The ripple effect of the October Chechen terrorist act in a Moscow theater-when nearly 1,000 people were taken hostage by radical Chechen insurgents-is deep and long-term. Russia stepped up rhetoric regarding extraterritorial use of force against terrorists, their supporters, and funders, such as those rich individuals in the Gulf states who allegedly ordered the Chechens to shoot a "snuff" movie in the theater.

Azerbaijan drew immediate conclusions and shut down a Chechen representative office in Baku. Georgian politicians remain nervous that Russian troops may pour over the border and into the Pankisi Gorge. (1) U.S. State Department officials in charge of Caucasus policy are concerned that a sweeping Russian operation in the Pankisi Gorge or elsewhere in Georgia could further undermine Georgian sovereignty. Such a campaign would deal a blow to the already weakened President Eduard Shevardnadze, although for now he seems to have acquiesced to Vladimir Putin's pressure.

After the October attack and the more recent suicide bombing at the headquarters of the Moscow-backed Chechen government, chances for a future settlement in Chechnya seem grim, and an emergence of an independent Chechen state or even a parastate less likely than before. If the fighting stopped tomorrow, the challenges to the viability of a Chechen entity are towering. After the 1996 Russian troop withdrawal, organized crime and Islamic militants have turned Chechnya into a haven for kidnappers-for-ransom, slave traders, and murderers of nuns and foreign aid workers. President Maskhadov was pushed by Shamil Basaev into adopting repressive Shari'a laws. Sources in the U.S. State Department said that Maskhadov failed to prevent over $100 million funneled to Chechnya by radical Islamist networks.  He could not forestall the invasion of Dagestan in July 1999 led by Basaev and Khattab an invasion, which ended Chechnya's de-facto independence and propelled Vladimir Putin to power. According to the State Department, today Maskhadov is hardly a proper partner to negotiate peace with the Russians, while radical Chechen groups may end up on the U.S. terrorism watch list, further losing their legitimacy-an even greater likelihood as further revelations detail the links between radical Chechens and terrorist organizations in the Middle East.

The October attack in Moscow has put a higher political risk premium on energy investments in Russia and the Caspian region. The peace settlement in Chechnya has suffered a severe blow. Today it hinges on what kind of an entity this proposed state could become: a "Caliphate" run by terrorists, with an educational system that brainwashes its youth to kill "sinners" and infidels or a nascent democracy with a love of secular education and the arts, such as the Chechens have been capable in the past.  In the recent past, the rhetoric about creation of a Chechen-led Caliphate  "from sea to shining sea" i.e., from the Black Sea to the Caspian created panic among the leaders in Russia, Dagestan, Azerbaijan and Georgia. A radical and impoverished Islamist state in Europe, on the doorstep of Russia and the weak South Caucasus states would unquestionably be dangerous. It will act as a destabilizing factor, and scare off the very investors who otherwise could improve the lives of millions of people in the region.

Will the Chechens be able to break the ties to global terrorist Islamic networks and to the funders of mayhem in the Gulf, in "Londonistan", and elsewhere?  Will they be ready to disarm in order to assuage its neighbors' fears? Will Russia and the West be capable of providing a massive humanitarian package for refugee resettlement and rebuilding. Neither the Maskhadov organization nor the Russian government are equal to the task, as the history of previous Russian assistance to Chechnya has demonstrated: the aid funds budgeted during the post 1996 period for reconstruction were stolen, and culprits never apprehended.

The United States is facing a deteriorating security situation in the Caucasus and beyond, which may increase the threat of WMD use. To help avert such terrorism, the United States should expand anti-terrorism and security cooperation with Russia, bilaterally and through the NATO-Russia Council established in May, and other Eurasian states. The U.S. should expand anti-terrorism and security cooperation with countries in the region and with the business community; undertake a security audit of major possible targets; encourage higher levels of protection of WMD storage sites and energy facilities. Washington should offer Russian forces anti-terrorism training and cooperation in hostage rescue operations and expand contacts between security services protecting WMD sites. The U.S. intelligence community should develop cooperation aimed at intercepting Chechen terrorist funding and operational support from outside Russia. Cooperate with Russia to facilitate the extradition of Chechen terrorist leaders from the Persian Gulf havens.

The United States should also assist Russia in finding Chechen partners for negotiations while isolating Islamist radicals.  Washington should recommend, as President Bush did in the recent summit meeting with Vladimir Putin in St. Petersburg, that moderate representatives of the separatists and the Russian government enter into negotiations that can produce a settlement while preserving Russia's territorial integrity. The Islamist wing of the Chechen rebels, however, should be excluded from the negotiation process. Moreover, the Chechen separatists interested in a negotiated settlement must break their ties to global terrorist Islamic networks. Those who maintain such ties should be put on the U.S. State Department terrorism watch list. Finally, the United States should take the lead in working with its partners in the European Union and among the Muslim nations, as well as with the Russian government, to put forward a massive humanitarian package for refugee resettlement and rebuilding in Chechnya if peace is achieved.  In the past, Russian assistance has failed-the aid funds were stolen, and culprits never apprehended.

It is time for the United States to face up to the deteriorating security situation in the Caucasus and beyond.  The brutality of the Moscow hostage taking, its undeniable ties to the same enemy the U.S. is fighting, and the necessity for Russian support in the global war against radical Islamic terrorism and a possible war against Saddam Hussein, dictate a closer cooperation. (2)

(1) See, for example, the comments made in previous issues of In the National Interest by Russian Foreign Minister Igor Ivanov and David Gamkrelidze, leader of the "New Rights" party in the Georgian parliament.

(2) See my comments on this question in the December 18, 2002 issue of In the National Interest.

Ariel Cohen, Ph.D., is a Research Fellow at the Heritage Foundation (http://www.heritage.org) and author of Russian Imperialism: Development and Crisis (Greenwood/Praeger, 1998).