Despite mounting Western criticism of the Chechnya campaign, Russian planes and artillery kept up their bombardment of rebel targets across the tiny territory, helped by clear weather.
In his last formal news conference of 1999, President Clinton said Russia's actions in the breakaway region are going to prove "very costly." But Mr. Clinton rejected cutting off U.S. aid to Russia in retaliation for its brutal campaign against the Chechen rebels.
He said halting aid would "alienate Russia from the international community, and that's a bad thing."
The president also said he has "no sympathy" for Chechen rebels, even though he has criticized as too heavy-handed Russia's efforts to stamp out the rebellion.
Meanwhile, the Russian military denied having ordered the residents of Grozny to flee the city or face death, saying their ultimatum had been aimed only at the rebel fighters.
Rebel spokesman Movladi Udugov said the separatists had withdrawn from Urus-Martan on Wednesday morning. Russian forces have for weeks been bombing and shelling the city, which guards the southwest approaches to Grozny.
Refugees said most of Urus-Martan's 30,000 residents had fled. They said there were probably only about 1,000 people remaining in the town.
The Russian Defense Ministry said the Urus-Martan operation was aimed at gradually squeezing the rebels out of town with the help of pro-Moscow paramilitaries, rather than trying to crush them in a single attack.
But Grozny remains the main prize for Russian forces, now in the third month of their operation against the guerrillas.
Earlier this week, Russian planes dropped leaflets on Grozny urging civilians in the bombed and burning city to leave by Saturday or be destroyed. The leaflets said a safe corridor would be provided for them.
Western criticism was swift and particularly harsh. Canadian Foreign Minister Lloyd Axworthy said Russia was "crossing the line into potential crimes against humanity."
But Itar-Tass news agency quoted Russia's chief commander in Chechnya, General Viktor Kazantsev, as saying the move had been intended to make the rebels think again and lay down their arms.
"This is a warning to the bandits -- a week's grace has been given to them," Tass quoted Kazantsev as saying.
If Moscow does not show more restraint, reports CBS News Correspondent David Hawkins, it risks losing critical aid from the International Monetary Fund.
Government sources in Germany, Russia's largest foreign creditor, on Wednesday linked the situation in Chechnya to aid for Russia: "It is hard to see how any cash can flow to Russia in the current situation," the sources said. They addethat Germany could not support such aid from any international body.
Many of Grozny's estimated 15,000-40,000 civilians have been too afraid to leave their homes, fearing the Russian bombing and the large groups of Chechen militants still in the city. Some refugees who fled said many that remained hadn't even seen the fliers.
Russian forces entered Chechnya in September following incursions by Chechen-based Islamic militants into the neighboring republic of Dagestan. The militants have also been blamed for apartment bombings in Russian cities that left 300 people dead.
Russian commanders say they do not plan to storm Grozny, where insurgents in a 1994-96 war slaughtered Russian troops.
©1999 CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press and Reuters contributed to this report