20 years under Putin: a timeline

The Institute of Modern Russia completes a series of articles on the Kremlin’s propaganda machine created to support the regime both internally and beyond its borders. In the first and second installments we spoke about systemic propaganda tools. The third installment will focus on more specialized instruments—structures that may look like democratic institutions, but under closer scrutiny turn out to be empty simulations.



The Silicon Myth

In November 2009, Dmitri Medvedev, the then Russian president, announced his proposal to create a unique innovation and technological center in the country—a Russian Silicon Valley. The head of state’s idea was immediately put into action. In March 2010, the site for the new center had been chosen—the village of Skolkovo, near Moscow. As many analysts assumed, there were mercenary objectives behind the choice of this area. It was there that the Skolkovo Business School had already been built, and where Medvedev and several government ministers were members of the advisory board. Also, the land plots in the area surrounding the future innovation city (or “inno-city,” as it was called), belonged to people like First Deputy Prime Minister Igor Shuvalov, and billionaire businessmen Suleiman Kerimov, Roman Abramovich and Alexander Svetakov. As experts have noted, the land values in this area will increase many times if the project goes forward.

Skolkovo became Medvedev's pet project and received a large share of support from both the private and state sectors. The project also became an effective propaganda tool for promoting the Russian president's “liberal” agenda. In 2010, Medvedev visited California's Silicon Valley where he spoke enthusiastically about the future “inno-city.” He met with the heads of leading American hi-tech companies, including Steve Jobs, who gave him a new iPhone as a gift. Thus, Skolkovo was presented as a part of the new Russia that should attract foreign investments and foreign specialists.

On paper, the project looked attractive. The idea was that Skolkovo would become a center where all the best achievements of Russian science could be concentrated, and by virtue of this the existing innovations and know-how could be commercialized and brought to market. According to the project’s plan, five technological clusters—biomedical, energy, nuclear, information technologies and space—are to be built along with science parks and a new university. Initially, the Russian government allocated 3–4 billion rubles ($95–130 million) for investment into Skolkovo’s infrastructure. The construction was scheduled to be completed by 2012 (as of today it is far from being over), but as Vladislav Surkov, then first deputy Kremlin chief-of-staff and now the government’s chief-of-staff, noted, it would take 10–15 years to develop a proper scientific environment. The project was conceived as a pilot, and the plan was to transfer its experience all over Russia in order to modernize the entire country from inside.

“Using a totalitarian system you can turn a country from an agricultural to an industrial one; but you cannot do the same to turn an industrial country into a post-industrial one.”

Thanks to a powerful public relations campaign, (which included articles in leading Western publications, public commitments of officials and businessmen of the highest level), the project made a favorable impression. For a while the shine of the Skolkovo brand hid from public view Russia’s inherent problems of corruption, government management of social, political and business activity, and the controlled legal system.

Still, a number of policy experts were skeptical of the Skolkovo project from the beginning. Dominique Fache, chairman of the board of Enel OGK-5 [an Italian-controlled power generating company in Russia] and one of the founders of Sophia Antipolis Science Park in France, stated in an interview with Kommersant that “[Skolkovo] is not some magic charm for innovation, it is a Soviet dead-end.” In his view, “the project's ideology is altogether absurd.” “For instance, I find especially absurd the idea of organizing a separate incorruptible police service in Skolkovo. Is this what really needs to be done? Something that will bring change in society is required, and for this one needs to have patience, because it will take decades to see the results of such activity. Average politicians cannot afford the luxury of waiting so long.”

Grigory Yavlinsky, founder of the liberal Yabloko party, was even harsher, saying that “it’s impossible to discuss seriously an imposed modernization.”  He added, “History shows that using a totalitarian system you can turn a country from an agricultural to an industrial one; but you cannot do the same to turn an industrial country into a post-industrial one.”

Nevertheless, the idea of Skolkovo as a future Russian Silicon Valley attracted the attention of the academic, scientific and business communities in the West, especially in the US. There are several reasons for that. First, Skolkovo was granted unprecedented tax privileges, the status of a special economic zone, and simplified customs and visa regime for foreigners employed to work there. Among the companies that showed interest in the project was Cisco Systems, one of the largest US corporations, which signed a memorandum to invest $1 billion in Skolkovo. Other international companies, like Siemens, Intel, IBM, and Russian companies, such as Renova, Sberbank, Finance & Construction Corporation (FSK), Transmashholding, also showed their support.

Secondly, the Massachusetts Institute of Technology was chosen as a partner of the newly created Skolkovo Institute of Science and Technology (Skoltech), which greatly enhanced the project’s reputation. A group of MIT professors, led by Edward Crawley, who became Skoltech’s president, agreed to develop the new university. MIT’s prestige and credibility in US academic and business circles opened many doors for Skolkovo and allowed the project (and the Russian government) to be better positioned on the foreign markets.

Thirdly, the very idea of creating a center for developing innovation, commercializing new technologies, stimulating startups, engaging world-renowned scientists and professors, teaching students the newest programs sounded clever and refreshing.

Despite the many favorable conditions created for Skolkovo, the project hasn’t achieved its ambitious goals: the city construction plan is still in development, and several Western top-managers left the project.  In 2011, Vladimir Putin, then prime minister, created a new body—the Agency for Strategic Initiatives, which was said to be a continuation of Skolkovo. In reality this move was a signal that Putin would not tolerate competition within the country’s leadership and that the issue of innovation would be under his control. Having returned to office as president in 2012, Putin decided to put the project on hold and refused to sign amendments to the law on Skolkovo, because “the criteria and indicators that are necessary for assessing the results of Skolkovo’s activities had not been defined.”


Skolkovo was a pet project of Russia's former president, Dmitri Medvedev.


Also, at the end of 2012, Steven Geiger resigned from his position of Skolkovo’s chief operating officer. Geiger summarized his experience at Skolkovo in an op-ed, in which he said that “a typical mistake of global innovation projects in various countries is the initial desire to announce themselves as an insanely costly super-city that incorporates all the new architectural and technological wonders of the world. They look spectacular, it is easy to make a futuristic TV-report about them, but almost always they have little to do with innovation development. What is even worse is that they distract from funding real innovations.” Geiger added that Skoltech was the only exception in the otherwise inconsistent implementation of the Skolkovo project.

Skolkovo faced even more trouble when Russia’s Investigative Committee (IC) initiated a case against Kirill Lugovtsov, the former head of the Skolkovo financial department, and Vladimir Khokhlov, director-general of the Skolkovo customs & financial company. Both men were accused of embezzling 24 million rubles ($760,000). A little later, it was reported that the IC had received information that 3.5 billion rubles ($110 million) of the Skolkovo fund was spent for unauthorized purposes. According to the IC, this money was deposited in Metkombank, which is affiliated with companies owned by Viktor Vekselberg, the Skolkovo Foundation president.

Yevgeny Yasin, academic supervisor at the Higher School of Economics, noted that the country’s leaders “were saying generally the right things: we need modernization, we need an innovative economy….  But one needs to understand: how is it going to happen? If you think that if you allocate a lot of money for Skolkovo, build some enterprises there, and invite Nobel Prize winners, things will immediately go as advertised, then I’m afraid this won’t solve the problem. Even a dozen Skolkovos won’t solve the problem. Silicon Valley in Palo Alto emerged on the basis of universities and free movement of the students <…> It was a real breakthrough. There they have a free democratic country. There they had functioning institutions that protected property rights, provided conditions for competition, not just in the economy but in politics as well, and most importantly, [these institutions were functioning] under the rule of law. There, the law is more important than who the boss, or the leader is. Actually, European success, and the success of the Anglo-Saxon countries are rooted in these basic institutions.”