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Introduction The fall of the Communist regime in the Soviet Union was more than a political event. The powerful interaction and fusion between politics and economics that characterized the state socialist system created a situation that was unique for the successor states of the Soviet Union. The penetration of the Communist regime into every facet of life left the Russian people hardly any democratic traditions. Russia faced the seemingly impracticable task of economic liberalization and democratization. That combined with the necessity to answer nationalist and ethnic questions that have plagued Russia for centuries. This paper addresses the problems of creating a stable democracy in Russia. The prospects for a stable democracy in Russia are limited at best. What is paramount to note is that a stable democracy must adequately address the developmental trinity: nation-building; capitalism and democracy. The dilemma that is especially relevant to Russia is that these conditions are often contradictory. The often messy business of politically reconstructing a nation defies traditional democratic ideals. The establishment of democratic institutions can hinder the development of a market economy and, conversely, programs that