‘Science Cities’ See their Salvation in Brain Power

Fellows Spring 2001

By Andrea Widener

June 06, 2009

OBNINSK, Russia -- Anton Yanovsky said the word "Naukograd" with a reverence that in other places is reserved for religion.

For him, it means much more than "Science City."

It means tax breaks for local business.

It means extra money and independence for city government.

It means recognition of knowledge harbored here.

And it means a plan to pull Obninsk, a young city of research institutes and apartments, out of its economic slump, a decline gripping much of Russia since the Soviet Union fell apart a decade ago.

Science and nuclear cities such as this one 60 miles southwest of Moscow were once helpless dependents of the Soviet state, which controlled everything from schools to street signs to salaries through the institutes and factories that were the primary employers.

In the past decade, the federal government has all but orphaned these cities. It left behind newborn city governments wobbling under the weight of debilitated apartment buildings and obligatory pension payments.

Along the way, city officials and citizens have had to totter through the messiness of an infant democracy. They've had to learn to listen, to compromise, to deal with election upheaval, such as a spring vote that may change the direction of Obninsk's city government.

Unlike other Russian towns, science cities have a secret they hope will help them grow like the celebrated mushrooms in nearby birch forests: brain power. Entrepreneurs and U.S. development experts are convinced Russia's science and math education system, combined with a glut of low-paid lab scientists, can turn these cities into miniature versions of Silicon Valley.

Obninsk was the first of a handful of science cities given special tax breaks and a small amount of funding as a naukograd. Others, such as the centuries-old military city of Krasnoarmeisk and the high-end science haven Akademgorodok, are using grants from nonprofit groups or U.S. government assistance to turn their fate around.

"We don't have diamonds; we don't have coal deposits," said Yanovsky, a young physicist turned deputy director of this city's Science and International Relations Department. "The question was what kind of industry could be developed."

An open Obninsk

Think of it as the ultimate company town.

"In reality, it was built as an institute, and around the institute a city developed," Yanovsky explained from his shared office in Obninsk, a city founded in 1954 where medium-rise apartment buildings are nearly indistinguishable from offices and labs.

During the city's early days, its 110,000 citizens were shut off from the outside world by tall fences and strict visitation rules. This was the Soviet version of security, replicated in dozens of other cities with nuclear and military knowledge. Many cities, including 10 formerly secret nuclear weapons sites, remain closed.

Obninsk has been open to visitors and its residents have been free to travel for almost 20 years, but the past decade brought new challenges as city government took responsibility for things such as health care and potholes, once the responsibility of the prominent research institutes here.

Yanovsky and many others worked for years to get the official "science city" designation in 2000. It gives the city five years to attract businesses and create new ones, relying in large part on a wealth of underpaid and underemployed workers at its 12 federal research institutes.

The designation spurred a large influx of grants from the U.S.-sponsored Eurasia Foundation, which is interested in creating the underpinning of civic organizations noticeably lacking in post-Soviet Russia. One grant funded Yanovsky's economic development plan; another put the city budget on the Web; a third set up a business park.

"It was not funding of academic institutions. It was funding for adaptation," explained Eurasia's Irina Pilman, who manages the 15 Obninsk grants -- an experiment in focusing on one city.

This project still leaves the city far from its goals. It wants to start businesses, privatize hundreds of apartments and increase incoming revenue.

"We are just in the beginning of this," said Victor Latynov, a former city official who uses a grant to train entrepreneurs.

New responsibilities

The mayor's office in Krasnoarmeisk is in a sturdy 1870s brick building with tall windows and rare wood floors, itself almost a century older than Obninsk. But the two cities face many similar difficulties.

This 27,000-person town northwest of Moscow was a 14th-century village with a strong local textile industry, whose main factory is still marked by tall metal gates. That industry drew the military during World War II and hence closed the city to visitors. Before long two-thirds of its residents worked for the factory and four military research institutes designing artillery. They owned schools, gardens, 96 percent of apartments and the cultural center.

Krasnoarmeisk elected its first city government in 1991, just two years before it was handed responsibility for crumbling apartments and offices, heat and water, education and health care, and no money to do anything about them. In 1994, the population paid only 6 percent of its utilities, and the city was responsible for everything else, said Vitaly Pashentsev, the city's straightforward mayor.

Pashentsev, a man with salt-and-pepper hair whose eyes crinkle as he talks, said he and fellow city officials have been learning democracy the hard way. Financial fixes needed to turn these problems around have been a hard sell to citizens, who don't understand why they should pay rent or utilities. The city wants residents to pay 80 percent of their utilities this year.

With the help of a foundation created by billionaire American investor George Soros, these officials have taken their message to local talk radio, town meetings and focus groups.

Soros' money paid a consultant to turn what residents say into a strategic plan. And they've had some success. Last year, a new perfume plant was built here. Through sometimes painful negotiations, the institute has given up several buildings and land for scientific development.

Science business

In cities big and small, one of the most promising hopes for economic development is Russia's massive science infrastructure. The economic downturn that orphaned fledgling cities also left thousands of scientists looking for jobs.

In, Akademgorodok on the Siberian plains 1,800 miles from Moscow, Alexey Alexeev can tell you minute-by-minute movements of the Nasdaq, and how each dip might affect his computer software company.

Alexeev, a small man with straight blond hair and a neat suit, has hired dozens of former scientists at Siberian Information Technologies to write computer programs for Western companies. He charges about $40 an hour, a pittance for U.S. programmers used to making $120 or $130, but a fortune for Russians often earning $80 a month.

Besides the lure of low prices, Alexeev hopes Western business will be interested in the pedigree of these scientists, especially in math and physics. He says Russian programmers are better equipped than those in India, a predominant computer outsourcing powerhouse, to tackle complex problems.

People don't think of Russia, said Serguei Simonov, who runs a technology park and collaborates with Virtual Pro of San Ramon to draw computer business to Russia.

"Siberia is not only a frozen area," he said, flinging his arms for emphasis and nearly losing his metal-framed glasses. "In fact, it is a big (site) for intellectual resources."

Back in Moscow, the U.S. Department of Energy is joining with the Kurchatov Institute to retrain the institute's nuclear weapons scientists to work in industry.

Ten years ago, this federal institute employed 12,000 people. Now only 5,000 people work there, most earning less than $100 a month. To stem a potential exodus of scientists, the department's Initiatives for Proliferation Prevention is linking 17 computer modeling experts with a Philadelphia-based phone company.

The biggest challenge, said Boris Stavisski, director of the institute's business park project, isn't the science but teaching programmers how to work for Western companies.

"The technical risk is very low," said Victor Alessi, a former Energy official who now works for the U.S. Industry Coalition, a group encouraging business investment in weapons scientists' technologies. "But it still has the problem that doing business in Russia is not easy."

Nearly nonexistent Russian patent and contract laws, along with an economy in shambles, have kept most Western businesses away. Those problems, along with marketplace naiveté, have kept many Russian entrepreneurs from success.

"(Western) companies need to be wary, but they need to understand that there is a lot more going on in Russia than what you hear in the press," said Virtual Pro's Martti Vallila, who began working with Russian software companies in 1993. "There are steps being taken to create stability."

Yanovsky, the author of Obninsk's economic development plan, is optimistic that stability will be part of the city's future.

When Yanovsky remembers the naukograd plan and all the hard work that went into it, he remembers the funders with a toast that has become a tradition:

"To the American taxpayer."