  We study the static potential between electric charges in the finite
temperature three dimensional compact gauge theory on the lattice. We show that
in the deconfinement phase at small separations between the charges the
potential contains a linearly rising piece which goes over into the Coulomb
potential as the distance between the charges is increased. The linear
potential is due to the gas of magnetic dipoles which are realized as
monopole-antimonopole bound states.
