NEWS ANALYSIS : Russia’s Sustainable Cost of War : Conflict: Despite dire predictions, the Chechnya toll looks more like a setback than a reversal of Moscow’s post-Soviet course.

Last winter Gen. Dzhokar M. Dudayev took an extraordinary gamble in Chechnya. Betting that Russia could not bear the consequences of its own assault on his tiny republic, he ordered his ragtag army to resist.

“We made the Russian regime go to extreme and wild measures that will eventually cause its collapse,” the separatist Muslim leader predicted on the third day of fighting. “The regime in Russia is in agony.”

Dudayev, now in hiding far from his ruined palace, figured wrong. His rebellion will indeed go into history as the inaugural blood bath of Russia’s modern statehood, one that cost thousands of lives and billions of dollars while damaging the nation’s democratic ideals, market reforms and prestige abroad.

But as Russia tries to turn its hard-won military gains into a negotiated peace, that toll looks in hindsight more like a costly setback than a breakdown or reversal of Moscow’s post-Soviet course, according to many foreign analysts and Russian war critics who initially echoed Dudayev’s doomsaying.

Their direst forecasts, made during the inept New Year’s storming of Dudayev’s capital, Grozny, did not materialize. Russia did not bust its budget, break apart, slide into dictatorship or split with the West or the Muslim world. Its army neither collapsed nor won so easily as to threaten civilian authority at home.

“At first we feared that dark forces had taken over the Kremlin,” said a Western diplomat in Moscow. “But the longer the war lasted, the more we realized it hadn’t really changed the nature of the beast. The Russians simply bumbled and displayed a side nobody liked.”

To be sure, the war is not quite over. Peace talks are moving slowly, and a few thousand Chechen guerrillas, although beaten militarily and driven from all but a few villages, could stage hit-and-run attacks for years, terrorizing more Russian cities as they did last month in Budennovsk.

And it is risky to pass final judgment on the conflict before voters do, in Russia and in Chechnya. This was Boris N. Yeltsin’s war, and it sank his rating to new depths; if the Russian president is defeated or declines to seek reelection next June, any new path the country takes will count as fallout from Chechnya.

Dudayev may be barred from running for Chechnya’s Parliament this fall, but separatist fervor in the republic is far from dead, and any candidate linked to the hated invaders will have trouble. Unless a moderate Chechen leader emerges, the war will have failed to settle the conflict that provoked it.

But with Chechnya somewhat calmed by a cease-fire and Russians absorbed in other problems, a survey of the war’s damage indicates that the costs for Russia are sustainable.

Since Russia invaded Dec. 11, the conflict has killed at least as many people as the Bosnian Serbs’ 39-month-old siege of Sarajevo. Estimates in Chechnya range from 13,000 to 25,000 dead, including 1,846 Russian soldiers. About 380,000 people, a third of Chechnya’s prewar population, fled.

Economic costs are harder to pinpoint. Russia’s government has a $1.1-billion plan to rebuild Chechnya and reports $355 million in spending so far. Chechen leaders installed by Moscow say they need more than $3 billion.

Any visitor to Grozny is struck by how little is being fixed, how much of the war’s cost has been deferred at the Chechens’ expense. Hundreds of apartment buildings in Grozny were wrecked by Russia’s bombing, but repairs focus on damaged railroads and oil pipelines vital to Russia as a whole.

In another town, Chiri-Yurt, Russian war jets pulverized a huge cement factory just to chase out six entrenched separatist fighters, according to outraged local officials. There has been no promise that the plant, which supports 2,000 families, will be rebuilt.

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“In Moscow, they declare that Chechnya was, is and will always be part of Russia, but in serious discussions they understand that it is not, which is why they are reluctant to spend more,” said Andrei Illarionov, a widely respected former government economist.

Russian outlays to wage the war were quite high--and cloaked in secrecy. Few believe the Finance Ministry’s $190-million price tag on combat operations. Measuring it several unofficial ways, Illarionov keeps coming up with $5 billion. Other economists calculate the cost to be lower but still in the billions.

One doomsday scenario was that Russia would finance the war by printing money and cause hyper-inflation. But the government has respected the strict budget deficit limits set by agreement with the International Monetary Fund, economists say.

So how was the war chest filled? The Labor Ministry has one clue: State companies in mid-July owed $222 million in late wages to defense, agro-industrial and mine workers. Also, an increase in the minimum wage expected at the end of last year was held up until April. Budgeted construction and scientific research have also been delayed.

Besides pinching people’s wallets, Chechnya created an atmosphere of uncertainty and halted foreign investment in Russian stocks, undermining the most promising effort to stabilize the economy.

Investors started returning in May, but war jitters had already contributed to an “inflation psychology” that slowed the stabilizing effects of the deficit limits.

“Had it not been for Chechnya, they might have had stabilization and real growth by now,” a Western economic specialist said. “They can still get it, but the war cost them valuable time.”

When the war started, a Kremlin adviser on ethnic affairs named Nikolai Petrov resigned in protest with this dark prediction: Instead of discouraging secession, Yeltsin’s assault would help shatter the multiethnic Russian Federation. “We have lost Chechnya and now we are losing Russia,” he wrote last winter.

Early protests stirred the heartland. Led by the republic of Chuvashia, a few republics declared native-son conscripts in the Russian army exempt from fighting the war. People in Dagestan and Ingushetia tried to block Russian troops headed for neighboring Chechnya.

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But neither the fighting nor Chechnya’s militant separatism spilled over. “The Chechens are a very special case,” Petrov admits now.

For wealthier republics that might be tempted to split, a more attractive model emerged--limited sovereignty allowing greater local control of local revenue. Tatarstan has signed such a treaty with Moscow.

Old ethnic rivalries between the Chechens and their Muslim neighbors in Russia’s North Caucasus limited support for their rebellion. This made it harder for politicians in Iran, Turkey and the Arab world to seize on the war as an issue of Islamic solidarity.

Russia and the West never stopped collaborating on strategic ventures, from peacekeeping in Bosnia-Herzegovina to exploration of space. After threatening a boycott, Western leaders joined Yeltsin in Moscow in May to mark the anniversary of the Nazis’ defeat in World War II and welcomed him to the Group of Seven summit in Canada the following month.

Still, Chechnya made the West start looking harder for a potential democratic leader beyond the ailing Russian president.

Partly because of Chechnya, Republicans in Congress are likely to slash U.S. aid to Russia from $340 million this year to as little as half that amount for 1996. But two other agreements--a $6.8-billion IMF credit and a trade deal with the European Union--mean more to Moscow.

The trade deal, delayed because of the war, was signed this week after the Russians opened peace talks. The IMF credit, granted last spring at the peak of the war, was a dramatic sign of the stake Western leaders have in Russia’s economic stability and their willingness to overlook the bloodshed.

At home, Chechnya finalized the divorce between Yeltsin and his onetime democratic allies--a split that hurt both. It also displayed the dovish democrats’ inability to rally hundreds of thousands of people into the streets, as they did in the dying days of Soviet power, to stop something so brutal.

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Opinion surveys show consistent opposition to the Chechen conflict but also a deepening disgust with politics, including with the democrats and the painful free-market programs they launched three years ago.

“People are disappointed in reforms, in democrats, in Yeltsin,” said Lev A. Ponomaryov, a leader of huge demonstrations then and meager ones now. “They seem not to have strength to resist the war.”

According to the gloomy view of Chechnya, these circumstances favor dictatorship--just as they allowed a narrow circle of Kremlin hawks to push Yeltsin into war without public debate.

But the war stirred democratic instincts. Russia’s press freely criticized it. Declaring “a new political era” in which the state puts “lives of citizens above political expediency,” Prime Minister Viktor S. Chernomyrdin negotiated an end to the Chechen siege of Budennovsk last month and launched the peace talks.

Chechnya made the army more restive, if not as threatening, toward civilian leaders. After recovering from their humiliating early failure to rout the Chechens, senior officers began pressing to improve the army’s lot. They have won legislation extending mandatory service from 18 months to two years for all young men, but there is little money to cover the army’s dire needs.

In any case, military specialists say Chechnya was such a sobering experience that the army cannot be sent so easily into the next battle.

“Politicians and officers will both be more cautious, more circumspect,” said Dmitry V. Trenin, a retired Russian army lieutenant colonel at the Carnegie Endowment for International Peace in Moscow. “They will likely use military force only when the goals can be achieved quickly and with minimal cost in lives.”