By Tatyana Ustinova
MOSCOW, Aug 26 (Reuters) - Prime Minister Vladimir Putin on Thursday hailed the success of Russia's operation to flush out armed Islamic guerrillas in its southern Dagestan region and vowed to use force against any future attacks.
The guerrillas, backed by Chechen warlords and estimated by Russian officials to have numbered more than 2,000, occupied several villages in Dagestan for two weeks despite heavy Russian bombardment before withdrawing into neighbouring Chechnya.
"The first stage of the (Dagestani) operation is completed. It was carried out in the shortest possible time with minimum losses, but there have been casualties," Putin told a weekly session of the Russian cabinet. He gave no figures.
He said the government wanted to help local people driven from their homes by the rebels and to restore normal economic life in impoverished Dagestan, which suffers high unemployment.
Putin, a tough-talking former KGB spy confirmed in office earlier this month as Russia's fifth prime minister in little more than a year, said Moscow preferred to use diplomacy to resolve the problems of its turbulent North Caucasus region.
"The Russian Federation wants to resolve all problems at the negotiating table but when we are left no choice then our response will be appropriate. Russia has enough strength and resources to rebuff any terrorist," he said.
The Russians used war planes and heavy artillery to drive out the rebels, who sought to establish Islamic rule in Dagestan, and push them back into Chechnya.
On Wednesday evening Russian planes dropped bombs on suspected guerrilla camps inside Chechen territory near the village of Vedeno, forcing many local people to flee.
"Federal forces retain the right to bomb concentrations of guerrillas," a ministry press spokesman based in the Dagestani capital Makhachkala told Reuters.
"The federal forces carried out an air strike near a lake on Chechen territory near Vedeno but the residents of the village were not hit," he said.
Chechen Deputy Prime Minister Kazbek Makhashev told Russia's Ekho Moskvy radio the Russian bombing had hurt the civilian population but had failed to hit the guerrillas' bases.
Russia's Defence Ministry says 59 federal soldiers were killed during the Dagestan fighting and puts the rebels' losses at more than 1,000. But the guerrillas say they lost only 37 men and put federal losses at more than 1,000. None of the reports can be independently confirmed.
Moscow withdrew its forces from Chechnya after suffering a humiliating defeat in a 1994-96 conflict with Chechen separatists. Chechnya claims it is independent, but Moscow says it is still part of Russia even though the federal government has no control there.
Chechen leaders said they were not involved in the rebel raid in Dagestan. But two leading Chechen field commanders, Shamil Basayev and Hattab (one name), were among the military leaders of insurgency.
Basayev and Hattab are at odds with the Chechen president, Aslan Maskhadov, and he has effectively no influence on them.