Russia is suffering a major ethnic shift in the Caucasus. Russians, and other people not native to the Caucasus, are being driven out of the region by terrorism, corruption, and a bad attitude towards outsiders. It’s been worse in Chechnya, where Russians comprised 25 percent of the population in 1989, but only two percent today. The decline has not been as great in the rest of the Caucasus, but it has been massive, with more than half the Russians who were living in the Caucasus having left in the last twenty years. Actually, this trend began in the 1950s, right after tyrant Josef Stalin died in 1953 and Russia began to trim the power of the secret police. The departure of ethnic Russians from the Caucasus simply accelerated after the Soviet Union collapsed in 1991.
Russia has been able to suppress Islamic and nationalist terrorists in Chechnya, and their half of the Caucasus in general (the rest is occupied by newly independent Georgia, Armenia, and Azerbaijan). What Russia has not been able to suppress is the hostile attitudes towards outsiders. This is a problem with peacekeepers everywhere. In effect, Russia has been peacekeeping in the unruly Caucasus for several centuries. Until the Soviet Union (and the ancient Russian empire) collapsed in 1991, the Caucasus was more peaceful than it had ever been. This, however, was accomplished via decades of using state-sponsored terrorism, including killing anyone who became troublesome and shipping off many people to prison camps who seemed like they might become troublesome. It was brutal, unfair, and it worked. But these policies were unpopular throughout Russia, by ethnic Russians as well as all the “others.” So the new government got rid of the terror apparatus (prison camps, secret police, and the nasty attitudes that made it all work) in the 1990s.
For the people of the Caucasus, that meant they could revert back to their ancient ways. This was a problem because outlaw behavior had been endemic to the region for centuries, especially among the Chechens. The region is similar to Afghanistan, in that for thousands of years survival was a matter of hiding (from armies moving between the Middle East and the great plans of Eurasia) in the mountain valleys, depending on clan organizations for survival, and doing whatever it took to make a living. Russia has controlled the region (or most of it) for nearly two centuries now and the locals (especially the Chechens) developed new traditions that are based on ripping off the Russians. This always made the Russians nervous because the Chechens were quite good at conning the czar's officials, and their communist successors, and the Russians never came up with a way to avoid being taken advantage of.
Russia tried to walk away from Chechnya in the early 1990s, after an uprising there proved too difficult for Russian troops to put down. That just enabled Chechnya, which quickly fell under the rule of a coalition of clan based criminal gangs, to become gangster central for the region. Chechen gangsters lived large via smuggling, robbery, and kidnapping. The Russians threatened to come back and the Chechens ignored the threats. But then the Russians did return in 1999, after the Chechen crime wave and Chechen Islamic radicals caused a growing public outcry throughout the Caucasus and southern Russia.
Using the traditional tactics of overwhelming force, determination, and ruthlessness, the Russians regained control of Chechnya. As was their custom, they appointed the most powerful and reliable clan to run the place and hoped for the best. But passing out jobs and other goodies to the most pro-Russian clans didn't stop the majority of Chechens from trying to make a living the traditional way (from anyone who didn't belong to their clan, especially non-Chechens). Attacking the Russians, and the pro-Russian clans, remained a favorite activity.
With legitimate jobs hard to come by (the official unemployment rate is over 50 percent), and a long tradition of improvising, and ignoring laws and rules, the Russians have peace with the Chechens (by local standards) but not much order. Violence and intimidation are still the most common forms of communication between the clans. The Russians are reluctant to pull out the non-Chechen police (Interior Ministry troops) and soldiers, because of the risk of Chechnya once again becoming gangster central.
The situation is somewhat better in the rest of the Caucasus, but the trends are similar. While the media likes to play up "terrorism in Chechnya," the main problem is that the Chechens (and their fellow Caucasians) have always been difficult to rule, much less control. This "Chechen Problem" has been on Russia's agenda since the 18th century, and nothing has really worked. Even Stalin deporting most of the Chechen population to Central Asia during World War II (when it was feared the approaching Nazis would find welcome allies among the Chechens) didn't fix the problem. This merely gave Chechens opportunities (usually criminal) throughout Russia. A decade later, the Chechens were allowed to return to Chechnya, where they did not get along with the Russians, and others, who replaced them after the removal. Chechnya is not a new problem, it's an old one that won't go away. What is going away is the non-native population of the Caucasus, which makes it even more difficult to keep the peace in the region.