THE CHALLENGE of a few thousand Muslim separatist guerrillas in the southern Russian province of Dagestan once again raises the question of whether Russia can hold together. The empire controlled from Moscow has been shrinking for a decade. With the collapse of the Berlin Wall in 1989, the captive nations of Central and Eastern Europe slipped their bonds. With the collapse of the Soviet Union in 1991, Russia suddenly had 14 new neighbors and far less territory. Moscow relinquished effective control of its southern province of Chechnya after losing a war with that breakaway republic in 1994 and 1995. Has Russia (still the world's-largest country) now shrunk to its "natural" borders or is further unraveling in the cards?

Elements of the latest challenge must be familiar to the Moscow power brokers who failed to prevent Chechnya's secession. On one side are highly motivated insurgents fighting in familiar terrain; on the other, poorly armed, poorly fed Russian draftees transported to treacherous mountains that they have no interest in defending or recapturing. Chechen guerrillas often shot Russian troops by night with weapons that Russian troops had sold them by day. This time around the Russian armed forces are no less corrupt, and certainly no less impoverished. As during the war in Chechnya, Russian leaders proclaim imminent victory in plain contradiction of the evident facts.

Both Dagestan and Chechnya are predominately Muslim entities in the Caucasus region. But the ethnic Chechen population was fairly united in its desire for independence, and Dagestan is a patchwork of ethnic and tribal affiliation that is not united in anything. Many people there fear that a break from Russia would lead to internal conflicts. Much of Dagestan's elite has traditionally aligned itself with Moscow.

But -- and here we return to the central question of Russia's viability -- that loyalty in the past has been bought, at least in part. Moscow took money from the few provinces that operate profitably -- primarily oil- and diamond-producing areas -- and recycled it to provinces such as Dagestan that never paid their own way. Now the capital has far less power to extract taxes from those who can pay and so fewer inducements to bind those who cannot.

The answer to the central question, in other words, does not lie in Dagestan's mountains as much as in Moscow itself. If Russia can put its economic reform on track and protect its fragile democratic institutions, most Russians will want to remain just that -- Russian. If the economy spirals downward and corruption becomes a permanent fixture, Dagestan may seem a few years from now to have been nothing but a harbinger.