2010 Yaroslavl Global Policy Forum: The Modernization of the Russian Economy

September 2010

Click here to visit ModernRussia.com

* Materials disseminated by Ketchum Inc. on behalf of the Russian Federation. Additional information regarding the dissemination of these materials can be obtained at the Department of Justice.

Fact Sheet: The Modernization of the Russian Economy

In the coming decades Russia should become a country whose prosperity is ensured not so much thanks to commodities but by intellectual resources: the so-called intelligent economy, creating unique knowledge, exporting new technologies and innovative products, Dmitry Medvedev, Go Russia!, September 10, 2009. The modernization of the Russian economy is a major initiative of the Russian leadership. In June 2009, the Commission for Modernization and Technological Development of Russia's Economy began its work. Every month, the Commission gathers to discuss developments in the five strategic areas of economic modernization identified by the President: energy efficiency and new fuels; medical technologies and pharmaceuticals; nuclear power-engineering; information technologies; and space and telecommunications. Below is an overview of the initiatives and achievements in each of these areas. ENERGY EFFICIENCY AND NEW FUELS Conserving resources and using them wisely are global trends we should follow. Dmitry Medvedev, @KremlinRussia, July 29, 2010 Target: Reduce Russian GDPs energy intensity by 40 percent by 2020 In November 2009, a new federal law "On energy saving and improvement of energy efficiency" was adopted, aiming to bolster the states ability to regulate and support energy savings and energy efficiency improvements. Speaking about energy efficient housing at the Presidential Council in July 2010, President Medvedev instructed officials to tackle wasteful energy consumption, as well as improving building insulation and making heating systems more efficient. The Ministry of Energy has opened a website (http://www.energohelp.net/) where Russians can calculate their energy spending and learn tips on how to rationalize energy consumption. As part of the "New Light" program, incandescent lamps of 100W and up will be banned for sale as of January 1, 2011. Modernization and replacement of lighting equipment in Russia is expected to free up to 10 percent of energy generating capacities. In a number of regions, pilot projects such as Energy efficient city and Energy efficient district have been launched. A presidential decree signed in May 2010 allows the government to monitor the progress of local authorities in implementing energy efficient programs and technologies. In order to encourage the use of new technologies in energy, Medvedev proposed in June 2010 to exempt energy-efficient equipment from property tax for three years.

MEDICAL TECHNOLOGIES AND PHARMACEUTICALS We need clusters for development of innovative medical technologies and medicines. Dmitry Medvedev, Modernization Commission meeting, August 31, 2009 On September 1, 2010 a law On the Circulation of Medicines" came into effect in Russia, introducing a more open process for registering medicines, making vital medicines more affordable and laying the groundwork for further development of the industry. The new law will also clear up provisions on clinical trials in Russia and provides for the transition to European standards by 2014. More broadly, the Pharma 2020 strategy aims to increase the competitiveness of the domestic market, calling for $6 billion investment in the sector. A parallel program, Health 2020, aims to improve life expectancy and provide access to health and life insurance to 100 percent of the population. The government is encouraging private companies to take the lead in modernizing the pharmaceutical industry. In September 2009, Russian pharma companies Farmstandart and Lekko launched the joint venture project Generium to invest in development of innovative biotechnologies and medicines. In May 2010, Dutch company Royal Philips Electronics and Russias Electron announced a partnership to invest $20 million in developing medical equipment for Russia over the next several years. The pair will provide technologies needed for early diagnosis of cardiovascular diseases and cancer, enabling the earlier treatment of patients.

In July 2010, Rusnano announced plans to create a joint venture with research center Chemrar to develop five new medicines that will be brought to the market from 2013 to 2016, including drugs for AIDS, pancreatic cancer and hepatitis C.

NUCLEAR POWER-ENGINEERING Each of the five modernization priorities that we have identified is linked to nuclear technologies nuclear energy, nuclear medicine, supercomputers, space technology, and new energy resources. Dmitry Medvedev, Modernization Commission meeting, July 22, 2009 Projects in this area are aimed at the introduction and widespread use of innovative technologies for effective and safe reactors, advanced nuclear fuel cycle infrastructure and development of controlled thermonuclear fusion. These projects will provide consumers with cheap electricity, as well as radically reduce adverse environmental effects and risks of nuclear proliferation. Main envisaged projects included: o By 2012, creation of the model atomic power plants with pressurized water reactor on thermal neutrons, adapted not only for Russia but also for European and American markets; o By 2030, forming a fundamentally new technological basis of nuclear power reactor facilities on fast neutrons; o Developing technology of controlled thermonuclear fusion for practical use by mid-century. The government has developed the federal mid-term program New generation of nuclear energy technologies, for which 120 million rubles were allocated for the period between 2010 and 2012. It is specifically designed to support research in fundamental physics for further progress in the nuclear energy area.

INFORMATION TECHNOLOGIES The country cannot be modernised without implementation of e-government and electronic services. Dmitry Medvedev, Modernization Commission meeting, July 8, 2010 Six priority projects have been identified: development of supercomputers; an e-government; an elearning system; online healthcare systems; high-tech security systems; and training highly qualified IT specialists. The government has allocated 2.5 billion rubles to create the first Russian supercomputer that can perform quadrillion operations a second, or a "petaflop," by 2011. The Communications and Press Ministry is implementing the 10-year Information Society program which includes creation of a national e-mail system, a search engine and a national operating system. The Ministry indicated in July that the national operating system could be launched as early as next year. As part of the e-government initiative, the website www.gosuslugi.ru has been launched, whereby Russian citizens can access electronic services, such as applying for a passport, registering property rights or checking a personal tax profile online.

SPACE AND TELECOMMUNICATIONS GLONASS system is high technology in its pure sense, without which the modernization of the country is impossible. Vladimir Putin, meeting of the Government in Ryazan, August 11, 2010 Four project areas are envisaged: developing the GLONASS navigation system; developing a satellite system of geographical monitoring; adapting an existing space-based defence targeting system for emergency situations; and moving to a system of satellite-based broadband. The Russian Energy Ministry announced in July 2010 that Russia would employ technologies used in outer space research programs to develop its energy sector in the future. The ministry signed a longterm agreement with the Russian space agency Roscosmos for this purpose. On August 28, 2010, Prime Minister Putin inaugurated the start of construction of the new cosmodrome Vostochny in the Far East region of Amur, designed to give Russia greater independence in its space programs. Russia plans to launch its manned space missions from the new center by 2018.

On September 2, 2010, Deputy Prime Minister Sergei Ivanov informed that the remaining four out of 30 GLONASS satellites will be launched into space, making the system global. The project Social Glonass has been launched in a number of regions to ensure safe and efficient functioning of the social security transport services. By 2015, tests of the next generation rocket Angara are scheduled to begin. The rocket is being designed to carry 37 percent more payload than the currently used Proton rocket.

SKOLKOVO RESEARCH AND INNOVATION HUB Skolkovo will become a kind of prototype city of the future, which should become a major testing ground for new economic policy. Dmitry Medvedev, Modernization Commission meeting, February 11, 2010 In February 2010, President Medvedev unveiled a new project to set up a hub for high-technology research and business covering all five modernization priorities in an effort to spur innovation in Russia. The Moscow region of Skolkovo was chosen as the territory to host the project. Scientific research premises will be built, as will graduate schools, laboratories, offices, kindergartens, schools and hospitals. The head of Renova group Viktor Vekselberg and the former CEO of Intel Corp. Craig Barrett coordinate the project. Nobel prize winners Jores Alferov (Russia) and Roger David Kornberg (USA) cochair the Scientific and Advisory Council of Innograd. The government working group on the project is headed by Vladislav Surkov deputy head of the Presidential administration. Companies that have resident status will be freed from profit and property taxes during the first ten years. As of July 1, 2010, simplified visa and immigration requirements for foreign highly qualified professionals came into force. The Federal Migration Service prepared amendments to the law on immigration for this purpose, allowing the issue of work permits for foreign experts for the entire employment contract (up to three years) and not just 12 months. For longer stays, permits can be renewed as often as required. To date, Nokia, Cisco Systems, Siemens and Google are represented in the Skolkovo Fund. Boeing and Philips are also discussing their potential participation in the project. The Massachusetts Institute of Technology and Skolkovo signed an agreement in June to explore possibilities of cooperation. Investment Fund Siguler Guff aims to launch the first stage of a data processing center in Skolkovo before the end of 2010.

MORE INFORMATION i-russia.ru official website of the Commission for Modernization and Technological Development of Russia's Economy (in Russian) ModernRussia.com - online forum that examines the economic and social modernization of Russia (in English) I-gorod.com online portal of the Skolkovo research and innovation hub project (in English and Russian)