Russia declared victory in Chechnya, but the conflict isn't over. After a background report, two experts examine the conflict over the breakaway republic.

RAY SUAREZ: For more we go to Thomas Graham, a senior associate at the Carnegie Endowment for International Peace. He has served in the U.S. Embassy in Moscow -- and Toby Gati, who was assistant secretary of state for intelligence and research in the first Clinton administration. She's now an adviser at a Washington law firm.

Well, Toby Gati, let's start with you. Is it over?

TOBY GATI, Former State Department Official: Well, the Russians would like to you believe that the hard fighting is over and now there's going to be mop-up. The professional soldiers are going to go in. But the victory that the acting president -- Vladimir Putin -- really wants is the victory in his election for president. So I think what you're going to see now is an effort to make this look like a mop-up operation, that there is a victory, that the Russians have been successful. If they do decide militarily to pursue the rebels into the mountains, it won't be on cameras. It's very cold up there. The rebels are going to suffer quite a bit.

So I think we're going to see another stage of the war. But the Russians have to win this. They can't have a repeat. And I think when the population looks at the pictures that you've just shown on your television, many of them are going to be saying, "Good riddance, Grozny. We never want to see you again, and we certainly don't want to see any more Chechen rebels."

RAY SUAREZ: Thomas Graham, there have been threats from the rebel radio station of continuing the battle through terrorism, through lightning attacks on Russian forces in other parts of the country.

THOMAS GRAHAM, Carnegie Endowment for International Peace: Well, I think the rebels clearly intend to continue this struggle. As your report indicated, several thousand did escape from Grozny and they are joining others who are in the mountains already. The force numbers perhaps 10,000 or more, and they're going to regroup. And there are going to be hit-and-run raids I think behind Russian lines in Chechnya and they will try to take the battle beyond the borders of Chechnya, I think particularly into neighboring regions, as they did in the war of 1994 and 1996. I'd like to point out, though, that in the earlier war, the Russians took Grozny, as well, and they occupied it for several months. The Chechen rebels managed to retake the capital once and then a second time in August that led to the defeat of Russia in Chechnya. So while the Russians need a win this time around, I don't think that this is a battle that they can win, certainly not in the near future.

RAY SUAREZ: Well, I'm glad you brought up the last war because, in effect, Boris Yeltsin got peace without a clear victory, declared it over and only to see this flare up again in a short time. Is the Putin policy any different?

THOMAS GRAHAM: Well, I don't think Putin has a policy for Chechnya over the long run. I was in Moscow just a couple of weeks ago, and what I found striking was with the growing concern among people who are close to the presidential administration, close to people in high levels in government, about what was going to happen over the long run. You need to rebuild Grozny if you're going to create conditions that don't lead to a breeding ground for insurgence against Moscow. And it's clear that Russia does not have the resources to do that. There are already indications that there's no intention to rebuild Grozny. Now, remember, this was a city that just a decade ago housed almost 400,000 people. And even after the last war, there were tens of thousands of people there. Where are those people going to live? What are they going to do? Certainly this is not a way to build good will for Moscow among the Chechen population.

RAY SUAREZ: Well, Toby Gati, over the last several months, the United States and many other countries have made public their distaste about what the Russians were doing, but it was an open question whether it could go any further than that public distaste. Can it?

TOBY GATI: I think the Russians know that we find deeply upsetting the way they have conducted the war, but there have been a lot of mixed signals. We're very upset, but we're not going to do anything. The Europeans have very upset, they're going to hold meetings. I think the Russians no longer really care very much whether we criticize them, nor do they care very much if we praise them. So I think they view this as a very important strategic objective, certainly Vladimir Putin has a great interest in making sure that, at least until March 26, it looks like Grozny is Russian. After that, he's going to have to look for a political solution.

We've been -- the U.S. government has been saying certainly, "Let's treat the civilians better. The humanitarian issues matter. Talk to somebody on the Chechen side." And the Russians say, "Who do you talk to?" It's not obvious on the Chechen side who you would talk to. So I think a lot of what we have been saying certainly shows that it's a concern to us. But when you come down to it, the programs that we are working with, with the Russians to reduce their nuclear weapons, to build a free press, to bring students to the United States, are in our own interest and if we cut them, it certainly wouldn't help very much from our side. So I think the Russians --

RAY SUAREZ: What about more tangible forms of leverage in the forms of cash that keep the Russian economy afloat?

TOBY GATI: Well, the cash that's keeping the Russian economy afloat now is oil money because the price of oil is so high. The amount of money that the IMF was going to give Russia, $640 million, was first of all going to pay the IMF back, so the Russians weren't going to see any of that. It was supposed to be so they couldn't steal it or use it for other purposes and that money wasn't really going to help the Russian economy.

So I think the world economy, of which the Russians say they want to be a part, is giving them a boost now, which will be artificial because the price goes up and down. But as of the current moment, there is not much leverage we have on the Russians. And the domestic side of Chechnya is much more important than the international concern and criticism. Don't forget, the Russians now have been hearing criticisms about Kosovo, hearing criticism about their policy towards Iran, about their policy towards Iraq. So we're adding issue after issue. But Chechnya is really a very sore spot for the Russians. It's their problem.

RAY SUAREZ: Thomas Graham, do you agree that there's a lack of leverage?

THOMAS GRAHAM: Well, I do agree with Toby that there is a lack of leverage. That doesn't mean there aren't things that we can do at this point that indicate that we stand on principle. And I think that sends a very important message to Russians who in fact want to turn their country into a democratic society and would like to integrate Russia into the world, not only into the world economy but into the civilized world or into a normal country, as they like to talk about their hopes for the future. We aren't giving them IMF money at this point. There are technical reasons for that. But I also think it's clear to the Russians that their operation in Chechnya is one of the factors. I think we ought to make that explicit in delaying the disbursement of the next amount of IMF money.

I think there are also things that you can do, particularly with our European allies in looking at assistance programs to Russia and redirecting that money towards humanitarian concerns. And particularly, I think we ought to cut off any funding that goes directly to the Russian government. I think Toby is absolutely right, those that go towards exchange programs, bringing Russians here to see how a democratic market society works are valuable to us in the long run. But there are still some money that goes to the Russian government that we ought to cut off.

RAY SUAREZ: With several of the world crises over the last decade or so, there's been talk in diplomatic circles about how this sets a new standard, moves the bar to a different place, whether it's Kosovo or Rwanda or Somalia. Well, now we have Chechnya, and it's not really clear where that leaves countries that are watching another nation do something inside its own borders that many other parts of the world find really hideous.

TOBY GATI: Well, I think there is a new standard in the sense that the Russians aren't throwing their own troops into a battle and having them march across and get shot at in the thousands. So the Russians have adopted a new standard in the way they pursue a war, for example, although they haven't in the terms of the way they treat their refugees. And I think the criticism is something that would not have happened 10 years ago.

But the reason it wouldn't have happened is not only that the international community has a new standard; it's that we have a new standard for the Russians. The Russians were part of the western civilized world and a civilized country doesn't do this. And I think that Chechnya will in the long run -- what will be the symbol is not the Russian flag over Grozny but the question of press freedom. What happened to press freedom in Russia during the Chechen war, both the first war and this war where there is not that much criticism? What happened to the sense of how you treat your fellow citizens? Do you divide people into them and us? Do you stop people on the street because they have darker skin? So I think a lot of the issues that are much longer term are going to come back to haunt Russia when the war is seen as a distant memory, and it will go.

I think in six months, Putin will have a political dialogue. He'll start to rebuild, and the international community, frankly, wants to forget. The standard, remember, that matters is Russia has nuclear weapons. And Russia is a large country. So there are a lot of standards. And Kosovo was one, but also, the loose nukes is another one.

RAY SUAREZ: Before we wrap up, Thomas Graham, will this cool any separationist feelings by other ethnic peoples who are inside Russia for the moment?

THOMAS GRAHAM: Well, there weren't really very many other separatist feelings by other ethnic groups inside Russia. I think that was a misperception that many people had in the west and even in Russia itself. Chechnya was almost unique in Russia in its drive for independence, in its desire to take the battle to Russia in order to achieve independence. So I don't see anybody who was prepared to follow Chechnya initially and certainly after this latest series of events, you're not going to find a lot of takers at this point. But I do think it's going to undermine Moscow's reputation in the region. Other provinces are going to begin to wonder what Moscow is really capable of. And I don't think in the long run this is going to serve to unify Russia the way President Putin thinks it should.

RAY SUAREZ: Thomas Graham, Toby Gati, thanks a lot.