(FORTUNE Magazine) – With election day quickly approaching, Russia's first wide-open presidential race is barreling toward an uncertain end. A few months back President Boris Yeltsin looked out of it, his support an abysmal 8%. By early May, polls tracked by the U.S. State Department showed Yeltsin running almost neck and neck with Gennadi Zyuganov, the candidate of the resurgent Communist Party. Still, with polling in Russia a dodgy business and about half the electorate either undecided or set to split its support among a handful of weaker contenders, Yeltsin's comeback is anything but certain.

What is clear are the stakes. For international financial institutions, global businesses, and democracies everywhere, this is arguably the year's--and perhaps the decade's--most critical presidential contest. And for all these deeply interested nonvoters, Russia's incumbent, despite his flaws, is far and away the preferred candidate.

No one believes that Yeltsin's reelection would spell an end to Russia's current mess, much of which he has presided over: soaring unemployment, epidemic corruption and crime, huge rips in the social safety net, a failure to develop trusted public institutions, and a brutal war in Chechnya that has claimed 30,000 lives. Nor will returning the Communists to power necessarily spark something as apocalyptic as the "civil war" predicted by Yeltsin's security chief, Major General Aleksandr Korzhakov, whose recent public call for postponing the balloting was quickly rejected by his boss.

But a Zyuganov victory would almost certainly wreck Russia's painful transformation from former evil empire to a relatively benign and market-oriented state. The new President would swiftly move to reinstate the central economic controls dissolved by Yeltsin when he took charge in 1991. And the Duma, or legislature, where Communists gained a majority in elections last December, would cheer him along. Though small and medium-size private companies might be allowed to keep operating, the privatization of large firms--a process that has helped put some 60% of the Russian economy into the profit-making, or at least profit-seeking, sector--would stop.

At a high-powered February gathering of business and political leaders in Davos, Switzerland, Zyuganov tried to convince foreign investors that they would benefit from the "order" and "predictability" of a Communist government that would, in essence, be little different from the social democratic parties of the West. That pitch is as ridiculous as it is false. Inside Russia, the candidate sounds virulently anti-Western and determined to get communism right the second time around. "There's a big difference between what Zyuganov says overseas and at home," says Arthur Hartman, U.S. ambassador to the U.S.S.R. in the 1980s. "The people around him are definitely not market guys."

Count on it: The rise of these nonmarket guys would send most of the Davos crowd running for the exits. "With no one paying taxes and Zyuganov saying he'd get idle factories up and running, he'd have to start printing money, the recipe for hyperinflation," says Michael Mandelbaum, a professor at the Paul Nitze School for Advanced International Studies at Johns Hopkins University. "There would be short-term panic and immediate capital flight." Investor confidence, agrees Robert Hormats, vice chairman of Goldman Sachs International, "would collapse."

Institutions like the International Monetary Fund would join the exodus as well. Should a new Russian government adopt an economic policy "consistent with the Communist approach," warns Michel Camdessus, managing director of the IMF, "we would have to suspend our support." Trying to restructure their economy without outside financial help would make the pain Russians have felt so far seem like a weekend at the Ritz.

On the diplomatic front, a Zyuganov victory would send relations with Washington into free fall. Congress would, at the least, speed up discussion of expanding NATO and, at worst, launch a witch hunt to determine Who Lost Russia.

Will it come to that? We probably won't know until July. If no candidate wins more than 50% in the initial round of voting on June 16--and none is likely to--there will be a runoff between the top two finishers. Most analysts are betting Yeltsin will at least make the finals. He has been limiting television coverage of his rivals and doling out pork. Should all that fail, expectations are widespread that he will cheat. "By hook or by crook, Yeltsin is probably going to win," says Dimitri Simes, the Russian-born director of the Nixon Center for Peace and Freedom, a Washington, D.C., think tank. According to Paul Goble, a former State Department expert on Soviet nationalities, "Russian officials say the central election commission can move 18% of the vote without anyone knowing. There have been only two U.S. presidential elections--1932 and 1964--when moving 18% would not have won."

If Russia decides not to roll back the clock by bringing in Zyuganov and the Communists, a few foreign high-rollers may immediately jump back in the game. "A Yeltsin win will unleash a great deal of capital, especially in the energy field," predicts Robert Strauss, former U.S. ambassador to Moscow and founding chairman of the U.S.-Russia Business Council. "After all, it's one of the last places on earth where you can earn 100 to 1 on your money."

For most Western companies, however, even those kinds of odds won't prove enough of a lure. Over the past four years, for example, U.S. direct investment in Russia has totaled a mere $2.3 billion, compared with around $18 billion for China. Over the past 18 months, with both the economy and Yeltsin's commitment to reform backsliding, the net increase in that investment has been virtually zero. Says Eugene Lawson, president of the U.S.-Russia Business Council, many of whose 240 members have been losing money: "We need better business conditions."

Few are sanguine about getting them anytime soon--even if Yeltsin keeps his job. He'll press ahead with basic economic reform, partly because Russia is locked into multiyear commitments to the IMF and the World Bank, which has approved 22 loans there, totaling more than $5.2 billion, since 1992. This March, as part of the international effort to boost Yeltsin's electoral prospects, the IMF approved $10 billion in credit to accelerate privatization and transform the Russian economy into "a fully functioning market-based system." But given the domestic pressures Yeltsin faces, Clinton Administration officials are bracing for a short-term rise in protectionism, including tariffs and heavy subsidization, if not outright renationalization, of key Russian industries.

What might really get business cheering? The Business Council's Lawson hopes a reelected Yeltsin will eventually resume taking more radical steps, such as rehiring Anatoly Chubais, fired in January as deputy premier because his reforms aimed at steadying the economy were too painful. He'd also like to see Yeltsin push a pending comprehensive tax bill through the Duma. "Making taxation less arbitrary and capricious," says Lawson, "is the single most important thing Yeltsin can do to support foreign investors."

REPORTER ASSOCIATES Eryn Brown, Alicia Hills Moore