Up From The Wreckage Of Russian Science

Can private enterprise pick up where the Soviets left off?

Sloshing water onto a filthy rag, a cleaning lady swabs the steps of Moscow's A.N. Bakh Institute of Biochemistry. Few others are in sight. It's a sad comment on the state of Russian science. Government science spending has dropped by two-thirds in the past five years, and more than half of Russia's 1.5 million scientists have abandoned their professions. With salaries averaging $60 to $70 a month and no money for supplies, most researchers have stopped coming to their labs.

But while most of the Institute is dark, a brightly lit office on the top floor hums with activity. Several institute scientists have set up Inbio, a biotechnology company, to market an industrial air-cleaning device that uses chemical-eating bacteria. President Vladimir Popov grumbles about the tedium of running a business, but he earns enough to fund his research into enzymes and X-ray crystallography.

Popov and his colleagues are among the survivors of the wreckage of Russia's research Establishment, which was once the largest in the world, employing more than 3.4 million people. But the government's continuing budget woes have cut deeply into research funding. Russia's federal government released less than 40% of the $1.3 billion allocated for science in 1996. In the Ural Mountains city of Snezhinsk last November, the head of a nuclear-weapons research center committed suicide in apparent despair over funding cuts.

SHAKEOUT. As government outlays shrink, the rough-and-tumble market economy that has emerged since the breakup of the Soviet Union is starting to move into territory once occupied by government research labs. The new entrepreneurial ventures are, in some cases, strengthening Russian science by shaking it out of its complacency and the straitjacket of bureaucracy. Scientists are setting up businesses, finding new sponsors for their work, and forging once unimaginable partnerships with foreign researchers. "We're going to have coming out of this a much leaner, smaller Russian science Establishment," says Loren R. Graham, a Massachusetts Institute of Technology expert on Russian science.

Before the breakup of the Soviet Union, scientists were expected to serve the needs of the planned economy--especially the defense complex, which accounted for nearly three-quarters of science spending. While the system produced some world-class research, especially in physics and mathematics, many projects were of questionable value. One Moscow institute had the task of preserving V.I. Lenin's embalmed corpse. And institute directors were more often rewarded for their political connections than for the quality of their research.

Today, lack of funds has already cut institute staffs by more than 50%, and shrinkage is continuing. Former Science & Technology Minister Boris Saltykov reckons that, eventually, no more than a dozen institutes will remain under direct federal control. The rest will have to find other sources of support or perish. In hopes of preserving the country's best labs, the government since the early 1990s has channeled extra funds to about 30 institutes designated as "state science centers." A new government-financed foundation, much like the U.S.'s National Science Foundation, dispenses grants to individual scientists through peer-reviewed competition. Another foundation helps scientist-entrepreneurs commercialize their inventions.

BRAIN DRAIN. But funds for such initiatives total less than 15% of the science budget. And while some industrial giants, such as natural-gas provider Gazprom, maintain their own research departments, Russia lags far behind the West in private-sector support for research and development.

Reform also has not stanched the exodus of some 30,000 top scientists from Russia in the past four years. Popov says most of the best researchers in his laboratory have left. "They're working in Hamburg, Boston, Montreal--everywhere but Russia," he says. "As soon as they get their doctorates, they leave."

The transformation to market-based science ventures is most visible at the country's 4,000 research institutes. Some have become ghost towns or are renting out space to banks, restaurants, and even car dealerships. But institutes keen on surviving are giving their blessing, usually in the form of free rent and utilities, to employees who want to start businesses. More than 50,000 scientists have already done so. Most institutes remaining open have become ad-hoc associations of small companies, says Saltykov, who was the first post-Soviet sci-tech minister. Few are making profits, Saltykov says, but many businesses generate enough money to let scientists continue their research. "We are in the process of not only surviving but developing," says Andrei Fursenko, a scientist who left a prestigious physics institute in St. Petersburg in 1991 to start a high-tech venture with several colleagues. His business, which produces lasers for semiconductor manufacturing, now employs 30 people. Fursenko says it makes a modest profit on annual revenues of $1 million.

Scientist-entrepreneurs have found markets inside and outside Russia. Space researchers in the Moscow suburb of Zelenograd set up a computer company whose data-encryption software is being sold worldwide by U.S.-based Sun Microsystems Inc. Other scientists are finding customers closer to home. Researchers at Moscow's Plekhanov Economics Academy came up with the idea of a fast-food chain for the local market, featuring exclusively Russian fare. They sold Moscow Mayor Yuri Luzhkov on the idea, and they now have a consulting contract with a city-run restaurant chain called Russkoye Bistro.

Even secretive military installations are getting into the act. Security restrictions prevent many military labs from commercializing their research, but about 10% of the 10,000 scientists and engineers in the central Russian city of Sarov--once a top-secret, closed city known as Arzamas 16--now work for startups that have commercialized technologies developed at the city's Institute of Experimental Physics.

HANDS ACROSS THE WATER. The scramble for funds has also prompted institutes to seek international research partners. The prestigious Institute of Nuclear Physics in the Siberian city of Novosibirsk now gets more than half its budget from outside Russia. It has cooperative agreements with national laboratories in the U.S. and with the CERN particle-accelerator project in Europe. Such cooperation has boosted morale and attracted talented young scientists to the institute, says Director Alexander Skrinsky.

Life isn't easy for Russia's scientist-entrepreneurs. Inbio, Popov's company, hasn't turned a profit after five years, even though it gets free rent and utilities from the Bakh Institute. Initially, the company sold its air-cleaning device to Russian factories, but that market collapsed as domestic customers slid into bankruptcy. Now, Inbio has licensed its technology to a subsidiary of British engineering company Sutcliffe Speakman, which is targeting customers in Asia and the West. It recently won orders from five factories in Korea and Britain for the device, which sells for about $150,000.

Others have turned to shady practices. A recent investigation by the federal government's audit chamber found that employees of the Russian Academy of Agricultural Sciences set up shell companies that then signed contracts with the Academy for work that its employees were already being paid to do. The Academy's leaders took part in the scheme and were paid off with new cars and other benefits.

Popov still pines for the days when he could immerse himself in research and let other people worry about money. But for now, he and other Russian scientists will continue their experiments in the laboratory of private enterprise.

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