A Complicated Fate of Skolkovo

Recent accusations about Skolkovo have attracted a great deal of attention and raised reasonable questions about the future of the project. With an ongoing investigation by the Investigative Committee of Russia regarding the project’s allegedly unreasonable expenses, the current situation seems challenging for its domestic and international partners. Yet the prospects are not as dim as many commentators try to make out.

Recent accusations about Skolkovo have attracted a great deal of attention and raised reasonable questions about the future of the project. With an ongoing investigation by the Investigative Committee of Russia regarding the project’s allegedly unreasonable expenses, the current situation seems challenging for its domestic and international partners. After Vladislav Surkov, the mastermind behind the project, resigned from his Vice Prime Ministerial position, the fate of Skolkovo started to look unclear. Yet the prospects are not as dim as many commentators try to make out. 


The Skolkovo Innovation Center was one of the main projects of Medvedev’s presidency and was aimed at stimulating and showcasing Russia’s innovative development. The fate of the project was complicated from the very beginning. It started as an attempt to replicate Silicon Valley in the United States, which is very different in nature from Russia’s legal, political, business and cultural environment. In order to make innovative entrepreneurship possible in Russia, Skolkovo was set up as an innovation playground with its own laws, customs and immigration rules and other regulations. The idea behind the project was twofold: first, achieve quick wins in terms of establishing new technology companies and developing a number of new technologies in Skolkovo itself, and second, develop and test a business environment that could later be expanded out to the rest of the country. The second goal made the project inherently political as it entailed changing a very broad range of regulations. As a result, the project has always been more about politics than actual innovation as it has had to promote the concept both domestically and internationally.

As the first organizer of the Presidential Commission on Modernization (established in May 2009), Surkov was behind the project from the very start. The very idea of an innovation development path started with his visit to the Massachusetts Institute of Technology (MIT) in Boston in 2010 when several leaders of the Russian government, among them Arkady Dvorkovich, Alexei Kudrin and Igor Shuvalov, attended a two-day innovation management seminar. This was later followed by Medvedev’s visit to Stanford University, where he met Barack Obama and decided to create an analogue of the Valley in Russia. After that, Surkov, then First Deputy Head of the Presidential Administration, started interviewing potential leaders of the project both from Russia and the US and overseeing the project subsequently.

From the very beginning, Skolkovo faced a number of challenges. One of them was the lack of legislative foundations for most of Skolkovo's proclaimed goals. They included corporate law provisions, immigration law, intellectual property rights protection and several other components. Skolkovo proponents faced a complicated choice between either modernizing various aspects of national legislation (which would entail huge nationwide reform) or making Skolkovo a legal exception in too many ways. Skolkovo was also made independent from most regulations regarding public spending and even from oversight by most law enforcement agencies. Combined with the extraterritorial principle for Skolkovo residents, it made Skolkovo almost an independent state inside a state led by one of Russia's most successful businessmen, Viktor Vekselberg, under the protection of the almighty Surkov. All that made Skolkovo a wanted yet unreachable target for the nation's numerous law enforcers. However, all these freedoms could only help to establish a single innovation center and were insufficient to cope with the broader task. Overall, its legal mandate has been too narrow to fulfill the unofficial mission of promoting Russia’s innovative development to an entirely new level.

The Skolkovo leadership had to reach out beyond its mandate to establish international partnerships, attract investors, and engage entrepreneurs and scientists, etc. in a very short timeframe. Perhaps the timeframe and the overall political context were too demanding to leave all those involved in the project an opportunity not to violate any regulations at all. In many ways, that is the same dilemma that most men of action face in Russia: either comply with all the sophisticated formalities or actually get things done. Professor Alena Ledeneva from University College London described this phenomenon as an economy of favors and unofficial agreements. Even if many laws could be amended to make Skolkovo possible, the general unofficial societal context could not be changed and the project’s leadership had to operate under the real-life conditions of the Russian economy. For example, one of the accusations was about State Duma Deputy Ilya Ponomaryov receiving a USD 750,000 contract for a research project and three public lectures about Skolkovo. The debate is about the question of whether he did the research and the lectures, while the real issues are, of course, about what he was really being paid for. And the answer could be about establishing foreign connections for Skolkovo in a very limited timeframe, which was a political necessity but could not be legally paid for. All participants know that and continue the debate for political rather than for legal reasons. Accusations, searches and investigations have been a tool to put pressure on Dmitry Medvedev’s team, which became significantly less influential after Putin came back to the Presidential office. A joint project between Skolkovo and active opposition member Ilya Ponomaryov was used to build an informal case against the innovation center in the ruling elite to portray it as an illegal channel for funding the opposition using government money.

That situation became possible due to a lack of communication between the Skolkovo team and President Putin. However, the increased involvement of Presidential Aide (and former Minister of Science and Education) Andrei Fursenko in the future of Skolkovo means a more reliable connection to the President is likely to be established. Almost direct presidential oversight of the project is likely to ease tensions. Due to the very political nature of the project, its initial substance is regrettably too often overlooked. For many multinational companies, supporting Skolkovo was an important political project leading to favorable attitudes from the Russian government. Clearly, that part of the story will be less important now. However, that does not mean there is no future for Skolkovo and that investors should leave it. The innovation center itself is progressing with new startup projects and the Skolkovo Institute for Science and Technology has been established jointly with MIT. One of the fields where the innovation center could be especially effective is competing for IT companies. The Russian IT market is growing faster than the global market but it still remains relatively small for ambitious companies. For that reason, some companies choose to migrate to other countries, but Skolkovo with its grant policies, zero taxes and a supportive environment for innovative startups is still globally competitive.

Putting too many hopes and expectations on Skolkovo placed a political burden on it, which now seems to be easing. For some investors and stakeholders that is bad news but for others it may be more preferable as the risks are also decreasing. It may be unreasonable to expect economic results immediately, but Skolkovo now has more time since the political rush is almost over. 

The author is laureate of the Valdai Club Foundation Grant Program.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.