PERSPECTIVE ON THE SOVIET UNION : Give Gorbachev Credit for Nerve : He makes a good case of readiness to join the Western economy--if the West provides enough capital.

Mikhail S. Gorbachev, the world’s greatest showman, now wants to join the West’s most exclusive economic club: the summit of the leaders of the seven top industrial democracies. He should indeed be invited to the London summit in July, and Western leaders should agree to provide massive help for the Soviet economy in exchange for Moscow’s commitment to far-reaching political and economic reforms.

The Soviet Union has reached its moment of truth. At issue are the orderly loosening of the union or its simple disintegration, the creation of a radically different economy or a plunge into chaos, the tolerance of pluralism or political paralysis.

In Moscow, there is a virtual consensus that Gorbachev’s perestroika and glasnost cannot continue lurching from crisis to crisis. By the crude estimates of a command economy, production fell 10% in the first quarter of 1991, and inflation has risen to 20% a month. The black market, the best gauge of economic performance, has devalued the ruble by 75% in the past year. Gone are last year’s long lines outside stores--because the cupboard is bare.

Meanwhile, nationalist impulses, from the Baltics to Central Asia, continue raveling the fabric of union; the old national compact is dead. And the elastic has gone out of political debate. Last year’s vigorous clamor of budding Madisons and Hamiltons has been replaced by fatigue at so much talk, so many false starts, so much inaction.

Ironically, however, a succession of failures is creating conditions that, at long last, can impel drastic change. The process began last fall, when Gorbachev started supporting hard-line Communists who had been most critical of his reforms. He was either shrewd or lucky, because the enemies of change discovered that there is no going back, that communism has no answers. Strife in the Baltic republics raised the possibility of civil war. The miners’ strike showed that the state-run economy could no longer command allegiance by fiat. A massive rally only a block from Red Square underscored popular rejection of so-called democratic centralism.

Gorbachev chose his moment to abandon the hard-liners. On April 23, he revealed an accord that he had negotiated in secret with leaders of nine of the Soviet Union’s 15 republics. This “Nine-Plus-One” agreement lays the basis for a new union treaty and moves some powers and resources to the republics. In turn, they will have to share some of his political pain.

Gorbachev’s archrival for leadership, Boris Yeltsin, will likely win an unprecedented popular election on June 12 for the presidency of the Russian Federation. But Yeltsin has already accepted responsibilities for action that, Gorbachev hopes, will cut the Russian leader’s soaring popularity down to size.

Gorbachev followed this master stroke by offering to quit as general secretary of the Communist Party. Outmaneuvered by “Nine-Plus-One,” the hard-liners had no choice but to knuckle under and ask him to stay. The upshot is that Gorbachev is again allied to the reformist camp, he and Yeltsin have informally acknowledged that they need one another, and their associates have begun reaching pragmatic agreement on a wide range of thorny problems.

This backstage maneuvering could prove to be just another episode in the Soviet Union’s blind groping to create something useful out of revolution. But hope is provided by a new psychology born of despair. Grudgingly, all but the most obdurate and obtuse now acknowledge that some of the republics will leave the union, and that it is likely to become a mixture of federation, confederation and commonwealth association. And it is now clear that some form of market economy, along with its demands for the rule of law and private ownership of property, cannot be avoided.

In his next move, Gorbachev now asks that the West honor a bargain he struck with President Bush at the Malta summit in December, 1989: Soviet strategic retreat in exchange for access to the global economy. He asks for major material aid--implicitly, in part as recompense for supporting Western policy in the Persian Gulf. And he asks for U.S. advice in shaping Soviet reform, thus buttressing his bona fides with Western critics. To underscore his point, Gorbachev has dispatched Grigory Yavlinsky, a leading economist and Yeltsin ally, to engage the United States in the reform planning.

In the Bush Administration, there is reluctance to bet on renewed promises of Soviet reform when every effort so far has fallen short. Spending on anything is unpopular in both the White House and Congress, especially the several billion dollars a year needed to make the effort worthwhile. But these concerns underestimate both the stakes for the West--no less than securing a Soviet Union less hostile if not more beneficial than in the past--and the leverage of economic statesmanship over the course of Soviet reform. They also depreciate the role that can be played by other countries and the private sector.

Fresh from his display of leadership in the Persian Gulf, President Bush should now apply it to the world’s most critical matter: doing whatever is possible to help the Soviet peoples help themselves--and thereby help everyone. At the London summit, he can strike a new historic bargain with Gorbachev--economic engagement for reform--that will put the final seal on the Cold War.