We study the static potential between electric charges in the finite temper
ature three-dimensional compact gauge theory on the lattice. We show that i
n the deconfinement phase at small separations between the charges the pote
ntial contains a linearly rising piece which goes over into the Coulomb pot
ential as the distance between the charges is increased. The linear potenti
al is due to the gas of magnetic dipoles which are realized as monopole-ant
i-monopole bound states. (C) 2001 Published by Elsevier Science B.V.