Tall, white concrete fences link the new flats, designed to conceal the waste ground, wrecked buildings and bomb craters full of weeds behind them. But the scale and speed of the rebuilding effort are remarkable, a tribute to the Kremlin's determination to spend huge chunks of its oil revenues on getting Chechnya "normalised". It is nine years since Russian troops recaptured Grozny in the second Chechen war but it's only during the year and a bit since Ramzan Kadyrov, Moscow's current favourite, became president that money has been lavished in effective quantities.

New too is the disappearance of Russian army and interior ministry troops from the streets, a pattern of declining visibility which the Americans have started to emulate in Baghdad. The Russians retain bases and barracks near the airport and elsewhere on Grozny's outskirts but security is in the hands of Kadyrov's Chechen forces. Highways which used to be dotted with Russian checkpoints are open and unpatrolled.

Like it or not, Russia has won this war. It is rare for foreign occupiers to defeat a nationalist insurgency supported by a majority ethnic community. Think Vietnam and Algeria for dramatic cases of failure. Britain's performance in Malaya, touted at West Point, Sandhurst and other war colleges as a textbook success, depended on the insurgents being from the country's Chinese minority.

Like most observers, I never expected Russia to reach this point, especially after its apparent victory in the first Chechen war in 1996 crumbled overnight when the guerrillas infiltrated Grozny and launched a mass uprising. But Putin is not Yeltsin. He has played a long game, and even spokesmen for the remaining opposition activists with whom I have talked outside Russia accept the war is over, at least for this generation. "There is no current scope for combined national resistance, and we don't want warlordism like with the 'Forest Brethren' in postwar Ukraine," one said, referring to the armed bands of nationalists who fought Soviet rule for a decade after the second world war.

Russia's Chechen success has come at a terrible human price through massive fire power, torture of suspected insurgents, targeted assassination of guerrilla leaders, and subtle manipulation of money and amnesty offers. Moscow also exploited and deepened the divisions within the Chechen national movement. Ramzan Kadyrov's father was a moderate Islamist who fought the Russians in the first Chechen war, but switched sides in 2000 in opposition to the Wahhabism that was gaining ground over the secularists in the insurgency.

Pictures of Ramzan - as he is universally called - adorn the walls of public buildings throughout Grozny. "Happiness in the service of the people" says one of him, in Saddam Hussein proportions, on the airport terminal.

His compound near Gudermes sports an artificial lake, a Disneyworld-style fibreglass mountain, and a collection of panthers and leopards which, he says, he finds relaxing to watch after a hard day's work. But with his moon face and wispy reddish hair, the 30-year-old president cuts an unexpectedly modest figure. This is no strutting dictator in dark glasses surrounded by gun-toting bodyguards, even though his opponents say he has created an unprecedented climate of terror in which no one dares to criticise him.

Kadyrov's language can certainly be blunt. Talking of Shamil Basayev, who masterminded the Beslan school siege, he told a group of journalists last week that he once shared a room with Basayev and quickly realised he was an opportunist with no real beliefs. "I was delighted when I heard he had been killed, then sad because I wanted to kill him myself," he told us with no hint of a smile.

The biggest irony is Kadyrov's unstinting praise for Russia. Since the Tsarist incursions in the 19th century, no people in the Caucasus have fought the Russians so fiercely or suffered so much. Yet now Chechnya's president boasts of having sent Chechen troops into South Ossetia alongside the Russians. "Chechen never wanted a separate state. We have shown we will stay in the Russian Federation," he said.

Some analysts say Kadyrov may secretly plan to ask the Russians to leave once their money has armed and trained his forces and rebuilt the republic. His opponents laugh at this, saying he is totally dependent on the Kremlin and they have other Chechens in Moscow to replace him if necessary.

So where does that leave the dreams of Chechen independence? On ice but not abandoned, say the nationalist exiles who were always as unhappy about imported Wahhabism as the Kremlin is. They cite two factors for optimism. Yeltsin's bombing, followed by Putin's war, forced Russia's huge civilian population to flee Chechnya. "The settlers have gone. Now there are only occupiers," as one put it. Then there is the new diaspora. "Thank God the Arab countries never took Chechens in as refugees. They're safe from Islamic influence. Chechens all go to the west, mainly to Europe. They are getting education, and one day they'll be ready to go back," the exile added.

By coincidence, his second point was also made by Kadyrov in our meeting. Whether the diaspora is ready to return as long as its leader is so slavishly wedded to Moscow remains to be seen.

© Guardian News and Media Limited 2008