IN the aftermath of the failed coup in Moscow, Eastern Europe faces a new set of challenges to its political stability and economic progress. Even though the danger of renewed Soviet expansionism has subsided, the disintegration of the last European empire will directly affect the region's security.The immediate reaction of East European states to the Kremlin putsch was alarm, nervousness, and awareness of vulnerability. Leaders reassured citizens that the overthrow of Soviet President Gorbachev would not reverse their own commitment to reform, but they also underscored possible repercussions. Eastern Europe fears a disruption of vital energy supplies and markets and curtailment of Western investors' commitments to a region threatened by further Soviet instability. Poles and Czechs remain concerned about the possibility of a massive refugee outflow from the Soviet republics they border. There are also uncertainties about the future shape of bilateral relations with the Kremlin. New treaties on future military and political relations between the East European countries and Moscow were being prepared on the eve of the coup. The collapse of Soviet central authority will make East European governments more determined to avoid any new alliance entanglements with the USSR. Nevertheless, it may be weeks before the Soviet government can stabilize its position and clarify its relations with former satellites, leaving Warsaw, Budapest, Prague, Bucharest, and Sofia in a strategic limbo. To help fill the vacuum, Eastern European states will seek closer ties with Soviet republics, whose room for maneuver has greatly expanded as a result of the Kremlin crisis. Moscow will be pressed hard to grant greater sovereignty not just to the Baltic states but to all six governments who refused to sign the now-obsolete union treaty (Estonia, Latvia, Lithuania, Armenia, Georgia, and Moldavia) as well as to some that did agree, including the Ukraine and Byelorussia. The Soviet shakeup could have a positive effect on Eastern Europe. It may rally a disoriented and economically traumatized population around the incumbent governments because of revived fears that uncertain Soviet developments could still threaten their regained freedoms. East European leaders have called for quicker and closer integration with Western institutions. Associate membership in the European Community by countries fully committed to market reform and political pluralism - already endorsed by s ome West European leaders - will now be strongly supported across Europe. The EC must further open its markets to competitive agricultural products and textiles from the East. Such actions would make the region's fragile economies less susceptible to Soviet disruption while enhancing political stability. The Soviet scare is also likely to spur closer political and economic cooperation between the states bordering the USSR. Hungarian, Polish, and Czechoslovak leaders quickly declared that they would create a trilateral consulting group to assist their integration into Europe and to consider possibilities for mutual security against future Soviet turmoil. Even more important, pressures will mount in Eastern Europe to establish firmer links with NATO and eventually gain affiliation with the alliance. Both Warsaw and Prague insist that Soviet instability underscores the importance of NATO's security umbrella. Although there has been an understanding that swift entry into NATO could upset the Kremlin, East Europe is now more anxious than ever about the glaring security vacuum following the demise of the Warsaw Pact. Conversely, Moscow's overwhelming preoccup ation with internal crises allows much more scope for East European entry into Western security institutions. Western governments have an important role to play in assuring the security of the region. It is not cash aid that is needed, but faster institutional integration. A security structure has to be devised and implanted that will provide Western military guarantees to East European states and help shield them against massive unrest, civil war, or another coup attempt in the USSR. At present only NATO has a viable structure and modus operandi that could embrace the new democracies (and eventually, perhaps, t he post-Soviet republics). Ultimately, Eastern Europe will benefit directly from a Western commitment to the dismantling of the Soviet Union. The coup crisis vividly demonstrated that the only popular democratic forces within the USSR are the freely elected republican leaders. Indeed, a positive effect of the current turmoil is the rapid movement toward republican independence. Post-Soviet inter-state relations will not be trouble-free, of course, but they will be devoid of the imperialist military threat that has petrified develo pments for seven decades. Western recognition of new independent states from the Baltics to the Caucasus will underscore the principles of self-determination and inter-national equality. Only on this basis can post-Soviet political and economic confederations be devised in the region. Stalin's imperium must be finally assigned to the dustbin of history. As the last week has shown, contrary to conventional diplomatic wisdom it is not the small liberated European states that most seriously threaten international stability, but the lingering presence of centralized empires.