  The localization length, $\xi$, in a 2--dimensional Anderson insulator
depends on the electron spin scattering rate by magnetic impurities,
$\tau_s^{-1}$. For antiferromagnetic sign of the exchange, %constant, the time
$\tau_s$ is {\em itself a function of $\xi$}, due to the Kondo correlations. We
demonstrate that the unitary regime of localization is impossible when the
concentration of magnetic impurities, $n_{\tiny M}$, is smaller than a critical
value, $n_c$. For $n_{\tiny M}>n_c$, the dependence of $\xi$ on the
dimensionless conductance, $g$, is {\em reentrant}, crossing over to unitary,
and back to orthogonal behavior upon increasing $g$. Sensitivity of Kondo
correlations to a weak {\em parallel} magnetic field results in a giant
parallel magnetoresistance.
