The old, grey Muscovite, breathless after battling through a scrum of photographers, fumbles for words as he peers down from the podium at the cultural crowd eating marinated salmon in the Maly Manezh art gallery.

Anatoli Azolsky, 67, has just won the 1997 Russian Booker Prize, and he appears humbly flummoxed by his success. The hard lights of nine television stations dazzle him; he clutches his $12,500 (Pounds 7,800) prize cheque (three years’ wages for the ordinary Russian) like a vulnerable child holding his mother’s hand.

Tomorrow Azolsky will be caught up in the kind of spat that is now so much part of the Moscow literary scene. But tonight is his, the culmination of a long journey that began in his years of internal exile under Stalin, years when he wrote without any hope of being published - “writing to the table”, the Russians call it.

Whether this former factory worker was an appropriate symbol of the new literary Russia was a different matter. “Why did he win?” asked the critic and poet Helena Riumina. “This little, white-haired Soviet man with a grey face seems to come from Brezhnev’s time. When he speaks, I hear the old style of a member of the Central Committee of the Communist Party of the USSR. His phrases are wooden; he doesn’t have his own language.”

That his novel The Cage , a metaphysical thriller about a freethinking scientist’s attempt to forge an autonomous identity, was set under the shadow of Stalinist terror inspired disappointment. At the press conference, I overheard one judge say: “When I hear Azolsky speak, I regret award ing him the prize. He is a man of the past.”

This was an eventful year for the Russian Booker. The shortlist was traduced, the judges mocked, the winner ridiculed and the future of fiction itself questioned. If all this has a ring of familiarity, it should: the 1997 Russian Booker shared more than a family resemblance to its British cousin. Why, it even had its own Martin Amis or Ian McEwan, a virtuoso stylist called Viktor Pelevin, considered to be the outstanding writer of his generation (he is in his late thirties) but who, it seems, is destined to remain out of favour with Booker juries.

The exclusion of Chapaev and Emptiness , Pelevin’s novel about a hero of the civil war that followed the Russian Revolution, enraged everyone except the judges. The critic Konstantin Kedrov captured the mood when he said: “It looks like there are two different talents here: to be a jury member and to be an expert on literature.”

The Russian Booker Prize is in its seventh year. Set up by Sir Michael Caine, then chairman of Booker plc, in association with the British Council, its effect on contemporary Russian literary culture can not be overestimated. It has galvanised the Russian novel at a time when increasing numbers of people are turning away from fiction, preferring to read newspapers, magazines and historical narratives.

“During the Soviet days you would go on the Metro and everyone would be reading books; but now it’s all glossy magazines,” complains Igor Shaitanov, a literature professor at Moscow University and chairman of the 1997 judges.

Professor Shaitanov is dismissive of those cultural pessimists who say that the Russian novel is doomed never to recapture its past grandeur, but he concedes that something has been lost in the rush to embrace capitalism. “We are living in a time of wilful anarchy; freedom has overwhelmed us. When we had the underground and people were writing against the system, writers had a point of focus.”

The problem is compounded by the chaotic state of publishing and the prevailing threat of mafia terror. In August Aleksandr Krutik, 29, a publisher of school textbooks, was assassinated outside his Moscow apartment. His company publishes at least 30 per cent of all school and college textbooks. It is a lucrative market since Russian schools urgently require material untainted by the Soviet past. The criminal underworld of contemporary Moscow, a kind of Wild West of unfettered markets and cruel disparities in wealth, is naturally eager to control educational publishing.

Most novels are published in so-called “thick journals” - cultural magazines such as Novy Mir and Znamya - recalling in style, if not in content, the great literary periodicals of the 19th century. But even these are losing readers.

When the Booker was established, the nominators could scarcely find enough novels to form a long list; this year nine of the 42 entries were published as finished books. So there is progress.

The success of the Russian Booker has inspired imitators, most notably the Little Booker Prize, which honours philosophical essays and works of criticism; the waggish Anti-Booker Prize, set up by Boris Berezovsky, a media entrepreneur; and the Solzhenitsyn Prize, supported by the self-styled saviour of the Slavic people himself.

But, as the critic Lyudmila Lantsova points out: “The Booker will continue to overshadow all other prizes…because it takes skill to make people wait and talk and to create hype around the shortlisted candidates.”

Skill and luck. For always running below the surface of the Russian Booker is a current of confusion. The awards dinner was a model of organised chaos; many more guests arrived than had been expected, and additional tables had to be swiftly laid. The resulting delay was softened by a steady flow of vodka and champagne, provided by co-sponsors Smirnov, and by memorable moments of cultural confusion: Vladimir Smirnov and Jonathan Taylor, the chairman of Booker plc, attempting to have a conversation when neither spoke the other’s language; the delay in proceedings, like an echo on an international phone call, as every public pronouncement had to be translated (or mistranslated); the frisson of excitment when Sir Michael was mistaken for the British actor of the same name.

Best of all was the moment when Sir Michael was asked by a Russian television interviewer to name three “interesting contemporary Russian novelists”. In a deep, resounding voice, he answered: “Tolstoy, Dostoevsky and…” He paused theatrically, drawing on his constant cigarette. Jonathan Taylor helpfully whispered: “What about Pushkin?” But Sir Michael would have none of it.

“No,” he continued, “Tolstoy, Dostoevsky and Gogol.”

“Yes,” said the interviewer, “but what about contemporary Russia?”

“I’m sorry,” boomed Sir Michael. “I can’t help you there.”

There is something of the grand Victorian patriarch about Michael Caine. Tall and intimidatingly vigorous, he has a a mischievous sense of humour and the kind of stutter that was once likened to the sound of a battered Morris Oxford refusing to start on a cold February morning.

Without his stubborn determination, the Russian Booker would not exist. Yet Sir Michael is over 70 and “his” prize may eventually have to break free from foreign influence, becoming fully Russian. Sir Michael almost conceded as much in his short speech at the award dinner: “The boat is fully launched and ready to go out alone into the heavy, wild seas of fiction.”

All that is missing is a modern Dostoevsky to document Russia’s contemporary extremity.