [western-leaning] development. Russia thinks we are a half-sovereign country."
Medvedev's video was an ultimatum, the diplomat added: accept Russian domination, voluntarily renounce plans to join Nato and renew the lease on Russia's naval base. Under these conditions Ukraine's new president – lame-duck incumbent Yushchenko has no chance, according to opinion polls – would be little more than a Russian puppet, the diplomat suggested.
Last month, Ukraine's nervous intellectual class complained in a letter that the west had abandoned it. Other eastern European countries also share a strong sense of betrayal following Barack Obama's decision last month to cancel America's planned missile defence shield in Poland – a key Ukrainian ally – and the Czech Republic. The shield was seen by many east Europeans as a guarantee against future Russian aggression.
"A lot of people in this part of the world are seriously shitting themselves," one analyst in Yalta admitted bluntly. "We don't know what Obama's deal [with Moscow] was. They think that Russia will take it as a green light," he added. Washington insists it dropped the shield following a new assessment of Iran's nuclear threat. But many in Ukraine believe the White House sacrificed its commitments to eastern Europe in order to "reset" relations with Moscow. The reasoning is clear: Washington needs Russia's help on Iran and other issues. The Bush administration strongly rejected Russian attempts to pressure Ukraine. Obama, in contrast, is preoccupied with Iran, Afghanistan and Iraq. Few are under any illusions that he is prepared to wade in to help Ukraine should Russia choose to attack.
The Europeans, of course, disapprove of Moscow's imperial muscle-flexing. But so far Brussels hasn't offered its own clear alternative. It has indicated that Ukraine has no hope of joining the EU in the foreseeable future.
In May, the EU invited Ukraine and five other post-Soviet states to join a new "eastern partnership" – a scheme scathingly described by one EU thinktank as "enlargement-lite". But the EU, unlike Russia, has refused to liberalise its visa regime for Ukrainians. Moscow, meanwhile, says the partnership is a cack-handed attempt by the EU to build its own rival influence sphere.
"I'm disturbed that the EU didn't rebuff Medvedev's letter," Dr Olexiy Haran, the founding director of Kiev University's school for policy analysis, said. He continued: "I'm afraid that the absence of a reaction combined with some elements of Obama's 'reset' policy can be read as a message – that the west is giving a free hand to Russia in dealing with post-Soviet space."
Others go further. According to Gorbulin, Europe's apparent abandonment of Ukraine is as pernicious as America's. He points out that Nato countries have "stopped the struggle" for Ukraine in order to preserve good relations with Russia. France and Germany, especially, have rebuffed Yushchenko's attempts to join Nato. Gorbulin dubs the Europeans' informal deal with Moscow "Munich Agreement 2", comparing it to the notorious September 1938 Anglo-French deal that allowed Hitler to seize the Sudetenland, the German-speaking part of Czechoslovakia.
Over on Yalta's promenade, there are few signs that the region could soon be plunged into war. Yesterday, tourists strolled along a harbour, past stalls where you can have your photo taken as Marie Antoinette. A group of middle-aged ladies were dancing and swaying under the pine trees, as a crooner croaked out syrupy Soviet melodies.
Most residents showed little enthusiasm for a possible war. "I served in the Red Army when we all still lived in the Soviet Union. There's no way I would fight against Russia," Yevgeny – who declined to give his second name – said.
Others, however, said that the mood inside Russia had grown more hostile, following a wave of state propaganda depicting Ukrainians as the enemy. The Kremlin has accused Kiev of arming Georgia during last year's South Ossetian war. "A friend from St Petersburg visited recently and asked, 'Why do you hate us?'" Alexander, a 32-year-old taxi driver, said.
A Russian attack on Ukraine is improbable. But before the election on 17 January there is a possibility that a minor clash could ignite a deadlier conflict. In August, Ukrainian court officials tried to seize back a lighthouse occupied by Russian troops. No shots were fired.
"There could be an accidental or deliberate confrontation," Andrew Wilson, senior policy fellow at the European Council on Foreign Relations, predicted. "Another unspoken problem is that the Black Sea fleet is a bit like the East India Company – all over the place. You have all this extra infrastructure, you have commercial activities, lighthouses and all sorts of back-door operations."
He concluded: "It doesn't mean Russia will invade. But it does have the potential to fast-forward things very quickly." Wilson described Medvedev's letter as "extraordinary". "He's saying, 'Here are the rules for your foreign policy, domestic policy, and here's how to interpret your constitution, and history'," he noted.
This month, Russian deputies adopted the first reading of a military doctrine that sanctions the use of the army abroad to protect national interests. "There are signs that the Kremlin would not rule out using forceful means to reach its foreign-political aims," the Ukrainian intellectuals said in their appeal to Obama.
Most observers, however, believe that prime minister Vladimir Putin and Medvedev will use the threat of war to weaken and destabilise Ukraine. According to Gorbulin, war is only likely when other options have been exhausted.
To a large extent, Ukraine has itself to blame for the mess. Since the 2004 pro-western Orange Revolution Kiev has been in a state of political crisis. Yushchenko has fallen out with his one-time ally, Yulia Tymoshenko, the prime minister. They have been involved in a power struggle that has paralysed governance and brought the economy to the brink of default.
In an interview with the Observer, presidential candidate Arseniy Yatsenyuk said that Ukraine would not be bullied. Yatsenyuk – former parliamentary speaker, and a mere 35 – is contesting the presidency against Tymoshenko, Yushchenko and the pro-Russian opposition leader Viktor Yanukovich. "There is no going back to the USSR. There can be no more empires, and no more spheres of influence," Yatsenyuk declared.
Of the four main contenders, Yanukovich has positioned himself as the Kremlin's favoured son. He draws support from Ukraine's Russian-speaking industrial south and east. He has said he will recognise South Ossetia and Abkhazia, Georgia's Russian-occupied provinces.
So far, Moscow hasn't backed any candidate. Some sources suggest that Vladimir Putin hasn't forgiven Yanukovich for the debacle of 2004, when Moscow recognised Yanukovich as the winner of a rigged presidential election.
Yanukovich lost in a re-run to Yushchenko. Yanukovich is ahead in the polls, but Putin has better relations with the populist Tymoshenko, who may steal through to win in a run-off second vote.
Whoever wins will face the problem of how to deal with Moscow. In his video address, Medvedev made clear that he regards Russia and Ukraine as indivisible "brothers". Russian civilisation emerged from Kievan Rus – a confederation of city-states based around Kiev in the ninth century. According to this view, Ukraine is an integral part of Russia – and essential if Russia is to be an empire once again.
Back at the Livadia Palace someone had incongruously installed several plastic aliens next to the table where Roosevelt, Stalin and Churchill met. Last month's conference was organised by Yalta European Strategy, a pro-European organisation that campaigns for Ukraine's accession to the EU.
Some participants were optimistic. The Kremlin's messages should not be read too seriously, they suggested. "It's noise. It's nothing to do with reality," Ukraine's deputy prime minister, Hryhoriy Nemyria, told the Observer dismissively. "We need more Europe in Ukraine. We are not looking at alternatives."
■ Ukraine's history stretches back to the ninth century, when it was part of a Byzantine Russian dynasty centred on Kiev. But despite its ancient origins Ukraine only emerged as a fully independent state in the 20th century, after long periods of foreign domination.
■ Poland-Lithuania, Russia and the Soviet Union all ruled present-day Ukraine.
■ Several different independent Ukrainian states briefly emerged between 1917 and 1920 – a chaotic period vividly evoked by writer Konstantin Paustovsky in his acclaimed memoir, Story of a Life.
■ After the Second World War, Soviet Ukraine regained its western lands from Poland, as well as other territories from Romania.
■ In 1954 the Soviet leader Nikita Khrushchev transferred Crimea to the Ukrainian Soviet Socialist Republic – a decision that was to become a source of tension between Moscow and Kiev after the collapse of the Soviet Union.
■ Ukraine declared its independence from the crumbling USSR in August 1991.
■ Ukraine's weak tradition of statehood and its lack of national ideas makes it especially vulnerable to a resurgent Russia, experts believe, at a time when Moscow harbours growing imperial ambitions.