Two years ago President Putin declared the war over in Chechnya after a decade of fighting between federal forces and separatist rebels. Since then the violence has not only continued in Chechnya but has spread relentlessly.

Now the Kremlin faces the prospect of a full-scale guerrilla war right across Russia’s seven North Caucasus republics. That would mean that Russia had not only lost control of its southern frontier, but it would bring one of the world’s most brutal conflicts even closer to the European Union’s borders and threaten the West’s plans to exploit oil and gas reserves in the Caspian region.

Masha Lipman, of the Moscow Carnegie Centre, said: “This is increasingly becoming not just a domestic issue. The more obvious it is that Russia can’t control the situation in the North Caucasus, the more reason there is to question the Kremlin’s policy there and demand some answers.”

Russia paints the conflict as part of the broader war on terrorism, blaming it on Islamic extremists with links to al- Qaeda. Yet regional experts say that violence in the region is fuelled by resentment over the corruption of Kremlin-backed local leaders and their heavy-handed efforts to stamp out Islamic extremism.

Kabardino-Balkaria is a prime example. Its population of 800,000 is predominantly Muslim but, unlike Chechnya, it does not have a history of opposing Russian rule. About 50 per cent are ethnic Kabardins and 10 per cent are Balkars. Ethnic Russians make up another 30 per cent. During the Second World War, Stalin accused the Balkars of collaborating with the Nazis and deported them to Central Asia, along with the Chechens and the Ingush. Some Balkars have campaigned for secession from Russia and are rumoured to have harboured Chechen rebels in mountainous areas beyond government control.

The main problem, however, is that the region is one of Russia’s poorest and most corrupt. Tensions have been exacerbated by an influx of refugees from Chechnya and Ingushetia.

The tinderbox ignited in December when gunmen raided the regional branch of the federal drug control agency in Nalchik, killing four employees and looting an arsenal. Security forces responded by combing Nalchik with armoured cars to arrest leaders of the local Islamic community, killing several militants and some residents. Local authorities then shut down all mosques but one.

Yesterday’s attack provided final proof that measures introduced by the Kremlin in response to the Beslan school siege have failed. They included the appointment of regional leaders by the President, not elections.

Mr Putin appointed Arsen Kanokov, a prominent local businessman, as president of Kabardino-Balkariya in September to replace Valeri Kokov, the ailing veteran leader. The Kremlin also ordered local authorities to tighten border controls and crack down on corruption and all extremist activity. None of this prevented dozens of rebels from launching yesterday’s attacks in daylight.

Ms Lipman said: “This was not like the London bombings, where the terrorists came out of nowhere. This was a huge military operation in a region teeming with Russian special forces.”

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