In one of the worst spates of terrorism Russia has ever seen, 425 people are dead--blown up at a Moscow subway station, killed on two passenger jets blown out of the sky and, most horrifically, massacred in Beslan's School No. 1 on the first day of classes. Russians are dazed and angry: How could this happen? Who will be held responsible? What will be done to prevent the next atrocity? And they want answers. "If someone doesn't take responsibility," says Vladimir Solovyov, a popular Moscow radio and television host who initiated a large antiterror rally in Red Square last week, "I don't see much of a future for the country, for this government. We'll have paralysis."

It is fashionable in the West to portray Vladimir Putin, the cautious, taciturn former KGB colonel, as Stalin Lite. And it's a valid characterization, up to a point. Putin has stripped freedoms from the press, side-lined rivals or thrown them in prison and forged a rigid administrative structure that commands obedience from Parliament, regional leaders and the judiciary. Yet the discipline Putin has imposed is based on the sort of fear that leads to inertia--the governmental paralysis that Solovyov fears. The latest wave of terror has brutally exposed this weakness and leaves Putin himself more vulnerable than ever to criticism.

The breakdown at Beslan was stunning--and compounded by the Russian government's propensity to conceal the truth. For days after 32 terrorists seized the school, taking at least 1,000 hostages, top leaders remained silent or offered bureaucratic platitudes as they waited for Kremlin orders. They lied about the number of hostages at risk. They failed to secure the school and its precincts--setting the stage for the mad melee that followed, when armed civilians stormed the school, hoping to free their children on their own and disobeying a cease-fire negotiated between authorities and the terrorists. The disarray was such that the terrorists were even able to sneak outside the school and reconnoiter a possible escape, Defense Minister Sergei Ivanov told Russian television Saturday night. Even now, more than a week later, it's still unclear precisely what happened--how many terrorists were involved, whether there really were Arab extremists among them and (most incredibly) how they were able to drive a truck full of armed men through police checkpoints to seize the school.

Putin initially rejected any public inquiry into what went wrong. Then, facing public outcry, he announced on television that Parliament would launch an inquiry on Sept. 20. Critics predicted a whitewash or, as happened after terrorists seized a Moscow theater two years ago, an "investigation" that never seems to end or produce any conclusions. As for himself, Putin offered the country few assurances--no explanation for the military's botched handling of the crisis, let alone specific plans for dealing with future threats. At one point he seemed to blame foreign powers for Russia's troubles, saying they wanted to rob Russia of a "juicy morsel"--his only reference to separatist Chechnya. Underlings picked up the theme. Foreign Minister Sergei Lavrov lashed out at the United States and Britain for granting asylum to Chechen rebel leaders, and the country's top general asserted Russia's right to launch pre-emptive attacks on foreign terrorist bases, adding helpfully that Russia "would not resort to nuclear weapons."

Yet Putin recognizes that he is in a bind. Part of his reticence during the crisis reflects his native cautiousness. But it also bespeaks his reluctance to further inflame popular passions, and possibly make his Chechnya problem even worse. Opinion polls last week showed that an overwhelming majority of Russians want to crush terrorists, to take the fight to them, wherever and whoever they might be. By contrast, virtually no one in power believes that military force will solve the conflict, or possibly even deter terrorists. Indeed, if misdirected at civilians, as so often in the past, a crackdown could exacerbate the problem. As he aims to strike back at the child killers of Beslan--offering $10 million rewards for Chechen rebel leaders Aslan Maskhadov and his more brutal counterpart Shamil Basayev--Putin may be realizing that he needs to rethink his policies, not only on Chechnya but increasingly on the entire region. The trouble is, his options are perilously few.

In an evening discussion with Western academics and journalists last week, Putin hinted that he was prepared to negotiate some kind of new arrangement for Chechnya, including greater autonomy, even up to the point of "violating the Russian Constitution," according to Fiona Hill of the Brookings Institution in Washington, who attended the briefing. For nearly four hours, over --endless rounds of tea, Putin displayed a "sophisticated, elegant and balanced view of geopolitics," says Cliff Kupchan, vice president of the Nixon Center in Washington. Animated, even shouting at times, Putin praised antiterror cooperation with the United States, conceded that he probably would not have launched the first Chechen war in 1994 and, most emphatically, objected to critics who say the atrocities of Russian forces alone bred the current wave of terror. But when it came to the question of what to do next, Kupchan says, "he didn't really have specific answers."

Not stated last week was Putin's biggest worry: that the war in Chechnya will spread to become full-scale civil war throughout the Caucasus--just what the terrorists are aiming for. Keeping that from happening requires caution and patience. Already last week, there was revenge-taking against non-Russians. Russian police on Thursday reportedly beat a retired cosmonaut from the Caucasus during a document check in Moscow. In Yekaterinburg, near the Ural Mountains, local Russians burned down three restaurants owned by Chechens, killing one. Meanwhile, ethnic tensions are rising in the republics bordering Chechnya, as rebels shift their operations to areas that not long ago were mercifully peaceful--Dagestan and Ingushetia. Word that the Beslan hostage-takers included a reported half-dozen rival Ingush has strained relations among tribes that only a decade ago were at war with one another.

So what does Putin do? With his popularity ratings in the 70s or high 60s, he can probably afford to proceed cautiously. For now, he is likely to impose more security measures as he tries to devise a new strategy. The Kremlin is pushing for a return to the Soviet-era practice of "severely limiting the movement of Russian citizens within the country," according to Pavel Felgenhauer, a defense analyst in Moscow. And Putin's aides are working furiously to fulfill his post-Beslan promise to "strengthen" law enforcement and tackle corruption. It's an open secret that Chechnya's guerrillas in the past bought many of their weapons directly from Russian forces, and similar dirty dealings almost certainly continue. And Putin is only too well aware how the massacres at Beslan could have happened. The most likely scenario is that corrupt officials, undoubtedly bribed, simply let the terrorists pass their checkpoints unhindered.

It's an open question, in the face of such entrenched social and governmental failure, whether any change of policy can work. Returning to police-state tactics would be effective only if the Russian security services do their jobs honestly and efficiently. More broadly, Russia's political institutions have to be made to work. That goes far beyond issues of bureaucratic corruption and ineffectiveness to those of democracy, institutional independence and civil society. Up until now, Putin has sought to make Russia's government function better by consolidating more and more power in his own hands. If he learns anything from the latest wave of terror and tragedy, it's the limits to such a strategy. Putin "now has to decide how to rule differently," says Stephen Cohen, a Russia expert at New York University. "And the first signs are not good--he's blamed everyone except himself." It's time to change course.

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