Chechnya, the self-declared independent republic in the North Caucasus, has become the center for one of the biggest scams in Russia, taking in hundreds of unchecked international flights each year that beat Russian customs and are packed with cheap consumer goods.


They call it the "big bazaar."


As many as 150 private airplanes a month fly into the airport in the Chechen capital Grozny from abroad, avoiding import duties and breaking international aviation guidelines, according to Sergei Shakhrai, who until last month was Minister of Nationalities with responsibility for Chechnya.


The Chechen "shuttle" traders resell their wares in Grozny, making huge and instant profits.


"It's a free economic zone," Shakhrai said wryly.


Ruslan, a young Chechen businessman, used exactly the same phrase, as he explained how the trade works.


Ruslan, who asked for his surname not to be given, said the traders hire private airplanes, usually from companies like Air Azerbaijan and Air Ukraine. Then they fly on shoptury -- "shopping trips" -- to destinations like the United Arab Emirates, Turkey, Syria and China, places with cheap consumer goods and easily negotiable customs.


Some of the planes fly directly back to Chechnya, others to the Azerbaijani capital Baku and from there to Grozny, Ruslan said. Each flight brings in at least $200,000 worth of goods and a trader working full time can amass between $100,000 and $150,000 a year, he said.


The traders exploit the twilight status of Chechnya, a republic which has been de facto independent of Moscow since the fall of 1991. It has not worked out its own tax system but is still officially part of the Russian federation with no customs controls at its borders.


Because of the trade, the bazaars and shops in Grozny, a city where the official economy has ground to a halt, are stacked with consumer goods, everything from video recorders, French perfumes and furniture to Kalashnikov submachine guns and Makarov handguns.


The prices are much lower than elsewhere in Russia, where import tariffs, which were raised this month, claim as much as 30 percent on electronic goods and 20 percent on footwear and furniture.


The only duties which traders effectively end up paying are a $20,000 a month payoff to the Chechen government for use of the airport or bribes to the GAI traffic police for anyone who takes the goods across the borders of Chechnya by car, Ruslan said.


"Not a single car goes into Chechnya without a bribe to the GAI," he said.Most of the wares are bought up by incoming traders from the surrounding North Caucasus region who resell them with a markup but can still make profits of their own.


"Grozny has become the wholesale market of the North Caucasus," Ruslan said The trade has indirectly proved a boon for the region. Mikhail Gutseriyev, economic adviser to the president of the neighboring republic of Ingushetia, acknowledged that the tariff-free Chechen goods are "much cheaper and are shipped out wholesale into Russia."


A spokeswoman for the Russian customs authorities said they could not comment on the amount of revenue the treasury was losing as they did not keep track of "contraband."


Shakhrai said that his main worry about the problems was not the economic damage to the Russian treasury which he said was "insignificant."


He said he was more concerned that Russia was shirking its international responsibilities by allowing unregulated aircraft to fly through its airspace.


"If such a quantity of airplanes flies out of the Russian federation unchecked it means that the Russian federation does not control flight security in its own airspace," he said.


Oleg Trufanov, the deputy director of the Air Transport Department at the Transport Ministry denied that there were any unmonitored flights directly into Grozny.


But he added that they could not monitor flights into and out of Baku and admitted this was a problem.


For Chechnya, which has been fighting a phony war with Moscow for independence for nearly three years, the trade is an economic lifeline.


Ruslan said that as many as 40 percent of the working population of Chechnya -- a republic of 1 million -- were involved in the trade directly or indirectly in a region where many salaries and pensions have not paid for more than a year and factories are at a standstill.


The business has helped spawn the Chechen millionaires who drive unmarked Mercedes through downtown Grozny.