When Richard Milhous Nixon met Boris Nikolayevich Yeltsin in Moscow in the spring of 1991, the Russian expressed pleasure at the remarkable connection between the two men.

Nixon's grandfather, Yeltsin recalled, had lived for a time as a businessman in Yeltsin's hometown, the industrial city of Sverdlovsk in the Ural Mountains. "Maybe we are even relatives!" Yeltsin cheerfully declared.

It was a promising beginning to the conversation, except for one thing. Neither of Nixon's grandfathers had ever left the United States. Nixon listened politely.

The error, as Dimitri K. Simes recounts in "After the Collapse: Russia Seeks Its Place as a Great Power" (Simon & Schuster, 272 pages, $25), was attributable not to bad staff work -- Yeltsin's aides were baffled, too -- but to the Russian leader's erratic intellect, subject even then to whimsy and vodka in approximately equal parts.

Eight years later, Russia's political and economic condition seems as shaky as its leader's physical and mental health. Simes' anecdote could be paired with Yeltsin's recent declaration on TV that he had just warned President Clinton both by letter and telephone that Russia would not tolerate NATO air strikes over Kosovo.

Actually, befuddled American officials said, Clinton had not heard from the Russian president at all. Not by letter. Not by phone.

Under Yeltsin's madcap leadership, the power that in imperial Soviet garb gave America geopolitical nightmares for half a century has been reduced to a sort of international joke. The fervent optimism accompanying the collapse of Communist rule has gradually transformed into nostalgia and resentment for millions of Russians, most of whom tell pollsters they regret the dissolution of the Soviet Union.

Is this Russia's fate? Is this sprawling country sentenced permanently to disabling incompetence and graft? Don't count on it. As Simes argues in his clear-headed account of the post-Soviet disappointment, Russia will recover great-power status.

"While today's Russian economy may resemble that of a third-world nation, no developing state possesses Russia's combination of size, natural resources, a highly skilled labor force, a strong technological base, leading universities, a demonstrable if often misguided entrepreneurial spirit, and a seat among permanent members of the United Nations Security Council," Simes writes. "Russia has shown impressive dynamism in recent years which, when added to its historical sense of mission, suggest that its geopolitical comeback may take less time than its currently pitiful economic condition implies."

Of course, prognosticating Russia's future is a hazardous hobby. Among past entries in the fortune-telling competition were "How Russia Became a Market Economy" (Brookings Institution, 1995) by the Swedish economist Anders Aslund, biased by his role as Kremlin adviser, and "The Coming Russian Boom" (Free Press, 1996) by Richard Layard, a London economist, and John Parker, an insightful Economist correspondent. They bucked the glum conventional wisdom to forecast prosperity. We're still waiting.

Then there was the opposite approach. In 1994, veteran Sovietologist Marshall Goldman published "Lost Opportunity: Why Economic Reforms in Russia Have Not Worked," prematurely pronouncing market reforms dead. When the paperback came out two years later, the economy was showing signs of life, and the new subtitle hedged: "What Has Made Economic Reform in Russia So Difficult?" But with the economic collapse and ruble devaluation last August, the turn toward optimism in the new edition has itself been overtaken by events.

Simes navigates deftly between the twin hazards of Panglossian optimism (just permit elections and markets and paradise will surely follow) and condescension (why can't those crazy Russians do anything right?). It helps that culturally he is at home in both countries. An emigre who once worked at a Moscow think tank headed by Yevgeny Primakov, the Russian prime minister, Simes now heads the Nixon Center, a foreign policy institute in Washington.

Simes traveled to Russia on four occasions with Nixon. His descriptions suggest that the very deviousness that did Nixon in domestically may have served him well in judging Russian politics. Nixon even confided to Simes a secret he had kept for decades -- that he had studied the Russian language since 1959 and understood it well enough to give him an edge in diplomacy.

"But we're not going to tell this to anyone, right?" he told Simes, in a remark redolent of White House tapes of yore.

Simes' eagerness to find fault with the Clinton administration leads him into some contradictions. He says repeatedly that the U.S. should avoid provoking wounded Russian nationalism -- but takes the administration to task for inviting Russia to G-7 meetings. That is exactly the kind of cost-free symbolic gesture that can ease feelings of wounded Russian nationalism.

More persuasive is Simes' insistence on the limits of U.S. influence. "Russia is too big, too complex, too well educated, has too much of its own tradition and patterns of operation, and is in effect too much its own universe for any foreign power -- or even the world as a whole -- to have a decisive impact upon its fundamental choices," he writes.

Both "After the Collapse" and "Kapitalizm" (Yale, 320 pages, $30), a compelling, close-up account of the Russian economic struggle by Business Week correspondent Rose Brady, emphasize the extent of privatization and the radical nature of Russian economic shock therapy. But to a striking degree, the Russian economy still has Soviet features.

As in Soviet times, barter takes the place of money in many transactions. What Soviet Russians called blat -- "pull" or "connections" -- remains a crucial factor in business success; today entrepreneurs say they need a krysha or roof -- the protection of a powerful patron in government or organized crime. Most significantly, business is inextricably intertwined with government and politics.

Hence the rise of the oligarchs -- the industrial chieftains who dominate the Russian economy -- was fueled less by business acumen than by cozy and corrupt relations with the state. Simes offers the example of the oil company Sidanko, obtained from the state in 1996 by wheeler-dealer Vladimir Potanin for about $20 million. The next year British Petroleum purchased just 10 percent of Sidanko for $571 million.

The sudden weakening of the oligarchs may prove a silver lining of August's economic collapse; their immense concentration of wealth and power is the last thing Russia needs. And a feeble ruble has ironically given a big boost to Russian manufacturers' sales at home, since competing imports have been suddenly priced out of the market.

Such vagaries show how unexpectedly Russia's turnaround may begin. Yet as Simes shrewdly notes, greater prosperity and greater democracy ultimately may make Russia not more but less pliant in relations with the United States. If military intervention against the Serbs in Yugoslavia is popular with Russians, for example, a reviving Russia is less likely to accommodate U.S. demands.

Half a century ago, Walter Lippmann contemplated the intensifying Cold War and urged Americans to think about history. "The beginning of wisdom on the Russian question is, I believe, to recognize the fact that the ... rivalry between Russia and the nations of the West did not begin with Marx, Lenin and Stalin, nor would it end if the Soviet regime were overthrown or defeated," Lippmann wrote in the Atlantic Monthly in 1948. "It was one of the great fields of diplomacy under the Czars as it is under the Communists."

Relations between Russia and the U.S. will remain a great field of diplomacy in the 21st century, as oligarchs, Mafia, nationalists and democrats jostle for power in the new Russia.

Scott Shane, a reporter for The Sun, was Moscow correspondent from 1988 to 1991 and is the author of "Dismantling Utopia: How Information Ended the Soviet Union."

Pub Date: 03/07/99