Simon Saradzhyan is a security and foreign policy analyst based in Moscow. He is the deputy of The Moscow Times. He also works as a consultant for the Belfer Center for Science and International Affairs, Harvard University. Saradzhyan is the author of several papers on terrorism and security, including most recently "Russia: Grasping Reality of Nuclear Terror," published in The Annals of the American Academy of Political and Social Science in September 2006.

It was August 1999 and, according to the prime minister of Russia, the country was in a precarious position: on the verge of losing Dagestan to thousands of rebels who had staged an incursion into this North Caucasian republic from then-de-facto independent Chechnya.

The threat was so real that then-prime minister Sergei Stepashin (then-president Boris Yeltsin's choice for his successor) publicly admitted after the incursion had been launched that he believed "we could lose Dagestan."

It was, perhaps, these words the eventually prompted Yeltsin to fire Stepashin and install Vladimir Putin, then little-known director of the Federal Security Service (FSB), as his successor on 9 August 1999.

Putin became Russia's fifth prime minister in 17 months in a country facing growing separatism in the North Caucasus while the ruling elite seemed preoccupied with fighting for power under an ailing president.

Soon after his appointment Putin proclaimed that he could solve the crisis, caused by the incursion of the rebels, in "a week and a half or two weeks." That seemed to be an implausible promise for a premier in Russia, which had already lost one region and with thousands of rebels controlling parts of another.

However, not only did Putin make good on his promise to rout the 2,000-strong rebel force out of Dagestan, eventually he led the re-conquest and pacification of Chechnya, significantly reducing the risk of secession not only in this republic, but within and without the North Caucasus.

The price for this success has cast a long shadow on Putin's rule. The conquest of Chechnya has featured premeditated killings of civilians by Russian troops, among other atrocities.

Questions also still linger on whether the bombing of the apartment buildings in Russian cities in 1999 - which were among other factors that led to the second military campaign against Chechnya, then still de facto independent, but already a failing state - were indeed carried out on the order of Chechnya-based warlords as the Kremlin claimed.

But other than that, the re-conquest of Chechnya and end of the conflict, which Yeltsin described as his "worst mistake," has become one of the more successful conducts of military, policing and public policies in the history of post-Communist Russia.

"I believe separatism in the North Caucasus didn't have deep roots and was encouraged from Moscow as part of a bigger game. Nevertheless, Putin turned out to be quite lucky and he displayed good intuition," Alexei Malashenko, one of Russia's renowned expert on the Caucasus and Islam, said when asked what he thought was behind Putin's success in re-establishing control over Chechnya.

But first Putin had to keep his promise to end the incursion into Dagestan. The federal troops and local vigilantes - which the authorities agreed to arm - drove the rebels out of Dagestan, by early September.

But then, bombs went off in apartment buildings in Moscow and Vologodonsk and Buinaksk, killing hundreds in terrorist attacks the authorities blamed on the Chechnya-based groups. Reacting to the bombings, Putin vowed to find and prosecute the terrorists, uttering one of his most controversial and best known promises to "waste the terrorists in the outhouse."

Questions still linger who and why have ordered the bombings in spite of conviction of several members of a North Caucasus-based Islamists for the bombings and the authorities' claims that they was ordered by Chechnya-based Arab warlord Khattab. Purported organizer of the Moscow blasts Achemez Gochiyaev - who remains on the run - has claimed that he had been used by the security services without knowing what he was planting and dissident security agent Alexander Litvinenko directly accused the FSB of organizing the blasts. Neither of the two produced any direct evidence and, the FSB and the Kremlin have vehemently denied these allegations.

Right after the bombings Moscow demanded that then-leader of Chechnya Aslan Maskhadov extradite the organizers and executioners of both these bombings as well as of the incursion into Dagestan. When Maskhadov declined to comply, federal forces first launched a massive air bombing of the republic and then a ground campaign.

The beginning of the end

The re-conquest was as brutal as the first Chechen war, causing thousands of deaths, including premeditated kidnapping and killing of innocent civilians and other war crimes. But as it progressed, one major difference arose: Putin and his government managed to win support of not just some dissident factions in Chechnya's chronically divided clans, but the support of several powerful clans that fought the federal troops during the first war, offering them not only material perks, but also assurances that they would be given power once the war is war.

As a result hundreds, if not thousands, switched sides to enroll in various pro-Kremlin structures, ranging from police to Kadyrov's security service, in what became the beginning of the end for Chechnya's de-facto independence.

It was winning the support of Chechnya's influential mufti, Akhmad Kadyrov, and the Yamadayev brothers (combined with support of the already known pro-Moscow factions, such as the one led by former mayor of Grozny Beslan Gantamirov) that helped to first incite divisions in the pro-independence camp. This, in turn, less to the successful 'Chechenization' fist of policing and then of public administration.

"The choice of Akhmad Kadyrov was perhaps the best move Putin has made there," Malashenko of the Carnegie Center told ISN Security Watch.

Arthur Martirosyan, senior manager with Mercy Corps' Conflict Management Group, concurred.

"Unlike in other separatist conflicts in the former Soviet Union, Putin followed consistently the policy of dividing and ruling. The traditional divide et impera would not work without establishing a positive attractive model for the Chechen elites prone to collaboration," Martirosyan, who frequented Chechnya in the 1990s and helped mediate peace talks after the first Chechen war, told ISN Security Watch.

The 'Chechenization' of the conflict

The forces loyal to Kadyrov, the Yamadayevs and allied clans, played a key role in hunting the rebels across the republic once the armed forces and interior troops had conquered all towns and strongholds by early 2001.

Putin - who swept the March 2000 presidential elections in part thanks to the campaign in Chechnya - also threw his personal support behind Kadyrov, who had fought federal troops in the first war and had been the de facto independent republic's chief mufti since 1995, by appointing him the head of Chechnya's temporary administration in 2000.

"Had Moscow not put its stake on the local elite, the war would still have been underway now," a Chechen government official told ISN Security Watch. "The 'Chechenization' of the conflict transformed the war, which was perceived as a rigid inter-ethnic conflict, into a some sort of a civil war with the ideologies of the conflicting sides being eroded," said the official, who spoke on condition of anonymity because he was not authorized to speak to press.

In the military dimension, the pro-Moscow Chechen groups contributed a lot because of their knowledge of terrain, connections with local population and knowledge of the rebels' tactics since many of the pro-Moscow fighters were former rebels themselves.

By 2005, there were about 5,000 servicemen who used to report directly to Chechnya's then first deputy prime minister, Ramzan Kadyrov. Since then, these paramilitaries, known as "kadyrovtsy," were integrated into the Interior Ministry structures to man police units and the newly established South and North battalions of the Interior Troops.

Similarly, the Main Intelligence Directorate of the General Staff has two battalions (East and West) manned by Chechens. The gradual transformation from large-scale military offensives, which resulted in civilian casualties and collateral damage, to seek-and-destroy operations by groups of commandoes also played a role. These groups still provoked resentment and calls for revenge for kidnapping or killing of suspects and sometimes innocent people, but on a lower scale than the mopping up operations carried out by federal troops, who had no emotional or other attachment to Chechnya.

Eventually, the fighting subsided into a low-intensity conflict in what allowed the Kremlin in 2003 to organize closely orchestrated presidential elections, which were neither free nor fair, but which were held to re-affirm Kadyrov's role as the governor of Chechnya.

Kadyrov was subsequently assassinated during a military parade in May 2004, but that did not avert the Kremlin's plans, and the rebels were kept on the run with the assassination killing of their leaders - including Aslan Maskhadov, Abdulkhalim Sadullaev and Shamil Basayev - significantly weakening the insurgency.

The current leader of the insurgency - Doku Umarov - lacks the influence, charisma and international ties that Basayev, for one, enjoyed. Umarov has failed to stop the continuing defection of individuals and even groups from the ranks of the insurgency - those disheartened among other things by the fact that even such a horrendous drama as the hostage-taking in Beslan in 2004 had failed to compel the Kremlin to start negotiations.

Losing hope of winning the conflict through either guerilla warfare or conventional terrorist attacks, hundreds of rebels have surrendered recently in Chechnya and Dagestan. Even in the absence of a formal amnesty, more than 300 rebels in the North Caucasus by September 2006 heeded a mid-July 2006 call by FSB director Nikolai Patrushev to come out of the woods and lay down their arms in the wake of the killing of Basayev.

Around 450 rebels were fighting Russian troops in Chechnya as of last fall, a higher estimate than previously given, Russia's top military officer in the north Caucasus, Lieutenant-General Arkady Yedelev, told a newspaper last November. According to Kadyrov's estimates, however, there were less than 100 rebels left in the republic as of the beginning of this year.

Beheaded insurgency

In addition to beheading the insurgency, the local authorities increasingly have attempted to address at least some of the root causes and contributing factors, such as poverty and abuses of human rights.

Kadyrov Jr has been more assertive than his predecessor in establishing control over law-enforcement operations in the republic, with local police increasingly taking over functions performed by federal servicemen doing tours of duty in the republic. As a result, while kidnappings and killings of civilians by law-enforcers still occur in the republic and many of them are blamed on local law-enforcers loyal to Kadyrov, the overall numbers have been decreasing in what also reduces resentment of the population and willingness of the locals to join the insurgency, experts say.

One sign that the Kremlin sees the security threat decreasing in Chechnya is the gradual withdrawal of troops. Federal commanders plan to leave only one army division and one Brigade of Interior Troops permanently deployed in Chechnya with the local police to bear the brunt of law-enforcement.

Neither did the assassination of Kadyrov Sr disrupt the gradual transfer of public administration, economic and policing functions to Chechens. First career police officer Alu Alkhanov took over from the assassinated leader and then resigned to give way to one of Kadyrov's sons - the ambitious Ramzan - in early 2007.

In addition to successfully fighting organized insurgency in the region, Kadyrov has in the short period proved very effective in mobilizing the federal authorities and Chechen businesses both inside and outside the region to finance reconstruction of the war-ravaged republic.

Kadyrov - who has already accumulated a fortune of his own - has not only managed to secure generous financing of the republic from federal coffers, but has also acted to prevent embezzlement of money from this heavily subsidized republic by hiring independent auditors for state-funded projects, according to one North Caucasian businessman who used to run a construction business in Chechnya.

Exports of oil bypassing the official operations run by a Rosneft oil subsidiary (which has license to extract oil in this republic) and sales of scrap metal, of which there is plenty at defunct Soviet-era plants, have also been sources of revenue for the local budget in addition to federal subsidies, said the businessman - who asked not to be named.

Under Kadyrov, the Chechen authorities have been steadily increasing budget revenues generated in the republic, including local taxes, thanks to incremental economic growth and other factors.

Local revenues totaled 1.8 billion rubles in 2004, but more than doubled over the next three years to 4.2 billion rubles, Taisa Makhasheva, head of the budgeting department of the Chechen Finance Ministry, told ISN Security Watch by telephone from Grozny.

Federal subsidies, however, still account for most of the local budget. Chechnya's budget amounted to 28 billion rubles in 2007, including 24.4 billion rubles from the federal government, Makhasheva said. This year, the budget is 33 billion rubles, including 4.6 billion in local revenues and 28 billion rubles from the federal budget, Makhasheva said. The projected budget deficit is 260 million rubles.

Despite growing spending, Chechnya lags far behind other regions in terms of economic growth. And human rights activists continue to accuse Chechen police and other forces loyal to Kadyrov of kidnapping, torturing and murdering suspects.

According to the Chechen official, "pacification of Chechnya" has been completed, but he cannot rule out that another bid could be launched for independence in the future. "Today, one can say that 'pacification' of Chechnya has taken place. People have come to understand that personal freedom is more important and that such freedom one can have even without living in an independence state. One cannot say for how long such an understanding would last, maybe be one or two generations, depending on whether and when a real threat arises to the personal freedom of Chechens," the official said.

Martirosyan of the Conflict Group and Malashenko of the Carnegie Center concurred. Albeit, the bloody price that Chechnya has paid for trying to secede must have discouraged separatists both within and without this republic, the threat of secession will continue to loom beyond Putin's presidency, they said.

"The current patron-client model is a combination of mild coercion and flagrant 'buying' of local elites. If the federal center weakens, externally manipulated centrifugal movements are a real possibility," Martirosyan said.

Malashenko said Putin was leaving a "much better legacy in Chechnya" for his successor and president elect Dmitry Medvedev than the situation he had at hand when Yeltsin resigned to make him acting president... but the backbone of the insurgency has not been broken."

In addition to having to deal with the insurgency, Medvedev will need to deal with factors that contribute to it, such as poverty and alienation of the general public from the elite in the region, Malashenko said. "The ice of stability in the North Caucasus is still very thin."