VZCZCXRO7773
PP RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHMO #1148/01 0751504
ZNR UUUUU ZZH
P 161504Z MAR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 8326
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
INFO RUEAIIA/CIA WASHDC PRIORITY
RHEHAAA/WHITE HOUSE WASHDC
RUEHZN/EST COLLECTIVE

UNCLAS SECTION 01 OF 02 MOSCOW 001148 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EB/CIP/MA (GIBBS), EB/CBA (MERMOUD), EUR/RUS (GUHA), 
OES/STAS (DR. ATKINSON), OES/STC (DAUGHARTY), EUR/ACE (YOUTH) 
 
COMMERCE FOR UNDERSECRETARY CRESANTI AND (BISNIS) ELLEN HOUSE 
 
E.O. 12958:  N/A 
TAGS: TSPL ECON EINT ETRD TNGD RS
SUBJECT: DUBNA: HIGH HOPES FOR SPECIAL ECONOMIC ZONE 
 
¶1. (SBU) SUMMARY: EST and ECON officers March 1 visited the Special 
Economic Zone (SEZ) in Dubna, home of the Joint Institute for 
Nuclear Research (JINR).  According to SEZ and JINR representatives, 
government sources will spend $300 million over five years creating 
the infrastructure for the SEZ, and administrators hope Russian and 
foreign investors will contribute $2.8 billion.  This is an 
ambitious effort to develop and commercialize innovation technology, 
and Dubna is hoping to capitalize on its history as a science city 
to attract investors. END SUMMARY 
 
¶2. (U) On March 1 ESToff and ECONoffs visited the Special Economic 
Zone located in Dubna, site of the JINR. We met with Alexander Rats, 
head of the Agency for Management of Special Economic Zones for the 
Moscow Region; Aleksey Sissakian, Director of JINR; and Sergey 
Dobromyslov, head of the Dubna University Department of Innovation 
and Information Technology.  In 2005 the GOR created Special 
Economic Zones (SEZ) entitled to customs and VAT exemptions for 
imported materials and to tax advantages, including five-year 
exemptions from or reductions in local property and profits taxes. 
Six SEZ with differing specialties, out of 30 regions applying for 
designation, were selected in a competitive process.  The Dubna SEZ 
is dedicated to nuclear-physics technologies and information 
technologies. 
 
¶3. (U) JINR was established in 1956 as an international scientific 
center for basic research in particle and nuclear physics.  It 
currently employs about 1,000 scientists and 2,000 engineers and 
technicians.  (NOTE: Located at the confluence of the Volga River 
and the Moscow Canal, Dubna is an energy and transportation hub, as 
well as a science center.  An aircraft design and manufacturing 
plant was created in Dubna in 1937.  The 105th element in the Table 
of Elements is dubnium, named after the institute where it was first 
discovered in 1967. END NOTE) Our meeting took place at the 
International University of Nature, Society and Man, which was 
founded under the leadership of JINR in 1994. The university 
building and plant are an impressive array of modern facilities, 
unlike many Russian higher education structures which show their 
decades of use and decay under Soviet rule. 
 
¶4. (U) Rats told us that the impetus for founding the university was 
to take advantage of the critical mass of scientists and researchers 
at JINR.  Of a population of 67,000 in Dubna, about 13,000 have 
university degrees, including over 1,000 doctors of science.  The 
university has 6,000 students pursuing degrees in 38 separate fields 
(called "faculties" in Russia), with almost 2,000 studying 
information and computer technologies. Rats noted that Dubna 
residents are computer-literate, and they have access to more than 
5,000 computers for work and studies.  One of the key goals of the 
Putin administration is to increase the availability of computer 
access to schools and regional populations.  The SEZ representatives 
told us that seventy per cent of the student body comes from other 
regions of Russia.  After completion of their studies, fifty-four 
per cent of graduates find work in Dubna. 
 
¶5. (U) According to Rats, the Agency for Management of Special 
Economic Zones has budgeted $300 million for construction of 
infrastructure in the Dubna SEZ over the next five years.  Of the 
total, 70 percent will come from the federal government and 30 
percent from regional and local authorities.  The agency is counting 
on private investors to contribute seventy-five billion rubles 
(approximately $2.8 billion). 
 
¶6. (U) One of the first residents of the SEZ is Luxoft-Dubna, an 
offshore programming and IT outsourcing company. [COMMENT: ESToff 
visited the Luxoft facilities in Moscow in September with EEB 
Special Representative Frank Mermoud and observed their extensive 
facilities and bold management.  Their chief operating officer 
outlined his ambitious and so-far successful efforts to position the 
company as an alternative outsource for more sophisticated IT work 
than is currently performed in such locations as Bangalore.  END 
COMMENT) Another resident is Dubna Sistema Managing Company, a 
subsidiary of AFK-Sistema, which specializes in plasma technology 
and implements nanotechnology in new materials production.  Rats 
said there are now six Russian companies approved for resident 
status and another six have filed registration papers for the Dubna 
SEZ.  Incipient construction, mostly of roads, is currently underway 
on the site; as we observed, construction season includes winter in 
Russia. 
 
¶7. (U) The directors of the Dubna SEZ have impressive credentials. 
Aleksey Norairovich Sissakian is the Director of the JINR and the 
Bogoliubov Laboratory of Theoretical Physics, and a Professor at 
Moscow State University.  A Corresponding Member of the Russian 
Academy of Sciences and a Member of the European Academy of Sciences 
 
MOSCOW 00001148  002 OF 002 
 
 
in Brussels, Sissakian is the author of 350 scientific papers and is 
credited with three inventions.  He is a modern Renaissance man, 
having also published five volumes of poetry.  Sergey Nikolaevich 
Dobromyslov holds the chair of Sustainable Development of 
Innovations at the Dubna University.  In the 1990s, he worked in the 
United States for Lockheed Martin in its heavy satellites program. 
He has also worked on the Entelsat communications satellite project 
with the European Space Agency. 
 
¶8. (SBU) COMMENT:  The Dubna SEZ has attracted a great wealth of 
scientific knowledge and practical management experience to the 
project.  In addition, there is a substantial commitment of funds by 
federal and local authorities to local infrastructure development. 
Arrayed against this is the failure of the earlier program of Free 
Economic Zones, which collapsed in corruption, inadequate 
development and outright tax fraud.  The new managers express 
determination to learn from previous mistakes and to commit the 
necessary financial and human resources.  They are hopeful that the 
special advantages of the JINR and the scientific environment will 
help make the Dubna SEZ attractive to investors and a model for the 
future development of innovation technology. 
 
BURNS