WHILE the defeat of the coup in August represented a landmark triumph, the democratic revolution in the former Soviet Union has now stalled. To help jump-start democratic progress, the West should recognize the incompatibility of democracy and a restored union and should actively work with the newly independent republics to advance their own political and economic reforms.The next phase of the democratic revolution will take place in the republics. Many republics will soon accept the need to follow Russian President Boris Yeltsin's lead in facing voters in free elections. In light of the desire for independence among the non-Russian nations, President Mikhail Gorbachev and the center would receive their walking papers if they were to hold free elections. Not surprisingly, after speaking of elections immediately after the coup, Mr. Gorbachev has since been silent on the is sue. To further democratic and free-market reforms, we must not blindly prop up the center but rather work with the former Soviet republics. How we in the West provide economic aid to the former Soviet Union is a key issue. Our help must not have the unintended consequence of supporting anti-democratic forces at the center. In the immediate crisis, we should work with both the center and the republics in providing humanitarian aid. We must recognize, however, that in the long term the republics will become the new centers of power. To influence their development, we must work on four fronts: * Appoint envoys to the republics. Western leaders have been unwilling to accept the fact that the Soviet Union no longer exists and that the declarations of independence of 14 out of 15 republics are real. If we want to shape the future of the former Soviet Union, we must have a political presence in the republics. While we should retain an ambassador to deal with the center on foreign and defense policy issues, we should appoint envoys to the republics who could eventually be upgraded to full ambassado rs. * Link aid to democratic reform and human rights. As the new centers of power, the republics should become the principal channels of our assistance. In providing that help, however, we must prohibit aid to any republic that drags its feet in holding free elections or fails to protect the human rights of its citizens. Given the collapse of the Soviet economy, our aid gives us tremendous political leverage. Through a policy of linkage, we can create incentives for positive political change and help frustra te efforts by extremist nationalists in some republics to come to power through demagogic attacks on ethnic minorities. * Send technical assistance missions to the republics. Some republics, including the Ukraine, plan to introduce their own currencies. Others are exploring ways to introduce free-market institutions and privatize their state-owned enterprises and farms. The major industrial democracies - the G-7 countries - should send teams of economic experts to each of the 12 republics of the former Soviet Union to advise their leaders on the transition to a market economy. * Make the Baltic states examples of free-market prosperity. Lithuania, Latvia, and Estonia can become enterprise zones that spread the principles of free-market economics by example into the republics. Because the Kremlin has accepted their independence and because their governments were elected freely, the Baltic states should be allowed to participate in all aid programs already developed for Eastern Europe. As soon as free-market reforms are in place, we should integrate the Baltic states into intern ational financial institutions and step in with stabilization funds for their new currencies, "enterprise funds" to start private banks and companies, and education and exchange programs to train citizens in skills needed for the free market. Those who argue that the newly independent republics of the former Soviet Union cannot survive economically are misguided. The Ukraine has a population larger than that of France, and even the smaller republics have better economic prospects than those of many developing countries. Moreover, breaking the bureaucratic grip of the center is the linchpin to fulfilling the promise of last August's democratic revolution. If we work with democrats in the republics - who are eager to adopt needed reforms - we c an help them execute an end run around the vestiges of the old order.