Chechens strike back as IMF rethinks its loans

Chechen rebels, who have been retreating under a barrage of Russian air and artillery strikes, appeared to hit back at the weekend, claiming they had retaken a small town east of the capital, Grozny. However, Russian forces continued to intensify their pressure on the capital city.

Chechen rebels, who have been retreating under a barrage of Russian air and artillery strikes, appeared to hit back at the weekend, claiming they had retaken a small town east of the capital, Grozny. However, Russian forces continued to intensify their pressure on the capital city.

In Madrid, meanwhile, Michel Camdessus, managing director of the International Monetary Fund (IMF), suggested that the organisation might have to reconsider its loans programme to Russia if Moscow persisted with the war. IMF help depends on the goodwill of the international community, Mr Camdessus said, "and it is very clear that this war has given Russia a very negative image internationally".

Russian General Valery Manilov said federal forces in Chechnya had begun the "third phase" of the breakaway republic's "liberation", which would end with the "liquidation of all terrorists" and the permanent stationing of Russian troops across the region by the new year.

However, the Russians suffered a setback in Novogroznensky, 25 miles east of Grozny, on Saturday when fighters commanded by the Chechen warlord Salman Raduyev claimed to have repulsed an attack and retaken the town.

On Thursday, Russian warplanes and artillery unleashed their fiercest strikes on the capital of the latest campaign.Lecha Dudayev, the Mayor of Grozny, said 260 civilians were known to have died in the latest bombardment and the final toll may be double that figure. Officials said 2,000 more civilians had fled the capital since Thursday and there was a six-mile traffic jam to the border with Ingushetia.

Tense relations between Ingushetia and Moscow came close to breaking point last week when drunken Russian soldiers shot dead a young woman working in a kiosk that no longer sold vodka because of a new local "dry law".