Kai Hagen said:
The Cold War era Soviet Union doesn't ring a bell for me in the villain factor as much as the Nazis did before. The Nazis winning would've been a menace to a greater majority of the world. People like Gorbachev, Petrov, and the fact that Khrushchev backed down from the Cuban Missile Crisis made me lose my fear of the USSR. Maybe a Soviet villain film would've worked for me when the tensions during the Cold War were higher.
I was always skeptical of them as villains in the run-up to KOTCS, but more because of the nature of the threat than the level of the threat.
The Nazis really *work* as Indy villains, not just in generic "well, we need an easily hateable villain, what's better than them?" kind of way but because they fit the stories like a glove. Fascism is all about the myths and legends of the past, and attempts to recreate them in the present, and that comes with plenty of interest in using history and archaeology to back your politics. If, in real life, Hitler had been told he might have a chance to recover the Ark or the Grail, I can totally imagine him taking it - for the symbolic value, if nothing else.
But the Soviet leadership? They'd just say "all right, so you found the city of the Lost Ark? Opium of the masses False consciousness. Dark ages rubbish. Just bulldoze the city and build some factories on the ruins." Writing themselves into the Grail legend just wasn't their kind of thing.
KOTCS makes this work via the shift to a more science-fiction oriented story, where the Sovs' presence actually works. Then again, a lot of people found that shift itself to be weird and not necessarily for the best.