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Innovation, by Order of the Kremlin

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Around the time that Apple Computer was making it big in California, Andrey Shtorkh was getting a first-hand look at the Soviet approach to high tech: he guarded the fence keeping scientists inside Sverdlovsk-45, one of the country’s secret scientific cities, deep in the Ural Mountains.

Ostensibly, the cities were closed to guard against spies. Its walls also kept scientists inside and everybody else in the Soviet Union out, The New York Times’s Andrew E. Kramer writes. While many people in the country went hungry, the scientific centers were islands of well-being, where store shelves groaned with imported food and other goodies.

Security in these scientific islands was so tight, though, that even children wore badges. Relatives had to apply months in advance for permission to visit. “It was a prison, a closed city in every sense,” recalls Mr. Shtorkh, then a young soldier.

Today, he is the publicist for an improbable new venture. The Russian government, hoping to diversify its economy away from oil, is building the first new scientific city since the collapse of the Soviet Union. Even more improbably, it is modeled, officials say, on Silicon Valley.

The site, still nameless and near a village outside Moscow, is conceived not as a secretive, numbered city in Siberia but as an attempt to duplicate the vibrancy and entrepreneurial spirit of America’s technology hotbed, The Times says in a broad look at Russia’s tech industry.

Russia’s rich scientific traditions and poor record of converting ideas into marketable products are both undisputed, cited as causes for the Soviet collapse and crippling dependence on mining and petroleum. Not surprisingly, then, its leaders look longingly at Silicon Valley.

“The whole country needs some sort of breakthrough,” Viktor F. Vekselberg, the Russian business oligarch appointed co-director of the project, said in an interview. Mr. Vekselberg was chosen in part because of his investments in solar power, an unusual venture for one of the oligarchs who made fortunes in commodities. “The founding of the innovation city, in form and substance,” he says, “could be a launching pad for the country as a whole.”

He calls the city “a test run of business models” to rebuild Russian science for the capitalist era.

Once developed, the site is intended to incubate scientific ideas using generous tax holidays and government grants until the start-ups can become profitable companies. Its backers in government and the private sector describe it as an effort to blend the Soviet tradition of forming scientific towns with Western models of encouraging technology ventures around universities.

Skeptics see a deeper strain of Russian tradition: trying to catch up with the West by wielding the power of the state. Looking askance at the incongruous blend of the Kremlin’s will and the openness prized by Silicon Valley, they refer jokingly to the new city as Cupertino-2.

“We should not expect the same mechanisms that work in Silicon Valley to work in Russia,” says Evgeny V. Zaytsev, a co-founder of Helix Ventures, a life sciences venture capital company based in Palo Alto, Calif., and a member of the advisory board of AmBar, the Russian business association in the real Silicon Valley. “The government will be involved, because that is the way it works in Russia.”

Indeed, the new city was conceived by what is called the Commission on Modernization, deep within the Kremlin bureaucracy.

The Russian government, though, has a long and conflicted relationship with entrepreneurs and scientists. There is still a thriving tradition of government crackdowns on private business with capricious enforcement of the tax laws, making entrepreneurship difficult.

For now, Russia’s hoped-for Silicon Valley is a panorama of muddy fields, birch groves, warehouses and storage sheds belonging to a state agricultural institute. The site was chosen for its proximity to another ambitious project, the Skolkovo business school, housed in a futuristic building financed by millions in donations from the oligarchs, including Mr. Vekselberg.

While similar ideas have been bandied about for years, this one was approved — and blessed with $200 million in government money — within a month of a visit in January to the Massachusetts Institute of Technology by senior Kremlin leaders, including Vladislav Surkov, the powerful deputy director of the presidential administration. Mr. Surkov says the new city will isolate new businesses from the bureaucracy that handcuffs the Russian economy today.

A government-financed foundation will build and run the city. Directors of existing state-financed tech companies — including Rusnano, a nanotechnology fund headed by Anatoly Chubais, a leading architect of Russia’s controversial post-Soviet privatization — will serve on the board and contribute money. Separately, a scientific council will decide which companies can locate at the site. The infrastructure should be in place within three years, Mr. Vekselberg says.

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