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Battered and bleeding: Chechnya looks beyond ruins of a fallen empire

Given that he had had every reason to believe that he would die on the battlefields of Chechnya, Sergei was understandably relieved to be going home. But he was also indignant.

"This place is an entirely different country," he said, standing beside his tank on the outskirts of Grozny. "I don't know what the war's objective was. It was simply misguided and wrong."

The 21-year-old Russian, along with thousands of other young men, was preparing to leave following the Kremlin's decision to withdraw from Chechnya before next month's elections here. They are packing their bags knowing they leave behind a bloodbath in a country that their army failed to tame, despite the loss of at least 4,000 Russian servicemen.

It was a terrible war, even by the ghastly standards of the 20th century. Yesterday was the second anniversary of the day President Boris Yeltsin sent his troops in for what he believed would be a swift victory which would rejuvenate his popularity and crush the Chechen leader, Dzhokhar Dudayev, who had proclaimed Chechnya an independent state in 1991.

To his horror, the Chechens mounted a furious resistance and maintained it, even after the Russians systematically bombed their villages, and carried on despite Mr Yeltsin's assurances to a scandalously indifferent West that military operations were over.

"From the beginning, the war was characterised by massive, appalling violations of humanitarian law," said Human Rights Watch Helsinki in a report which warns that many problems have yet to be settled in the aftermath of hostilities. But although the carnage was appalling - estimates of the death toll varies wildly from 20,000 to 100,000 - the Chechens can claim some measure of success. The Russian army has been humiliated by a small force of rebels and is leaving, without disarming them.

The shadow of Moscow will still loom over the North Caucasus, but Chechnya is now in the hands of a government of separatists, and will remain so after the elections, scheduled for 27 January - two days after the Russians say their last soldier will have left.

The war did not settle the most important issue of all: the republic's legal status. Under the August peace agreement, both sides agreed to postpone a decision until 2001. They are maintaining what diplomats call "constructive ambiguity" over the issue.

There is, however, nothing ambiguous about their positions. Moscow insists that Chechnya is part of the Russian Federation. The Chechens believe that they are an independent nation.

"Of course we are not going to deny that we are an independent republic," said Brigadier General Kasbek Makhashev, the Chechen Minister of the Interior. "Independence either exists or it doesn't. But we do understand that our relations [with Moscow] must be established on mutually beneficial principles."

While the republic's status is unresolved, the place remains in limbo. Few foreigners will want to invest without knowing whether it is a country or not. Yet it is in ruins, in desperate need of money to rebuild the wrecked schools, universities, hospitals, institutes, roads, and talented people to run them.

Inevitably, all eyes turn to Russia. Optimistic-sounding discussions have taken place between Moscow and Grozny about investment. But Russia is in financial chaos, unable to pay its coal miners and pensioners, let alone its old enemies in the Caucasus.

Hope has fixed on a Russian-Chechen agreement over oil. One of two pipelines which will carry oil from the Caspian Sea runs from Baku to the Black Sea via Chechnya. Russia's desire to control the pipeline was another reason why it started the war. A tariff-sharing deal may yield valuable income for the Chechens.

Yet it is hard to believe that this could ever supply the billions of dollars needed to rebuild their home. There are other flickers of hope: Chechnya has ties with Saudi Arabia and other Muslim nations, which may agree to chip in funds, especially if it means deepening its Islamic roots.

But it is all as cloudy as the winter fog over the Caucasus mountains. Even the most optimistic economists would find it hard to believe that enough money will flow in to Chechnya to secure its destiny as a modern society, and not just a Third World bazaar, surrounded by the ruins of a fallen empire.