VZCZCXRO7054
RR RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHVK RUEHYG
DE RUEHMO #0970/01 1000514
ZNR UUUUU ZZH
R 090514Z APR 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 7537
INFO RUCNCIS/CIS COLLECTIVE
RUEHZN/EST COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 MOSCOW 000970 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: TSPL ECON EINT ETRD TNGD IR RS
SUBJECT: GOR PROMOTES "INNOVATION ECONOMY" 
 
REF: (A) 07 MOSCOW 00645 
(B) 06 MOSCOW 02255 
 
¶1. (SBU) Summary:  Russia continues to promote innovation as a means 
to harness its scientific expertise and diversify its economy beyond 
oil and gas exports.  The Federation Council and Duma recently held 
hearings on stimulating innovation.  The GOR also promoted 
innovation through sponsorship of the 8th Annual "Innovation Salon." 
The GOR is directing billions of dollars to promote innovation 
through "State Corporations."  A key goal is to forge linkages 
between research centers and the private sector and commercialize 
research.  End Summary. 
 
¶2. (U) On February 27, the Federation Council's Education and 
Science Committee convened parliamentary hearings on "Priorities in 
Supporting Science and Mechanisms for Stimulating Innovation."  At 
the hearing, Sergei Mazurenko, Head of Federal Agency for Science 
and Innovation (FASI), reported that federal funds for developing 
innovation grew from 2 billion rubles (USD 86 million) in 2002 to 11 
billion rubles (USD 471 million) in 2008.  The GOR currently 
sponsors thirteen initiatives to stimulate the development of high 
technology products.  The GOR has allocated over 130 billion rubles 
(USD 5.5 billion) to stimulate long-term innovation in the economy. 
Mazurenko plans to seek another 130 billion rubles from 
non-budgetary funds to further develop the areas of nanoindustry and 
energy efficiency. 
 
¶3. (U) Leonid Melamed, Head of the Russian Nanotechnology 
Corporation (Rosnanotech), testified at the Federation Council that 
the Russian business community's attitude toward innovation and 
nanotechnology is still evolving.  To encourage the shift from a 
resource-driven to an innovation-driven economy, Melamed advocated 
the commercialization of innovation in Russia.  He noted that 
globally, small private companies often develop new technology.  In 
Russia, these enterprises are still in an embryonic stage.  As a 
result of the hearing, the Committee recommended that the GOR 
propose new legislation on technology transfer, intellectual 
property rights and greater state funding of scientific research to 
stimulate innovation. 
 
¶4. (SBU) On March 31, the Embassy attended the State Duma- held 
hearings on "Legislative Support for the Innovative Development of 
the Economy" aimed at outlining strategies for innovation.  Valeriy 
Komissarov, Duma IT and Communication Committee (ITCC) Chairman, 
proposed introducing a special tax regime to grant favorable tax 
treatment to IT companies.  Ilya Ponomarev, ITCC member, noted the 
disconnect in Russia between business and science.  He cited a lack 
of entrepreneurial traditions, weak business infrastructure and a 
shortage of entrepreneurs as major hurdles facing the promotion of 
innovation.  Olga Uskova, President of the National Association for 
Innovation and IT Development, voiced skepticism regarding the new 
wave of state corporations being created by the GOR (such as 
Rosnanotech.)  She views these state-controlled business incubators 
as vehicles for large cash transfers with grossly inadequate checks 
and balances and minimal transparency. 
 
¶5. (U) On March 3-6, the Embassy also attended Moscow's 8th 
International Salon of Innovations and Investments.  The Russian 
Ministry of Education and Science, the Federal Agency for Science 
and Innovation, the Duma Science and Technology Committee, the 
Russian Academy of Science, the Ministry of Economic Development and 
Trade and the Ministry of Telecommunications and Information 
sponsored the show.  The goal was to introduce Russian innovations 
to international markets.  Six hundred organizations from 22 Russian 
regions, plus exhibitors from 16 other countries, displayed over 
12,000 inventions.  They came from a wide range of industries, 
including nuclear, aerospace and agriculture. 
 
¶6. (SBU) "Nano" was the buzzword at the show, showing up in a broad 
array of products.  One example was the Institute of New Carbon 
Materials and Technologies (INCMT), based in Moscow.  The company 
produces environmentally-friendly fire-proof materials used in 
building and construction.  It has over one hundred patents and 
claims more than 3,000 customers in Russia, the CIS, Europe, and 
China.  Similarly, Tomsk State University advertised its 
"Nanocluster" science and education center and displayed nano 
products it developed, such as fire-proof paint and ceramic 
materials.  There were also traditional technologies redesigned for 
new applications.  Zlatoust machine-building enterprise (Chelyabinsk 
Oblast) displayed hospital beds manufactured to cater to the needs 
of new-born babies and patients with burns. 
 
¶7. (SBU) Comment:  Russia's substantial science base and a 
well-developed science and technology education system provide a 
solid foundation for developing an innovation economy.  However, 
Russia's private sector, particularly in the area of small 
enterprise, has lagged in investing in research and development. 
The challenge for the new GOR State Corporations, like Rosnanotech, 
will be to foster linkages between the research sector and the 
private sector to stimulate innovation and promote 
 
MOSCOW 00000970  002 OF 002 
 
 
commercialization.  The GOR's commitment of billions of dollars 
behind the concept is clear; what remains to be seen is whether the 
model will, in fact, work. 
 
RUSSELL