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The most common cause for a dog to walk backwards and in a circle is anal gland issues. The anal glands are 2 sacs on either side of the anus at about the 4' o'clock and 8 o'clock positions. If your dog is continually licking their anus and dragging it, it could also indicate that they are full. This problem can usually be resolved by emptying out the glands. To empty them or express them, you will want to cover the area with a tissue and press your finger on the dog's anal glands with an upward motion. A foul smelling liquid should come out. If nothing comes out and your dog appears to be in pain, you should take him to the Vet. Your vet can do this easily, as he is experienced at it.
Excellent site on anal glands
The other possibility is a partial or focal seizure. Conditions that lead to seizures can cause circling. Hypoglycemia is low blood sugar and can cause seizure activity especially in small breeds. Feeding your dog smaller meals more frequently can help. If you suspect your dog is having low blood sugar you can put a drop of pancake syrup on your dog's tongue which should raise the level.
Seizures can manifest as circlling and a dog may not lose conscienceness. You can read more about seizures here:
I'd have Fonzie's glands checked and if his glands are fine, have your vet check him over.
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