EDITORIAL PAGE — The next Russian revolution

Long before Mikhail Gorbachev introduced reforms that changed the political and economic structures of Russia and the former Soviet Union, there existed a nostalgia for the order and structure that epitomized the Stalinist years. Granted, most Russians abhored the heavy-handedness of those times. But even so, Westerners have always underestimated the affinity that lies deep within the soul of many Russians for a strong, authoritarian government — one that offers social order as a refuge from economic uncertainty. It will take some time before the vision of the collective — where everyone is asked to give (to the state) according to his ability and be provided for (by the state) according to his need — is replaced by the concept of self-determination and individual effort.

Although capitalism is taking hold in Russia and many other former Soviet republics, many Russians regard free enterprise as cold, crass and uncaring, as well as conducive to lawlessness, corruption and violence — and therefore less desirable than the more familiar system of communism.

Most Westerners fail to realize that Russia was a feudal monarchy before the onset of communism, with few of the country’s citizens owning businesses or property. Consequently, the concepts of democracy, individual freedom, free enterprise and private property never took root.

Much has been made of the recent elections in Russia, which saw many communists and former communists return to power. Many of them campaigned on the promise that they would restore Russia to its former glory as one of the world’s superpowers. Evidently, their message struck a chord with many Russians, who have watched the country decline in stature since reforms were introduced.

Despite the fact that communists and some hard-line military leaders made solid gains in the recent parliamentary elections, reform will continue to march slowly ahead in Russia. In some cases, steps forward will be offset by steps backward. But even so, it is doubtful the country will choose to revert to old-style communism when the presidential elections are held later this year.

Still, all this creates uncertainty for foreign investors interested in the opportunities that are emerging in the region. A far more serious problem is that most of the republics in the former Soviet Union, including Russia, still do not have the legal framework necessary for doing business. Western mining companies are interested in the rich mineral potential of the former Soviet Union, but it is often unclear as to who actually owns these resources. As a result, political risk is higher in the former Soviet Union than in just about any other region in the world.

In past decades, Russia was the centre of its own universe, but this is no longer the case. The country and all its former republics are integrating themselves into the mainstream of the global economy. But in order for this process to succeed, the domestic economies of these republics must first be made to function.

The challenge for Russia is to adjust to the necessity of regulatory systems, property rights and enforcable contracts. If the present impediments to economic activity and foreign investment remain in place, mere half measures will not be sufficient.