MOSCOW - Russian President Dmitry Medvedev resolved on Friday to wipe out bandits across Russia's turbulent, Muslim-dominated southern flank after a suicide bomb killed seven policemen in the Dagestan region earlier this week.

As far as bandits are concerned ... They simply need to be eliminated, Medvedev told the head of the FSB, the successor to the KGB, using a Russian word often synonymous with militants, in comments posted on the official Web site

Russia is fighting an escalating Islamist insurgency in the North Caucasus, particularly in Dagestan, Ingushetia and Chechnya, leading Medvedev to call the upsurge in violence over recent months the country's biggest domestic political problem.

Political analysts and rights groups say Russian security forces are effectively at war with Islamist rebels, who want to create a sharia-based, Muslim state across the North Caucasus separate from Russia -- a struggle whose foundations were set over 200 years ago.

The Kremlin chief's hard-hitting words come after a suicide bomber detonated a car packed with explosives at a traffic police depot on Wednesday in the capital of Dagestan, Makhachkala, killing seven and injuring 20.

(Eliminating bandits) must be done in a tough manner and systematically ... Our task is to create normal living conditions in our southern republics, Medvedev added.

The beginning of 2010 has seen little let-up in violence along the patchwork of republics making up the North Caucasus.

In Ingushetia, gunmen killed a woman selling alcohol, a bomb was found near a gas pipeline and destroyed and a senior officer was wounded in a shoot-out. Separate explosions in Chechnya, which has fought two separatist wars against Moscow since the mid-1990s, also wounded several policemen.

FSB head Alexander Bortnikov said Wednesday's suicide bombing in Dagestan was carried out by a group called Al Bara, the nickname of Dagestani rebel leader Umalat Magomedov.
Al Bara was linked to al Qaeda in unconfirmed press reports earlier this year. Bortnikov said the rebel leader was killed on December 31 2009 in an operation by Russian special forces.

The former head of an FSB anti-terror unit said terrorism in the North Caucasus was part of a larger global problem.

If we do not understand the specifications of the Islamist factor in the Caucasus, then this terrorism is only the tip of the iceberg, Anatoly Yermolin told Ekho Moskvy radio station.

(Editing by Elizabeth Fullerton)