MOSCOW — In the hope that Wednesday's decisive second round of Russia's presidential elections will finally put an end to the political uncertainty that has hobbled economic recovery here, businessmen and investors are banking firmly on Boris Yeltsin to keep Russia on the path of reform.
Investors are already pumping up share prices. Moscow's stock market has surged in recent days, hitting one record high after another, as cabinet shuffles and public opinion polls have pointed to the likelihood that President Yeltsin will carry the day against his Communist challenger, Gennady Zyuganov.
And even businessmen who had flirted with Mr. Zyuganov a few months ago, when he looked more likely to win, have changed their minds.
"I think it would be a disaster if Zyuganov won," says Marc Holtzman, president of the investment bank Mees Pierson EurAmerica, who hosted a dinner in Davos, Switzerland, last February to introduce the Communist leader to Western fund managers.
Though Yeltsin is far from perfect in the eyes of Western businessmen and economists, having slowed the pace of free-market reform dramatically in recent years, he is still seen as the only guarantee that reforms will continue.
"Yeltsin at his worst is still 50 times better that Zyuganov at his best," Mr. Holtzman argues, "because even if the Communists turn out to be not so bad, people will still wait for a year or so to see, and Russian cannot afford to wait" for new foreign investment.
Uncertainty about Russia's political future has put the brakes on outside investment for several years now. In 1995, for example, it reached only $2.8 billion, compared with the $38 billion that flooded into China.
Concerns about Zyuganov focus partly on the vagueness of his economic plans. Observers find it hard to tell whether to give more credence to the social-democratic image he projects abroad, welcoming foreign investment, or the harder-line nationalist message he preaches at home to the electorate.
His pledges to rescue Russia's poor from their predicament, to boost social spending and job creation, also worry many Western-style economists who see such moves as self defeating.
"Massive spending on government investment or social programs, given the present state of the budget, is only possible by printing more money," argues Economy Minister Yevgeny Yasin. "This will cause inflation and devalue all the benefits of the increased investment and social benefits."
Mr. Yasin blames some of the wide budget deficit this year on the elections themselves. "The Communists have not come to power. I hope they will not come to power," he said last week. "But the very expectation is already exerting an extremely negative impact on the economy, including on the collection of taxes."
But weak tax revenues - 40 percent below budget - are only partly to blame. Yeltsin himself, making extravagant promises left and right, has also depleted the national treasury in ways that may come home to roost next autumn, some critics worry.
Spending on such key budget sectors as industry and construction was barely half the planned amount in the first four months of the year, as the president plundered state coffers to pay urgent bills, such as overdue wages, in a bid to win votes. Health-care spending was 43 percent off, and debt-service payments 37 percent below planned levels.
It is unclear where the money will come from to make up these deficits after the elections, unless it be the printing presses. Inflation will also be pushed up by expected price rises in energy and transportation, predicts Mikhail Delyagin, an economist in the president's personal think tank.
In order to boost Yeltsin's re-election chances, big transport and energy companies have restrained prices so far this year, Mr. Delyagin explained.
Despite open Western support for Mr. Yeltsin, the course of his economic policy in a second term is by no means clear.
Reformers, led by former privatization boss Anatoly Chubais, led the cheerleading when Yeltsin suddenly fired three close hard-line Kremlin aides 10 days ago. Among them was chief bodyguard Alexander Korzhakov, who had in the past tried to block free-market reforms demanded by the World Bank, and deputy Prime Minister Oleg Soskovets, a fierce proponent of government subsidies for ailing heavy industry. However, there are reports General Korzhakov is staging a comeback.
But Yeltsin has ruled out Chubais's return to government in a second term, and last week his new hard man, security chief Gen. Alexander Lebed, issued a draft national-security plan calling for controls on raw-materials exports and state-sector prices - statist policies that horrify reformists and Western economists.
Despite his strength in recent polls, Yeltsin faces ongoing speculation about his health. On Friday he took an unscheduled break from the campaign and skipped a meeting with farmers.