1 may 2013

Deputy Prime Minister – Chief of the Government Staff Vladislav Surkov’s answers to audience questions at the London School of Economics and Political Science


Vladislav Surkov: First of all I would like to say that there will be no lecture. I do not think it is possible for me to teach anybody here, but I am ready to answer questions.My recent biography has been briefly described here. I really worked in private business, including quite large companies, from the very first days of reforms in Russia, then I worked in Russian television, at the main channel for a while. After that I worked at the Presidential Executive Office for 11 years; I was involved in issues of development of the domestic policy, the electoral system, religious relations, the regional policy. And since 2012 I have been working at the Government, in charge of issues of state service and innovation development, as well as modern culture.

If you would like to ask me something, I am ready to answer any questions. I believe this kind of conversation will be much more interesting that a lecture, because I am still not fully aware of what you are interested in.If you give me a topic, I can read you a lecture, but I think it would be better to have a conversation.

I will be using headphones, since my English is not good enough to understand you right away. I will be speaking Russian, I beg your pardon for that, because I am Russian.

I am ready for our conversation. Let's begin.

Moderator: I propose asking questions related to any aspects of work in Russia. I’ll take questions, perhaps two or three at a time. But if you (addressing Vladislav Surkov) wish to interrupt and answer some question in full, please go ahead. 

Question: It was mentioned in your biography that you are a trustee of the Skolkovo Foundation, and back when the whole project was started you wrote a big editorial with Vedomosti describing all plans related to it, plans to bring people together and perhaps produce some sort of miracle of innovation in Skolkovo. I’m not sure whether it has been produced, but of course you know recently in Skolkovo a representative of Intel was detained with his passport taken away and then he left Russia quickly, and the fact that Skolkovo has been investigated for handing outside of 750,000 dollars for a series of lectures by Ilya Ponomaryov. So I just wanted to ask how this project is progressing, and specifically we have a situation with the foundation handling so much money for the reasons that the law enforcement is alleging, and we have a situation where a law enforcement officer decides based on whichever reasons he has that a fee paid by the foundation is correct orincorrect…

Moderator: Do you have a question? 

Remark: My question is whether the constitutional structure is conducive to innovation, or perhaps some changes are required to it.

Question: I also have a question about Skolkovo. Don’t you think that development of Skolkovo and similar projects would actually draw results – and by results I don’t actually mean only financial results but also administrative and human capital results – away from the Russian science?

Question: First of all I would like to take the opportunity to congratulate you on the 1st of May. It is celebrated in Russia today and it’s a special day for Russia.Now the question: Nowadays a very large proportion of discussions about the development of Russia is dedicated to discussions of pouring investment into Russia, ways to encourage foreign investors to invest money in the Russian economy and I wanted to ask you not just as an deputy prime minister, but also as the person who introduced the term of “sovereign democracy” to the Russian politics. Do you feel that there is a potential danger that this devotion to attracting foreign investment into the Russian economy can potentially lead to violating Russian sovereignty because foreign investors or generally Western parties can use their position in order to influence the domestic or foreign policy in Russia in order to secure this investment?

Vladislav Surkov: These are very big questions, so I will still have to resort to a lecture after all, because it is difficult to answer them quickly. And I will answer them in the order they were asked.

First, about the situation in Skolkovo. I think I need to tell what Skolkovo is, because I am not sure that everybody knows. In fact, several years ago an idea was proposed, in which I participated very actively, to create the Skolkovo innovation centre in Russia. Actually, this was not some unheard of innovation; this is a rather typical project for modern innovation policy. It is an attempt to create an innovation ecosystem in a single place, quite a concentrated one, with a very high density. Because it is considered – and practice reflects this – that a “chain reaction” takes places where scientists, students, business people, interested parties, of course, the state to a certain degree (depending on the country) gather together: new ideas are conceived, they turn into new products, become commercialised, and new markets, new products and new services emerge. 

Actually, Silicon Valley, where everything I’ve spoken about here is concentrated in a single place, is often cited as an example. It was an organic process. Many countries replicate it and build such facilities at new locations. This is normal and natural. It was done in the United State. Today, for instance, we visited the QMB Innovation Centre at Queen Mary University here in London. This is a large centre that brings together biomedicine, a huge clinic, scientists, the university and large companies, and all of which is partially supported by the government. This centre was built with the help of the government. There is nothing really new about that.

The miracle is not reproducing this classic model for creating a large technology park. The miracle is if it succeeds, because, like I said, you can gather everything together in a single place, but life will not necessarily bloom there.

We decided to build an innovation centre in Russia as well, to build it in an open field, from scratch – to do it like China, Singapore, Brazil and India, and even the United Arab Emirates and many other countries. Again, it’s all been done before. There’s nothing exotic about this idea. It is just as common to build such centres today as it is to build schools and hospitals. To emphasise, this is an international trend.

Our plan for such a centre was dictated by the need to concentrate the quite disparate, divided intellectual forces that we possess in a single place; to take something from the Academy of Sciences (I will return to this later), take the best from there, from universities, provincial cities, and gather it all together so as to have a critical mass of intelligence per unit area. And, of course, to attract international companies there. And you have to build a new city for this with a new architecture, because architecture also matters. The main thing that needs to emerge in Skolkovo is a new environment and atmosphere of collective creativity, where people will be able to find and communicate with each other, experiment and find business applications for new ideas.  

This is why building the new centre is important. It is not as large as it seems. We plan to have about 6,000-10,000 people living and working there, which is not a lot. China has centres with hundreds of thousands of people, even  a million or so (I have been in such centres in China). So 6,000-10,000 people is not a lot, at all.

In addition, the Soviet Union had a great amount of experience in creating science towns. They were created under Stalin, Khrushchev and Brezhnev. New science towns were built outside big cities, including renowned science towns, such as Dubna and Sarov, to name a few.

So, how’s it exotic? There’s nothing new here. Russia has always built science towns, I’ll say it again, from scratch. There’s nothing surprising or unusual about this, either. Nevertheless, this idea was met with scepticism right from the beginning, even thought it was clearly something we needed, and it immediately had supporters and detractors. The detractors say: “Why spend so much money to build a new university, a new technology park, or a new town?” (In fact, the issue is about building a small town with a very special atmosphere). Why not take this money and give it to existing universities or poor people, build new roads or do somewhere else rather than spend it on building this town?

Other people say: “Why make this project an open one?” (It’s an open project involving the participation of the world's largest companies. We’ve partnered up with MIT to build a university in Skolkovo.) There are people in Russia who say: “This is wrong. Why do we need foreigners on this project? We are not going to share our scientific achievements with foreign companies for nothing. It’s just not right.”

The project, anyhow, has run for two years, which is not a lot for a project like that. As you may be aware, a research grant is usually issued for three years in order to get any results, including negative ones. But it’s only been two years. We are going ahead with the construction, funding is being allocated, and we will introduce the first phase of this town in 2014, and the rest, I hope, in 2015. The university and several infrastructure facilities are being built using budget funds. Housing is being built by private companies.

We are already actively funding R&D activities. I invite everyone who’s interested in innovations to join us, because the terms are quite favourable: the state covers half of the corporate costs involved in research on an irrevocable basis. The state gives these funds as a gift to these companies to encourage their research activities, because Russia's economy is based not on innovation but on commodity exports. We have two kinds of big business in Russia: exporting commodities and importing finished goods. Only these two areas are big money makers. We haven’t made much money on inventions. We don’t have people like Steve Jobs; we don’t have companies like Kodak; we don’t have people who have invented something, created a new market based on this invention and made large fortunes.

We would like to turn this trend around. We need at least one success story, where a Russian billionaire made his billion dollars not by selling lumber, oil, or iron ore, or by selling sneakers imported from the Great Britain. That’s not bad, either. Someone has to be out there selling sneakers, but we must also do something intellectually advanced as well.

For this to happen, we have already started financing such works. Though we provide half of the money to companies, we ask for only three things. First, we want the technology to be truly innovative, not something built on existing ideas, otherwise the money will be wasted. Second, we want a foreign participant in such a project. We insist on this, because we believe that Russia can evolve only if it mixes its  culture with the culture of advanced economies. We believe that only an open economy is capable of innovation-based growth; therefore, the presence of foreign experts in the project is a prerequisite for funding in Skolkovo. It is very important for us to acquire skills that are simply non-existent in Russia. Few of our researchers are capable of commercialising their designs; we have no research managers, either. There may be a few, but they have no bearing on the economy. In order for us to have such people, it’s not enough just to read books. We need to create international teams. People learn faster when they work together. I don’t believe in virtual workplaces. I don’t believe it when they say that thanks to the Internet researchers don’t have to work side by side, because it's expensive. Let one researcher sit in China and the other one in San Francisco and work on scientific problems.  Things like this are advanced by people who themselves bunched together in great numbers in California.

They sit there together and tell everyone else to part ways and do research separately. That’s not the way to go, and it’s been proved. So we certainly need Skolkovo. The third aspect is cooperation with Russian universities. This must be done as well, because we believe that universities, students, and graduate students should be actively involved in research. This kind of work is also in its infancy in Russia.

We have already disbursed about eight billion roubles for research over the past year or two. We have British and major international companies working there. The Skolkovo board has people like Eric Schmidt from Google and the CEO of Siemens. Our key partners in the Skolkovo project include Honeywell,  Nokia and other leading companies, including major Russian ones. They are serious about this project and enthusiastic about it, too. For example, people such as Mr Chambers from Cisco are active supporters and advocates of Skolkovo. This is very important for us. People have faith in this project. The research board in Skolkovo is led by Mr Kornberg, a distinguished Nobel laureate, and Mr Alfyorov, the board co-chairman, the only Nobel laureate in Russia..

Eight billion roubles is about 160 million pound sterling. That’s a fair amount of money to finance research. Regarding how clean the financing is, you know that government spending, or any major spending for that matter, is fraught with fraud. It can happen.

I believe that Skolkovo is one of the cleanest projects in terms of potential abuse for one simple reason: Skolkovo is managed by Viktor Vekselberg, one of the richest men in Russia. When I was looking for a manager to head it all, I thought that a major businessman with so much money that he wants something from life other than money would be a perfect fit. A man who has made enough money, who isn’t too young and who thinks about what will be written and said about him after he’s gone. It was important for him to be rich enough so that he’s not tempted to steal. We have found such a man. It’s Viktor Vekselberg. You know, he recently sold his stock in TNK-BP for several billion dollars. It's very unlikely that he’ll be tempted to steal the paltry hundreds of thousands of dollars which you just mentioned. I’m sure he won’t be tempted to do so, he doesn’t need to. I'm not poor, either. I worked in business for 10 years and I might continue to work, if need be. I was successful in my area of business, which was advertising, public and government relations. That’s a fact that you can check for yourself. There are written records to that effect available. This was before I started working in the Presidential Executive Office. Even then I was successful as one of the industry’s leaders. So I don’t need to get involved in this, either.

They say in Russia that a fish rots from the head. Our head here is not rotten, and so the body is much cleaner than in many other Russian projects. Is that an iron-clad guarantee that no one has stolen anything in the process? Of course not. But then again, haven’t there instances of theft in large corporations? There have. On many occasions. I can name them. They made headlines around the world. Executives were arrested and put behind bars. These were major multinational companies. So what? These companies are still there. They haven’t been closed and they have partners to do business with. The banks that were caught red-handed still have customers who keep their money with them, including you. What happened? If some pig tarnishes your reputation, it doesn’t mean that all of your business should come to naught, right? You just have to kick the pig out and continue to work.

As for the current situation in Skolkovo, there’s no single case of proven fraud. The Investigative Committee has some ideas about these relatively small amounts of money that, by the way, cannot be compared with the Skolkovo budget. This may be crime, but maybe not. It is necessary to take these matters to court and let the court decide whether it’s a crime. The energy with which the Investigative Committee is making its thinking public makes ordinary people feel that there’s been a crime. It's just the energetic style of the Investigative Committee. Let them prove that these people are guilty of a crime, and we'll see whether they can prove it, with all due respect. This is a slippery slope for Skolkovo, since this project is hypersensitive to reputational damage. I believe it’s way too early to talk about possible violations before a court weighs in. What I mean is that we should talk, but it’s a question of how loud we’re talking: I believe we should turn the volume down.

If the Government cares about the projects that are just getting underway ... This project is  just two years old. That’s not a lot for a human being, it’s even less for a new university and nothing for a new innovation centre. If we start bombarding this very fragile entity with artillery fire then, of course, we may suffer, as the military say, unacceptable damage, because there’s always someone who will make a political story out of it, which is probably what your question was about. Any question can be tied in with politics and become part of legal proceedings or an inspection, which are absolutely normal and legitimate. Government spending should be monitored. If there’s abuse, it should be immediately stopped and the culprits should be punished. The only question is whether a crime has been proved and the attitude to such projects. I believe that we should be sparing and delicate with regard to such projects, because if we get tough, the project will come under threat. It is quite obvious, and everybody, including our partners and journalists, are asking such questions. I’m absolutely convinced that everyone should be equal before the law, innovators and non-innovators. However, findings should be made public at the end of proceedings, and reporting in the media must be unbiased.

However, I’m absolutely confident that Skolkovo and its philosophy will live on and evolve. Russia absolutely needs this project. A lot of people have come aboard, and I very much hope that this project will be completed successfully within the timeframe that I mentioned in my interview. I said back then we can expect the first substantial results 10-15 years from now. All those involved in such a work should understand this. Not a single university can produce results quickly, not a single scientific school takes shape instantly. You and I realise this, and I believe that the project will be judged correctly and continued into the future. The project should be able to remain active for as long as needed in order to produce the results which I absolutely believe it will achieve.

Some wonder whether Skolkovo will nab researchers from the Academy of Sciences. It will, and a certain number of researchers will go to work at Skolkovo. The Academy of Sciences is working with Skolkovo, and a number of academic institutions have signed agreements with Skolkovo. We just don’t call this “nabbing.” Instead, we call it integration. This is an issue of perspective. Skolkovo  already has joint projects with academic institutions, and I very much support the Academy of Sciences and strongly support the cooperation between Skolkovo and the Academy of Sciences. Of course, researchers from the Academy will work at Skolkovo, but talented people from Skolkovo will move to the academy, if needed.

With regard to foreign investment and sovereignty, you mentioned my favourite theory of sovereign democracy. It has to do with, first, understanding sovereignty in the modern sense of the word, not as isolation. By the way, the term "sovereign democracy" came to us from the West. It has been used by major US and European politicians. We did not come up with it ourselves. In introducing it to Russia (I remember well the discussion), we have tried to prove that one can be a sovereign and open country at the same time. The point was that an open country's tools for preserving sovereignty are somewhat different from the tools to protect the sovereignty of a “closed”country.

For us, as a country that is going through a period of transformation, this is important. I don’t think it’s important for British democracy. Things are pretty much clear here, and there’s nothing to discuss. But in a country that just thirty years ago was totally “closed” to foreigners and understood sovereignty as isolation, it was important to clarify that there may be a different kind of sovereignty and that identity can be preserved in other ways. Our goal was to prove that foreign investment poses no threat to the sovereignty of Russia. On the contrary, it’s beneficial for Russia. Still, Russia has several strategic industries that are off-limits to foreign nationals and we have a Government commission (of which I’m member) that takes decides whether to allow certain foreign investments. That includes such sensitive things as nuclear energy and medicine (and vaccinations, in particular). We recently refused an offer by a US company to buy a Russian company, because we believe it’s still premature. But this is a fairly narrow sector, and such commissions exist in all countries. Take a look at the way things are done in the United States (not to mention Britain). There's a lot of rejections, and the president may take unilateral decisions with regard to a number of industries. He may decide not to allow the sale of a US port to a particular country. Why? Because. No explanation is provided. The answer is: “We believe that we shouldn’t sell it.” This is a normal way of doing things, but the number of such industries should be limited. These are the industries that the country believes are of critical importance for its survival and where it’s concerned about potential damage. Most of the industries and sectors of the economy obviously should be as open as possible.

Question (via interpreter): More than two years ago, you said that the best part of Russian society, or at least the most productive part of it, deserves respect. And I think this part of society, of Russian society, will determine the success of Russian innovation. What has the Russian Government done since to address these concerns, and what has it done for the most productive part of society?

Vladislav Surkov: Thank you. As a matter of fact, what we are discussing, including Skolkovo, is also a concern for that part of society. Innovation in general means strengthening or creating institutions that can tap the potential of this most productive part of society, the productive minority (if this is a relevant and correct term).

That’s why we have taken certain steps towards greater openness in the Government. We have drafted a lot of documents and regulations that say that the Government basically cannot take a decision without prior discussion with the expert community. We are simply obliged to do it. The Government cannot pass certain documents unless there is a certificate attached to them saying that they have been discussed with stakeholders. This is true of major acts and routine regulations. I think we are doing enough today to engage in dialogue that part of society which has something to say.

Question: Good afternoon. Russia is such a big country, and some remote regions often do not share in the success of the Moscow Region. What sort of impact, in your view, will Skolkovo and other innovative projects have on these remote regions?

Vladislav Surkov: They’ll have a positive impact on certain regions. I think all the projects that open up new opportunities for our country have a positive impact on all regions. Some regions have raw materials, some provide infrastructure services and some provide intellectual services. Russia has different regions and each of them contributes to the prosperity of other regions. I don’t see why the rapid development of the Moscow Region where Skolkovo is located should pose a problem. It is a region that attracts investments. Moscow is expanding. A huge metropolitan area is emerging. I see no harm being caused to other regions (if that is what you are hinting at), because a richer Moscow means a richer country.    

Question (via interpreter): Reuters. Supporters of Vladimir Putin say that he's brought stability to his country. But his opponents say he's brought stagnation. What do you say to opponents who say that Vladimir Putin has been in power too long? And could you tell us, what do you think the biggest political risk is for Russia's development? Thank you very much.

Vladislav Surkov: What can I tell Putin’s opponents? The debate over how many terms a president should serve seems rather meaningless to me and a bit contrived, in my opinion. Putin is serving a third term. Blair (Tony Blair, British Prime Minister from 1997 to 2007) was elected three times, if memory serves. Angela Merkel (German Federal Chancellor) looks set to become Chancellor for a third time, and this raises no questions. I once delivered a lecture on Roosevelt, who served four terms as president. What did he do that was bad for America?

Putin is absolutely legitimate. Incidentally, he could easily have changed the Constitution (I worked in the Presidential Executive Office at the time so I know what I’m talking about) and remove the term limit (no more than two consecutive terms). He chose not to, and instead took a very difficult step: he left his post and became Prime Minister at the peak of his popularity and at the peak of his powers. He deserves recognition for that.

As for “stagnation or no stagnation”, honestly, I see no stagnation. Life in Russia is vibrant and dynamic and very turbulent. We have many problems and many concerns. If we had stagnation things would be so quiet... We would be laid back: we would come to work late and come home early. But somehow we cannot get to stagnation. Even if we wanted to we wouldn’t be able to. You with your world crises, our own people in the Caucasus, this and that. Stagnation is just not the name of the game.

As to what the biggest risks are, I am convinced that the main and fundamental risk for Russia is the one I have already mentioned. We must embark on the path of innovation-driven development. If we need a regimented country where the main concern is to screen everyone, that’s one trend. If we need a country where one can be creative and free and make things, products and services that are useful for all, that is a totally different strategic choice. We should do everything to break out of the paradigm of a military power with a lot of raw materials and embark on the path of a post-industrial society, travel that path and take our place in the world division of intellectual labour. We must produce valuable technologies that others do not have and make our economy smart and intellectual. This is our main challenge. If we fail to meet it, I for one am convinced that Russia will not survive as a country. It is really an existential choice. It is not a matter of taste, it is a question of survival: either the country survives, or it does not because all the development potential will have been exhausted.   

Question (via interpreter): Financial Times. According to a Levada opinion poll this week, more than 50% of Russians now agree with the statement that United Russia is a "party of crooks and thieves" ("partiya zhulikov i vorov"). Does that not, even more than many other signs that we've seen in the last year and a half, show that the political system, of which you are quite often described as the architect in Russia, is broken, and needs replacing or reforming? If so, what kind of democracy does Russia need now?

Vladislav Surkov: Thank you. The system is not broken. It is not broken. That is wishful thinking. The system of which I have the honour to be a co-author is alive and well, it survived the 2011 elections. It was the same system at work. Do you really feel like the old system collapsed after the December 2011 rally? No, it has defeated the opposition, there is no doubt about it. The system must not be liquidated, it must not collapse, it must adapt to changing conditions. The system must change. Change within the system does not mean its liquidation.

Life changes and the political system must also change, there is no contradiction there. When it faced certain challenges and saw that there is discontent in society, profound discontent, it adapted itself. It took a tough stand, at long last, with regard to extremists. At last those who thought they could get away with beating policemen got the punishment they deserved. The situation in Russia before was  rather odd. If you broke the law during a rally it somehow wasn’t against the law. But why? Because people are expressing their feelings? Express your feelings, but do not break the law.

Here in your country when people caused some mischief, burned something in London, many of those who did it are still in jail. Why should we allow our people to beat policemen and throw stones at them? No, no. The system has shown that it can be tough. At the same time it has shown that it can be open. Think of the law that simplified the procedure of registering new parties. Many used to say that we do not have enough parties. Indeed, there were few parties, we were living through a period of cleaning up the political space, but once that was accomplished the law was drafted. I have to remind you that it had already been drafted  before these events. The system was already responding to tangible changes in society. Today there is essentially open registration for parties all over Russia.

The question about United Russia’s a significant negative rating is a legitimate question. I think United Russia must survive in a competitive environment. This is normal. Competition will increase. I am sure, for example, that Russia would benefit from having a second party as big as United Russia that could seriously compete with it; perhaps we should even help such a party to stand on its feet because this is a normal process. Why wait until something happens spontaneously? We see a normal process which reflects the evolution of society to the extent that it has taken place, no more and no less. It is dangerous to run ahead of organic changes in society (change happens all the time because society is a living structure): one can run too far ahead. But one should not lag behind society either. I am sure that our political system is marching in step with society. It is part of society for we have all its institutions in our heads. The political system that we have in Russia reflects the mentality and the soul of the Russian people.     

Question: Good afternoon. I’ll ask my question in Russian. There are many Russian students in Britain, including London, who study here, there are so many of them that a deputy education minister came here in October and urged Russian students to come back to Russia. But when it came to specific programmes, it turned out that nobody needs us in Russia with our English degrees: the Russian Foreign Ministry hires many more people who have graduated from MGIMO. Businesses, politicians and the state prefer people with Russian degrees. How does the Russian Government propose to change that? Will there be any concrete programmes, vacancies and the like?

And a very short question regarding VKontakte. Is control over a social network going to increase? There were rumours recently that it was going to be sold. These are my two questions. Thank you.

Vladislav Surkov: Thank you very much. VKontakte, for those who don’t know, is a social network in Russia similar to Facebook.

First about the demand for those who study here and the possibility of returning to Russia to complete their education or to work.  I think we are doing enough to make sure that the creative young people who study here, who have a bent for technology and science, the best, the most advanced of them come back to Russia. You cannot order them to come back, it is necessary to create conditions to attract them. But I can say that there is already a fairly intensive flow of specialists – not only foreign ones, but those who had left Russia to study and have now finished their course and are returning – a considerable number of people because the terms are comparable, sometimes even better. It’s not only about salaries; universities have sprouted laboratories, which is also important. There are things to do, contracts are available, that is, there is work for people in Russia.

As for jobs, I think there is normal competition. We are an open society. You have come here to study, you can find a job here or you can find one in Russia. Whether or not you will find a job has to do with your qualifications, your charm and the demand of the market. I think you should rely on yourselves. We are all liberals, aren’t we? Let us each rely on one’s own strength.

As regards VKontakte, I think there is some pot-stirring going on there; I don’t know the whole story, so I won’t stick my neck out for fear of misleading you. I know Pavel (Pavel Durov is one of the founders of the VKontakte social network) and I hold him in high regard. All sorts of things are being said, I don’t want to go into it, I don’t want to make any comments because I do not know what has really happened. But clearly there is a situation involving owners and new deals and so on. I am sure that it will survive in one form or another because it is a very popular network in Russia. Having said that, I think Pavel is the soul of that project. I very much hope that everything will turn out well. VKontakte has been criticised a lot over various things, but it is a fact that this is a very talented team which has created a very popular, one of the most popular networks in Russia. I very much hope that it will continue to be as talented as before.

Moderator: I would like to thank our speaker today. Thank you very much, we are glad that you found time to visit us and to answer our questions.

Vladislav Surkov: Thank you.