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Medvedev Seeks to Remake Russia with Silicon Valley in Mind

  • Anya Ardayeva

Russia's President Dmitri Medvedev

Russia's President Dmitri Medvedev

Peter the Great, Joseph Stalin and now Russian President Dmitri Medvedev all set ambitious goals of modernizing Russia. Last September, Mr. Medvedev published an essay entitled "Go, Russia!" that spelled out a new strategy to use technology and innovation to boost economic efficiency. Part of the plan is to create an innovation center called Skolkovo, the Kremlin's answer to Silicon Valley. But, many in Russia are skeptical about the project's success.

Russian President Dmitri Medvedev began a visit to the United States earlier this summer not at the White House, but in California's Silicon Valley, where he met with Governor Arnold Schwarzenneger and established contacts with potential business partners at the world's leading technology companies. The main reason - Russia's ambitious plans for its own Silicon Valley, or Skolkovo.

"This center will serve as an engine for forming an innovation system in our country," President Medvedev said. "It has to be represented as fully competitive from the very beginning, and its competitiveness has to be global. This will make a major difference from what we've done before. Now we have to start the work."

This is Skolkovo now - 370 hectares of empty land, 20 kilometers from Moscow. Over the next three years, the government plans to spend more than $5 billion to build a science and innovations hub here, focusing on energy, information technology, communication, biomedical research and nuclear technology.

The project has already attracted interest from Siemens, Microsoft, Google, Nokia and Intel. Cisco Systems will become the first tenant, having promised to invest $1 billion during Mr. Medvedev's visit to California. Oil and aluminum billionaire Viktor Vekselberg has been appointed Skolkovo's general manager. He says he hopes Russian companies also will come on board.

"The status of participants will be active for 10 years," he said. "There will be breaks on value-added tax - in some cases zero taxation - no tax on land or property, tax breaks on pension payments. All that creates very attractive conditions not only for startup companies but for existing scientific research centers that could decide to move and organize their activity at Skolkovo."

In the past 10 years, much of Russia's revenue has come from oil and gas sales. Nikolai Petrov from the Carnegie Endowment for International Peace in Moscow says the Kremlin hopes Skolkovo will help to change that.

"The general idea is connected with the fact that the model of Russia's economic development based on natural resources is almost over and it's vitally needed for the country to look for a different model," he said.

Supporters also hope that Skolkovo helps to lure back hundreds of thousands of talented Russians - technology specialists, scientists and entrepreneurs - who have left Russia since the fall of the Soviet Union. But Petrov says one single project will not solve the problem.

"Unfortunately, you know, it's like in agriculture - you can try to grow a plant, but you need to have the whole environment friendly, otherwise this pretty weak plant will not survive," said Petrov. "So it's possible to attract those Russians who left from the country, but if it's not for a short while, not for just a visit, it's needed to offer them conditions similar to those where they live now.

A recent poll in Russia says most Russians think their country's modernization plans should focus more on getting rid of corruption and bureaucracy than building technology. But plans are to start construction at Skolkovo sometime in 2011, and the Kremlin hopes in three years Russia's new technology hub will be in business.

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