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Foreign Ministry Gets Investment Portfolio

The Foreign Ministry should become the locomotive driving foreign investments to Russia, President Dmitry Medvedev said Thursday in his state-of-the-nation address, stressing that foreign partners and knowledge would be key to implementing his plan for modernization and innovation.

The government must ease visa requirements to help attract scientists and create tax initiatives to develop a high-tech hub like California’s Silicon Valley, he said. Otherwise, Russian goods will keep their “shamefully low” level of competitiveness and the economy will continue to suffer from its “humiliating” reliance on oil and gas.

“Diplomatic efforts serving the interests of the economy should be given particular oversight,” Medvedev said. “The results should be visible not just as specific help to Russian companies abroad or as efforts to promote national brands for goods and services, although that’s all very important. It should also be seen in the volumes of foreign investment attracted, and most important, an influx of the newest technologies.”

The Foreign Ministry, headed since 2004 by Sergei Lavrov, should make such work “systematic,” Medvedev said, ordering the government to develop clear criteria by the end of the year to evaluate the ministry’s efforts.

Analysts said the comments signaled an expansion of Lavrov’s docket, but it remains unclear whether it would come at other ministries’ expense.

“I think, if you ask the president what he meant, he wouldn’t dwell on the specifics,” said Stanislav Belkovsky, founder of the Institute for National Strategy, a think tank. “I think the idea … was a lobbyist-pushed initiative aimed at bringing Russian trade missions abroad under the control of the Foreign Ministry.”

The country’s 29 foreign trade missions are overseen by the Economic Development Ministry, which quickly signaled that it didn’t need the help.

The ministry is already developing specific strategies to boost trade with 30 countries as part of President Dmitry Medvedev’s push for greater innovation, Deputy Economic Development Minister Andrei Slepnyov said Thursday afternoon. Country-specific plans will be submitted to the government this year.

The president also gave his Cabinet two months to develop new procedures to ease formalities for investment in the regions. Governors will be responsible for making sure that the rules are implemented in three to four months, rather than the years that it often takes now, Medvedev said. Those whose regions have systemic delays would risk losing their posts, he added.

And while reform within Russia occupied a large part of Medvedev’s modernization plan, he also stressed the need to draw on knowledge, experience and specialists from abroad.

A group of Russian scientists working outside the country wrote an open letter to Medvedev in October calling the situation in Russian science a catastrophe. They suggested increasing funding, pay hikes for scientists and luring foreign-based researchers to Russia.

“It’s necessary to facilitate the recognition of [foreign] academic and university degrees,” he said. “They should be issued visas quickly and for the long term. We’re the ones who are interested in them, not vice versa.”

He also ordered the government to expand the system for granting fellowships to scientists pursuing innovation.

“Development institutions should seek and select prospective projects countrywide, provide financial support to innovative enterprises, including the small ones that are now being set up in the universities … and scientific institutions, sharing, however, the risks with private investors, of course,” he said.

“There’s an idea, which came from Altai, to create business-incubators on the basis of some universities,” he said. “This is where graduates will learn to transfer their technical plans into profitable business projects.”

Medvedev was a vocal backer of a law he signed in August that lets universities establish on-site firms to commercialize their findings. He ordered lawmakers back from vacation in July to approve the bill, after the Federation Council voted against a version of it on fears that it would spur corruption.

The address got a mixed reaction from the scientific community, including Alexander Belyayev, one of the authors of the letter to Medvedev and a lecturer in physics at Southampton University.

“The problem isn’t getting scientists back, it’s far more serious,” said Belyayev, who left Russia a decade ago. “In our letter, we stressed the necessity of developing science, which cannot be done without young fellows.”

And that’s impossible when postgraduate research fellows earn $100 to $200 a month, he said. “Nothing will change if foreign specialists come and deliver lectures to these young people. They need financial motivation to go in for science.”

Other major topics of Medvedev’s modernization pitch were energy efficiency and telecoms development, which he ordered the government to develop.

“A blatant example of inefficient management of energy resources is the burning of associated gas. The environment is polluted and tens of billions of rubles go up in smoke,” he said. “Recently, the government … promised to put an end to this mess.”

On Tuesday, Prime Minister Vladimir Putin ordered oil companies to use up to 95 percent of their associated gas, a byproduct of oil production, by 2012. Up to 20 billion cubic meters of associated gas are flared annually in Western Siberia alone, he said, and state-controlled Rosneft is the worst offender.

Medvedev also identified IT and communications as industries that needed drastic modernization to catch up with global leaders.

“Our country … occupies only the 63rd position worldwide as to communications infrastructure development,” he said. “[We need] to provide broadband Internet connections across the country in the next five years, switch to digital television and 4G mobile networks.”

All schools will be priority recipients of the broadband Internet, as part of an ambitious project to make them “smart” institutions.

He also urged a new generation of Russians to get rid of the last remnants of their Soviet heritage and turn Russia into a player capable of competing in the global economy.

“In place of an archaic society where the leaders think and decide for all, we will become a society of smart, free and responsible people,” he said, drawing applause from the assembled officials.

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