From Volume 37, Issue 8 of EIR Online, Published Mar. 5, 2010
Russia and the CIS News Digest

London Clique Tries To Take Over Russia's 'Modernization' Policy

Feb. 24 (EIRNS)—The same group in Russia, which, in the 1990s, devastated the country's economy with London-scripted radical monetarism, is now attempting to take over President Dmitri Medvedev's announced policy of economic "modernization and innovation."

The group's central figure is Anatoli Chubais, who, as one of the so-called "young reformers" during Boris Yeltsin's Presidency in the 1990s, launched the fire-sale privatization of Russian industry. Ousted from the cabinet in the financial debacle of 1998, Chubais has restyled himself as an advocate of "liberal empire" (using that British catch-phrase in his own writings), an efficient corporate manager (overseeing the break-up of Russia's national electric power utility), and the go-to-guy for allegedly cutting-edge technologies, with the emphasis on finding lucrative market niches for Russian products. Reporting to Prime Minister Vladimir Putin Feb. 2 on the operations of Rosnano, the national nanotechnology corporation he now heads, Chubais waxed so lyrical about "whole sectors, which didn't exist before, and are being born before our very eyes"—like production of solar energy batteries!—that Putin advised him to focus more on "our own economy and our current needs," on "such very important areas as new materials and microelectronics."

Working with Chubais are members of the original Mont Pelerin Society-schooled clique that seized control of the Russian government at the end of 1991, such as the late Yegor Gaidar's right-hand man, Vladimir Mau, today rector of the Russian government's Academy of the National Economy. (See "IRI's Friends in Russia: The Anti-Utopia in Power," EIR, Sept. 6, 1996, for the sordid tale of how this group was recruited through the late Lord Harris's Institute for Economic Affairs during the Gorbachov "perestroika" era of the late 1980s, and groomed in monetarist practice at seminars in Hungary, Great Britain, and with economic Anglophiles at Harvard and the University of Chicago.)

A host of high-ranking government officials are marching to Chubais's drum, notably including Deputy Prime Minister Finance Minister Alexei Kudrin, whose frequent consultations in the City of London, and call for "global Maastricht" strictures against government credit-creation, earned him the title of "subprime minister" from Lyndon LaRouche.

Every aspect of economic policy in Russia is currently being discussed under the umbrella of the "modernization and innovation" campaign, which Medvedev launched with the creation of his Commission on Modernization and Technological Development of the Russian Economy in May 2009. Its five areas of concentration are energy efficiency, nuclear power, space technologies with an emphasis on telecommunications, medical diagnostics and pharmaceuticals, and IT. The Commission's meetings on nuclear power, held at the Academy of Sciences' Kurchatov Institute and the national weapons lab in Sarov, have included a healthy perspective for the nuclear power sector, of moving from improvements in Russia's workhorse VVER pressurized water reactor design, to accelerated development of plants based on full fuel-cycle breeder reactors, and on to thermonuclear fusion power not too much later.

When it comes to IT and the other areas, however, the Chubais clique is introducing psychedelic levels of insanity, elevating the failed post-1968 policy trends of the West to a status from which they could derail any prospect of industrial modernization. Over the past month, Kremlin aides Sergei Naryshkin and Vladislav Surkov, under the influence of the Chubais group, have raised the banner of "creating a Russian Silicon Valley"—as if oblivious to what that famous California district looks like now, after the dot-com crash and real estate deflation: a zone where you can drive past miles of empty office buildings, punctuated by foreclosed McMansions and homeless former programmers, some of them visibly deranged, living on the street. Surkov says that Russia needs small, innovative companies like the ones around Stanford University and the Massachusetts Institute of Technology. Chubais's Rosnano is supposed to be curator of the project.

Indeed, on Jan. 25-26, Chubais and Surkov came to MIT on what was practically a stealth visit—with no media coverage in the United States and only one substantial article in Russia—to attend seminars on "MIT's experience in supporting and promoting innovation." With them was a big chunk of the Russian cabinet and Kremlin staff: First Deputy Prime Minister Igor Shuvalov, Subprime Minister Kudrin, Deputy Prime Minister Sergei Sobyanin, Economics Minister Elvira Nabiullina, Kremlin deputy chief of staff and economics adviser Ardaki Dvorkovich, State Savings Bank (Sberbank) CEO German Gref, Mau, and the CEO of Russian Venture Company Igor Agamirzian. The emphasis, as a U.S. Department of Commerce release put it, was on "commercialization of technology, bringing innovations from the laboratory to the marketplace."

On Feb. 11, Medvedev convened a session of the Commission on Modernization in the Siberian city of Tomsk, dedicated to the role of the private sector in modernization. To give the keynote presentations to the two dozen top government officials and corporate CEOs in attendance, he invited Chubais and Kudrin, who gave essentially a report-back on their MIT expedition. Chubais put forward the notion that success will be measured when "the market" decides that a start-up is "a viable innovation company." Medvedev himself reconfirmed what LaRouche has called the "greatest blunder" in recent Russian policy, namely, downgrading the role of the Academy of Sciences, by saying that the "inspiring" list of proposals for technological breakthroughs, submitted by the Academy, needs to be vetted, and "with all enormous due respect to the Academy of Sciences, it would not be a bad idea for this to be done by the business world."

U.S. Sends 'New Flagellants' to Moscow and Novosibirsk

Feb. 24 (EIRNS)—The announced "restart" of Russian-American relations took a wrong turn last week, with the dispatch of a joint government/IT sector/Hollywood delegation to Moscow and the science center of Akademgorodok in Novosibirsk. They set out to advise Russian leaders on guiding their economy into new technologies, with the advice being provided by "high-ranking leaders of U.S. technology companies," who joined top Obama Administration officials on the Feb. 17-23 trip: the CEOs of online flea market eBay, Internet software maker Mozilla, and the Social Gaming Network, plus officials from IT companies Microsoft and Cisco Systems, and Esther Dyson, known for her success in launching lucrative start-up ventures in the virtual world. The group received huge publicity because it also included actor Ashton Kutcher, who provided play-by-play via his Twitter feed—one of the most heavily subscribed in the world, with 4.5 million recipients.

From the U.S. government, the delegation was led by Jared Cohen of the State Department policy planning staff, and included National Security Council official Howard Solomon, chief technology officer Aneesh Chopra, and John Beyrle. They were hosted by deputy chief of the Presidential Administration Vladislav Surkov, who has recruited Dyson as one of three foreign members of his working group to create a "Russian Silicon Valley." They met with Surkov and Kremlin economics advisor Arkadi Dvorkovich twice, also visiting the Russian Union of Industrialists and Entrepreneurs, and the government ministries of economics, education, communications and health, as well as meeting with representatives of Rostelecom, Yandex (the Russian search engine) and the anti-malware company Kaspersky Laboratory.

In a Feb. 18 press conference, held at Russian State TV and Radio, Cohen said that the task was to share knowledge of how "technological innovation" is done. He said that the common excellence of the U.S.A. and Russia in "technology" is exemplified by the key role Russian emigre software engineers and programmers have played in U.S. IT companies. Speaking in the lingo of globalization, Cohen hailed Internet-based "social networking"—what Lyndon LaRouche has diagnosed as the "new flagellants" movement of our own looming Dark Age—as the statecraft of the 21st Century, and said that social-networking-based "multi-stakeholder partnership" ("stakeholders" being newspeak for "the public") was the way to go, on education, health, and other social issues. Kutcher chimed in that his stream of "tweets" about Russia's desire to master high-tech, will enable Russia to get tons of free advice from all over the world, in a process dubbed "crowd-sourcing."

Russians and Chinese Pledge Further Economic Cooperation

Feb. 28 (EIRNS)—Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs (RUIE), met with Chinese Ambassador to Russia Li Hui, in Moscow on Feb. 27. Li spoke highly of the rapid development of the China-Russia strategic partnership, as well as the contribution made by Shokhin and the RUIE, and said he hoped the latter would play a positive role in facilitating exchanges between enterprises and guilds from the two countries to raise cooperation to a new high. Li said the Chinese Embassy was prepared to give them all possible assistance in order to achieve that goal. While foreign direct investment in Russia slumped by 41% in 2009, Chinese investment in Russia continues to grow—from a very low starting point of about 1% of the total.

A similar estimate was made earlier in the week by the head of the Foreign Affairs Committee of the Russian Duma, Konstantin Kosachev, who in a meeting in Washington noted that the China-Russia relationship was "unprecedentedly good ... excellent in comparison with the relations between the United States and China," he added.

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