In Russia's worst outburst of terrorism since Soviet times, at least 425 people are dead, blown up at a Moscow subway station, killed on two bombed passenger jets 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? Whose fault was it? What will be done to prevent the next atrocity? "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."

Westerners tend to view Vladimir Putin, the tight-lipped former KGB colonel, as Stalin Lite. And up to a point, the characterization is valid. Putin has muzzled the press, sidelined rivals or thrown them into prison and clamped down on Parliament, regional leaders and the judiciary. Yet the discipline Putin has imposed, based on intimidation and secrecy, has encouraged bureaucratic inertia, not efficiency. And the Russian leader, having concentrated so much power in his own hands, is now more vulnerable than ever to criticism when things go wrong.

The breakdown at Beslan was stunning. For days after 32 terrorists seized the school, taking at least 1,000 hostages, top leaders remained silent or offered bureaucratic platitudes. No clear command structure was set up at the school. When the standoff exploded in chaos--as local civilians and terrorists began firing and bombing--special forces had to storm the place unprepared. More than a week later, no one was sure of the real number of hostages, or whether there were really 10 Arabs among the hostage takers--as Russian officials repeatedly insisted. Putin initially rejected any public inquiry into what went wrong. Then, facing public outrage, he announced on television that the upper house of Parliament would launch an inquiry. Critics predicted a whitewash or, as happened after a previous hostage crisis, an inquiry that never ends.

Yet Putin also seems to recognize that he's in a bind. Virtually nobody believes that military actions alone will solve the larger Chechen conflict, and if once again misdirected at civilians, the use of force could exacerbate it. As Putin aims to strike back at the child-killers of Beslan--offering $10 million rewards for Chechen rebel leaders--he needs new policy initiatives on Chechnya. He just doesn't have any.

In an evening discussion with Western academics and journalists last week, Putin hinted that he was prepared to expand Chechnya's autonomy. For nearly four hours, Putin displayed a "sophisticated, elegant and balanced view of geopolitics," says Cliff Kupchan, vice president of the Nixon Center in Washington. But when it came to the question of what to do next, Kupchan says, "He didn't really have specific answers."

So Putin will likely impose more security measures as he tries to devise a strategy. The Kremlin is pushing for a return to the Soviet-era practice of "severely limiting the movement of Russian citizens within the country," says 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. But any serious effort to return to police-state tactics--such as reviving an extensive network of informers--is likely to fail because, in an era of private enterprise, the Russian government no longer enjoys the leverage over ordinary people it once did, says Felgenhauer. 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." Putin has turned back the clock about as far as it will go. Now it's time to develop a strategy for the future.