With sudden urgency the Kremlin has decided that Russia must modernize its economy to survive in the 21st century, and to do so it must attract capital and know-how from abroad. There are some built-in time parameters to the situation. Russia will hold a presidential election in 2012 and host the Winter Olympics in 2014. Both events will be viewed as judgments on Russia’s progress. The elections can demonstrate political and social progress, while the games will display the country’s wealth and panache. It will also highlight Moscow’s ability to provide security at the games. Sochi is dangerously close to the volatile North Caucasus.

The presidential election, just 20 months away, is more immediate and important. Whoever is elected will serve a six-year term instead of the four-year term served by previous presidents. Vladimir Putin’s expected election as president in 2012 will be interpreted to mean that Medvedev’s election in 2008 was only a sop to the Constitution. The real power had remained semicovertly with Putin and will remain overtly with him until 2024, assuming his re-election again in 2018.

Foreign capital might find this scenario attractive. Putin is a known entity and identified with stability. The promise of 12 years of consistency and continuity, along with other inducements, could well attract the capital — financial and intellectual — that modernization requires. But that prospect will seem less attractive if the elections are tarnished by violence and obvious fraud. Apart from the moral repugnance of such spectacles, investors cannot feel assured by a government that is not confident enough to accept its own popularity as indicated by polls. A lack of democracy might not scare them away, but a lack of confidence just might.

Both Russia’s lack of a free media and fair elections are subject to a relatively quick fix. Free-ranging political programs allowing opposition figures to voice their views should be allowed on national television as soon as possible. If the current leadership is afraid that an hour of opposition leader Garry Kasparov could prove a tipping point, they are out of touch with the reality of their own country and hardly fit to lead a modernization campaign. There is no political figure who could win more than a few points from either Putin or Medvedev in a fair election. A truly free and fair election would allow Russia to score huge points in the global arena — and at little cost with virtually no risk.

That’s not the case with the judiciary, whose lack of independence and integrity is likely to trouble potential investors more than the lack of free media or elections. Since commercial disputes are adjudicated in the courts, there has to be a reasonable assurance of fairness in this sector. Unlike the media and electoral system, the legal system needs more time to demonstrate reform. But the Kremlin could score a huge victory in one sweep if, for example, former Yukos CEO Mikhail Khodorkovsky is released from jail soon or after his current prison term is complete and if his second trial ends in acquittal. In addition, a few of those who ordered the murders of prominent journalists must be brought to justice. The sight of important heads rolling would be a signal that the campaign for modernization is for real. Peter the Great would have approved.