TITLE : 1992 CONFERENCE ON RUSSIAN SCIENCE :SUMMARY REPORT

AUTHOR: Harley D . BalzerGeorgetown University

THE NATIONAL COUNCI LFOR SOVIET AND EAST EUROPEA N

RESEARC H

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PROJECTINFORMATION:*

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Georgetown University

PRINCIPAL INVESTIGATOR :

Harley D . Balze r

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805-1 2

DATE :

October 12, 199 3

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SUMMARY REPORTON 1992 CONFERENCE ON RUSSIAN SCIENC E

Harley Balze r

Georgetown University

EXECUTIV E SUMMARY*

This report presents highlights of a 2-day conference on Russian science held at

Georgetown University in April 1992, supplemented by the author's findings from a follow -

up visit to Russia in June 1992 . Russian participants whose views are reflected here includ e

Minister for Science, Higher Education and Technology Policy Boris Saltykov and Academ y

of Sciences President Yurii Osipov, among others (see conference program, appended) .

Four main themes are discussed : (1) the character of the former Soviet science an d

technology (S&T) system as it affects and sharply limits prospects for rational reform ; (2) the

nature of the current transition crisis, in which the catastrophic state of Russia's economy ha s

produced impossible working conditions in S&T and thus a massive outflow of personnel ,

prominently and regrettably including many of the most qualified ; (3) the policies bein g

pursued, including some bright spots (for instance in maintaining CIS cooperation in scienc e

and education) but with a deep and so far unresolved gulf between advocates of "restoratio n

of order" and radical reform ; and (4) some thoughts on the future, which in the author' s

view is impossible to predict in the short term but may in the long term see preservation of a

much reduced version of the USSR's S&T potential, probably based on a mix of rationa l

planning and haphazard survival .

An important subtext is the role of the West in the reform of Russian S&T, a rol e

which is shown to be both crucial as a source of advice, assistance, and legitimation fo r

domestic reformers, and constrained by the potential for backlash blaming the West fo r

painful decisions inevitable in the reform process .

'Prepared by NCSEER staff .

iii

SUMMARY REPORT ON 1992 CONFERENCE ON RUSSIAN SCIENC E

Harley Balzer

Georgetown Universit y

This report summarizes the highlights of the two days of conferenc e sessions,*

drawing upon the oral and written presentations, the questions and discussion, and also the

author's extensive research on the topic and frequent visits to the USSR/CIS . In addition,

during a short visit in June 1992, Dr . Balzer was able to revisit some of the topics covered a t

the conference with some of the participants and to clarify some of the points raised durin g

the conference.

The emphasis is on main points that emerged at the conference, key questions that

were raised, and new data . Full discussions of the Soviet/Russian science system exis t

elsewhere, and this summary does not attempt to replicate them . Inevitably, a distillation of

diverse views on complex issues leads to a loss of nuances . What is presented here is, w e

hope, an informed synthesis, rather than an attempt to precisely replicate the comments mad e

during the conference . For the more detailed arguments, readers should definitely consul t

the fuller summaries and the presentations themselves .

To put the material into some sort of context, the information presented at th e

conference has been grouped around four main issues : 1) the character of the Soviet S&T

system ; 2) the nature of the current crisis of transition ; 3) the policies being pursued ; and 4 )

some thoughts on the future .

1) Science everywhere is an intricate social system, and it tends to be a conservativ e

system . No scientific community changes rapidly or easily. This makes science particularl y

susceptible to disruption in times of serious crisis . The Soviet science system was embedded

in an equally conservative social and political system, making the social, systemic an d

accompanying psychological difficulties of transition quite daunting .

Broad characteristics of the system also make change difficult . Robert Campbel l

noted the long experience with planning, forecasting and industrial policy in socialis t

'See conference program, appended .

2

societies, which often leads to the belief that government is a better judge of priorities than

the "wild" market . Both self-interest and socialization encourage such views, and man y

commentators insist that there is some way to adjust the old system rather than changing i t

completely [VAN article on financing 1992] . The danger of a backlash against "foreign

models" remains a constant threat .

The psychological problems and systemic deformations are surely most pronounced i n

the military industrial sector . The Soviet military R&D and production establishment wa s

enormous and privileged . Like the military everywhere, its emphasis was on mission an d

performance, not cost or efficiency . The nature of the military-industrial complex (MIC )

was such that it will be nearly impossible to switch enterprises in that sector to cost-effective

civilian production . It is hardly surprising that the MIC has been among the loudest of many

voices demanding special treatment in any reform program .

The serious psychological and social problems of reform were almost certainl y

accentuated by the experience of the scientific community in the years of perestroika, durin g

which more than three decades of income levelling was reversed . In the period 1987-199 0

many scientific and technical personnel benefitted from the emphasis on improving scienc e

and technology and the opportunities for work in cooperatives and consulting firms . Dmitry

Piskunov alluded to a "boom" in financing science in 1987-89, a period when many R& D

personnel enjoyed significant increases in their incomes . This has made adjustment to th e

current crisis even harder.

Finally, it is important to note that the ability of outsiders to influence the system i s

both crucial and limited . Virtually all of the Russian speakers noted the essential role contac t

with the international community plays and will continue to play in any successful progra m

of reform. At the same time, speakers from both countries noted that outside help can neve r

solve all the problems--that only by drawing on their own talent and resources will Russian s

change the way things are done and the way they live .

These limits emerged clearly in presentations by both Maxim Aleksandrov and Joh n

Gage which discussed the failure of the Western system of export controls to prevent Russia n

acquisition of computer hardware or software . Software in particular was often copied an d

generally available . [Neither speaker addressed such questions as the intent being to delay

3

rather than totally prevent the acquisition of particular technologies, the difficulties and cost s

associated with "imperfect" means of acquisition, etc . ]

The contradictory quality of outside involvement came up several times in different

guises, and will be discussed further below .

2) There was universal agreement that the current situation in S&T represents a

serious crisis . Prior to 1992, scholars and planners devoted much attention to analyzing th e

nuances of the different aspects of crisis in the various sectors of Soviet S&T--"Academic "

science, "branch" science, and higher education . But the massive economic crisis sinc e

January 1992 has wiped out the distinctions among these sectors . All are in a catastrophi c

situation . However, this does not mean that the solutions will in all cases be the same .

Economic dislocations mean that there is minimal financing for scientific activity .

State budget allocations have been cut, and even when promised the funds have not bee n

delivered. At the same time, most other sources of financing have disappeared . There have

been reductions in contract research by Ministries, and this includes the large portion

previously funded by the Ministry of Defense . In conditions of near economic collapse, n o

state or private enterprises are in any position to take up the slack .

The financial stringency also affects the small but critical hard currency accounts .

While not large, these funds paid for importing foreign scientific literature and for crucia l

materials such as reagents used in research . The foreign component in the R&D system may

have been small, but it often involved crucial components . As an example of the budgetary

chaos, the Academy was promised $12 million in hard currency for scientific literature i n

1992, but none of this money was actually made available . In fact a hard currency debt o f

$175 million was inherited from the Soviet Academy .

The result of economic crisis and impossible working conditions has been a n

inevitable outflow of personnel from the science sector . Everyone agrees that Soviet R&D

institutions were over-staffed and could well stand to prune dead wood, but that is not wha t

has happened . Rather, the best and most productive scientists are leaving, while those who

at best make a minimal contribution are endeavoring to keep positions in state-finance d

institutions.

4

Thus far, the movement of personnel has been much more into other jobs in Russi a

than out of the country. The "external" brain drain, in the view of almost all conference

participants, has been exaggerated as a problem . For one thing, laws still exist preventing

individuals who had security clearance from leaving the country without permission . At the

same time, a continuing downward economic spiral could undermine the system's ability to

maintain order .

Several speakers noted that in times of crisis, there is an inevitable tendency t o

emphasize short-term goals, with minimal attention to planing the more distant future . This

has a particularly serious impact on basic science, where long time frames are a way of life ,

One of the cruel ironies of the current situation is that the crisis has become acute jus t

at the time that Russian science was finally regaining a place as a genuine part of th e

international community .

Several Russian speakers noted that the most severe crisis is in the social sciences .

The deforming impact of ideology in these fields was at least as severe as the militarization

in natural and technical sciences, where military-related research came to consume 75% o f

the budgets . This is a place the international community can play a particularly importan t

role .

3) What can be done? Everyone agrees on the need for retrenchment. The only

questions involve the way this will be done and who will suffer. Everyone also agrees that i t

would be preferable to carry out cutbacks in a rational, planned way, rather than allowin g

spontaneous forces to determine events . Yet thus far it has been impossible to make suc h

plans . What administrator would want to sign an order eliminating the financing for half or

two-thirds of the people working in science and education, or closing half of the institutes ?

In facing the daunting task of consolidation and reform, it will be essential to establis h

priorities. For Boris Saltykov and Yurii Osipov, these priorities clearly include

"destatization" of consciousness and genuine conversion. It was clear that for leaders faced with

excruciating choices, discussion of these relatively philosophical issues was more palatabl e

than specific details about what to cut .

5

One exception to this generalization came in the discussion of education, wher e

Minister Saltykov stated clearly that a number of the narrow industrial institutes for trainin g

engineers must be closed . At the same time, he stressed that the program of combinin g

educational and scientific institutions must be evolutionary--it cannot be done on the basis o f

an old style administrative campaign or shotgun marriages .

Perhaps the most positive element that came out in presentations by official govern-

ment participants was the awareness that Russians themselves must solve the problems.

While voicing appreciation for the efforts in the West, and especially in the U .S ., to provide

assistance, several of the speakers stressed that they themselves must do the job . This

emphasis was echoed by speakers from both America and Russia who noted the importanc e

of resolving micro as well as macro economic issues, and the crucial role of the privat e

sector in both countries (assistance from U .S ., mobilization in Russia) .

The other relative bright spot to emerge from the conference presentations by Russia n

guests was the attention to maintaining CIS cooperation in the areas of science and education .

It appears that more is being done here than in most other realms . There was a recent

agreement allowing students in higher education to attend school wherever they pass the

exams this year . (While appearing to be a generous policy, this will mainly aid Russia n

students living outside the Russian Federation, who make up the largest portion of "cros s

border" matriculants . )

Boris Saltykov also noted that Russia is managing a joint patent system for all CI S

states. While not necessarily the optimal solution to needs in this area, the system does a t

least provide some modicum of intellectual property protection . As Saltykov noted ,

sometimes the scientists are more rational than the politicians about these matters .

Many of the speakers stressed the importance of changes at the level of the micr o

economy . While the World Bank and IMF devote their attention to macroeconomic an d

systemic factors, it is really the behavior of individual actors and enterprises which wil l

eventually generate economic growth . This activity in turn requires a psychological

reorientation, which has thus far been elusive .

Juxtaposition of the presentations by Aleksandrov and Semyonov provides a n

important example of the contrast between a scientific institute director who has taken his

6

operation private and a state enterprise manager who voices the views of many manager s

from the MIC. Semyonov believes that recentralization and restoration of order will allow

the government to gain control of the economic situation, after which it will be possible t o

gradually raise prices and proceed with other economic reforms . Aleksandrov suggests that

it is already too late to restore control, that the old system has failed, that the old generatio n

must give way to new people who can cope with a new, internationally oriented market

economy, and that this will be a long and painful process .

4) The Russian government is nearly broke . Russian enterprises have been sufferin g

since 1985 from failures in the program of perestroika . To think that many of them wil l

soon be in a position to finance R&D is a pipe dream . The West can provide some support ,

but it will never be enough to maintain the gigantic scientific and educational structure buil t

by the USSR . The only alternative is a rational downsizing, which may well lead to

reorienting two-thirds of the personnel who previously worked in R&D . While it would be

highly desirable for everyone, Russian and foreign, to see this done as a rational process, i t

is probably already too late .

Thinking about the future is both depressing and inescapable . It is equally as

disturbing for outsiders as for Russians . Robert Campbell spoke several times of the "tar

baby" problem--that the West could get involved in the processes taking place and end u p

being blamed for them . It is fully understandable that in the face of a necessity to close

institutes and dismiss personnel, Russian administrators want to have their decisions endorsed

by "international" experts--both to base such decisions on informed opinions by leadin g

specialists in a position to be "objective," and to provide a cloak for the painful choices . But

the serious danger is that there will be a backlash blaming the West for the painful decisions .

Everyone agrees that the Russians must do it themselves, but virtually every Russian als o

wants the West to endorse the actions .

One recurring theme was the chaotic legal situation, particularly as it affects intellec-

tual and other forms of property . Several speakers noted the logical inconsistencies and eve n

absurdities in this realm .

7

Another recurrent theme is the absence of a coherent program of conversion . Every

speaker who touched on the topic noted that conversion has been carried out in a haphazard

and ineffective way, and that to the present moment there has never been a serious program .

On the other hand, the insistence on a "law on conversion" misses the point that conversio n

in the Western sense of the term would involve not use of resources by the MIC in a

different way, but a major reallocation of resources away from the military sector .

PERSONAL REFLECTION S

Conference speakers were given a set of questions and problems to address . While

not asked to cover all of the issues in the terms of reference, each speaker was asked to

comment on those areas matching his expertise . What follows is an attempt to bring togethe r

the material presented by the various speakers in the context of these terms of reference. By

necessity, some of the diversity of the presentations is lost in amalgamating the content . But

readers may easily consult the full text of individual presentations to get these nuances .

* Russian science policy is very much in flux . During the first half of 1992 ,

reactions to the economic crisis far outweighed administrative plans as the driving force i n

setting policy . To the extent the government has a policy for science and technology, it is to

demilitarize, marketize, and rationally downsize . But it is clear that thus far any efforts t o

implement rational reductions have been far outstripped by spontaneous behavior in response

to powerful negative economic stimuli .

Industrial policy also has been massively influenced by the economic crisis . There i s

a clear divide between those who believe that the crisis is accelerating the necessary an d

inevitable breakup of the monopolistic state system, and those who perceive the curren t

dislocations as extremely harmful, precluding measured and rational change .

My personal view, based on the conference and on a visit to Russia in June 1992, i s

that the advocates of stabilization are able to make their message sound quite plausible, bu t

that nothing in the reform efforts of the past 40 years suggests that it would be possible t o

achieve the equilibrium upon which they intend to base their subsequent price reforms . The

forces calling for stabilization are numerous enough that they will likely force the govern-

ment to compromise, slowing economic reform and granting additional credits . This will

8

make the process longer than anticipated, and will improve the chances for some of the ol d

managers to maintain their positions, but in the end it is not likely to change the direction of

the reforms .

* Every speaker who addressed the issue of legal guarantees, particularly for

intellectual property, noted that it remains a serious obstacle to development . Intellectual

property legislation remains in limbo, causing both domestic and foreign actors to hold off o n

investment decisions and efforts at innovation . The legal framework for foreign participatio n

in the economy also remains murky at best .

The one bright spot in this realm thus far is the agreement of most of the forme r

Soviet republics to continue to cooperate in a unified system of patents . Despite the affront

to national pride, the newly independent states have recognized the advantages, both in cos t

savings and in logistical terms, of keeping a centralized patent system .

* Management in R&D is everywhere being undermined by the economic breakdown .

The Academy is perhaps the most intact of the structures, but is facing budget cutbacks tha t

will force major reductions in staff by next year . In higher education, the financial problem s

are even worse, with much of the burden of funding being placed on local governments tha t

are in no position to meet these new obligations . Industrial R&D is suffering from th e

elimination of most of the ministries . They have been replaced by new institutional systems ,

often called "concerns," that lack the power and resources to enforce central priorities . In

this situation, anyone in a position to sponsor research is in a position to elicit responsiv e

behavior from what is left of the R&D community .

* Through June of 1992, it appeared that most industry would be privatized quit e

rapidly . It now seems that the process will be slowed, with small enterprises, retail trade

and the consumer sector the first targets . The extractive industries and natural resource s

remain the most tightly controlled sectors . Large enterprises have been served notice that

they will be privatized, and that monopolies will be broken up, but these policies ar e

provoking strong resistance from managers, sometimes in alliance with workers who fea r

unemployment .

It is difficult to talk of a relationship between private and government sponsore d

research in a climate where few private actors are in a position to support R&D . It will take

9

an extended period of time--likely 10 to 25 years--before Russian enterprises are in a positio n

to finance a serious level of R&D .

* Cutbacks in defense expenditures are having a ripple effect throughout the entir e

R&D sector . The military supported a huge portion of the research conducted in all types o f

institutions, and this funding has practically evaporated . Defense enterprises, confronted

with a chaotic program of conversion, are not in a position to fund R&D from non-existen t

profits . State budget support has been severely reduced . In the Academy and at educational

institutions, the contract research previously supported by the military has been curtailed . In

the absence of alternative sources of financing, it is not possible to reorient either th e

institutions or the personnel to other lines of research .

* Reduced military R&D inevitably means downsizing in the entire system . In an

economic crisis and with no private sector, there are simply no alternative sources o f

support .

The brain-drain in the military sector involves two types of movement . Thus far ,

there has been relatively little movement abroad by military scientists and engineers, in par t

because Soviet legislation limiting travel abroad by those with security clearances remains i n

effect. But there has been a significant shift of personnel from military R&D to the civilian

sector, often involving complete changes in career . Data on these shifts are still scarce, bu t

the numbers are almost certainly in the six figure range.

Discussions of conversion and dual-use technologies for the most part remain in the

realm of myth : with a few well-publicized exceptions, these programs have not had an y

measurable effect thus far .

* One of the outstanding achievements of the past seven years has been the elimina-

tion of barriers to contact and communication with the outside world . Scientists were amon g

the people in the best position to take advantage of these opportunities, and many have don e

so .

Unfortunately, just at the time that political restrictions on contact have bee n

removed, economic constraints are becoming omnipresent .

* Russian speakers at the conference all emphasized the crucial role to be played b y

international contact and participation in their reform program . Virtually all of them stressed

10

their appreciation for Western economic assistance, but also their awareness that no on e

outside the country can solve the problems for them .

The emphasis on international support seems to be most crucial as a psychologica l

issue. It is important for reformers in the newly independent states to feel that they ar e

participating in an international system . Not only does this promise support, advice, and

assistance, but it provides the hope that if they become part of an international community i t

is less likely that their nations will sink back into the closed, autarchic, isolated condition s

that prevailed from the 1920s to the 1980s . If the reformers feel weak in the face o f

difficulties and the rumblings of isolationist nativists, they hope that pulling their societie s

more fully into an international system might provide a bulwark against the opponents o f

openness .

* No one would be willing to make firm predictions about economic conditions in th e

next 12-36 months. Given that every prediction about the timing of economic reforms tha t

was made in January was missed the mark by 100%--that is, that every phase took twice a s

long as planned--all the economists have learned to hedge their forecasts .

It is far easier to forecast longer periods . It is likely that the economy will stabiliz e

following three to five years of serous difficulty . Within a period of five to ten years, it i s

reasonable to expect that in Russia there will be a mixed economy, with far more privat e

activity than can be envisioned now, but with a larger state sector/state role than is typical i n

the West .

The impact this will have on S&T is more difficult to predict . If appropriate step s

are taken, it might be possible to preserve between 1/4 and 1/3 of the scientific potential o f

the USSR. It is not yet clear whether this will be done on the basis of rational planning o r

by the haphazard survival of those who are able to find support . Most likely, there will be

some of each .

1 1

AGEND A

SCIENCE, TECHNOLOGY AND INDUSTRIAL POLIC YIN THE FORMER SOVIET UNIO N

RUSSIAN AREA STUDIES PROGRA MGEORGETOWN UNIVERSITY

INTERCULTURAL CENTER AUDITORIU MAPRIL 27-28, 1992

Monday, April 27

09 :00

WelcomeDr. Harley Balzer, Director, Russian Area Studies Program

09:10

Keynote AddressDr. Allan Bromley, Director, Office of Science and Technology Policy ,Executive Office of the President

09 :50

Break

10 :15

Science, Technology and Industrial Policy in Russi aDr. Boris Saltykov, Minister for Science, Higher Education and Technolog y

Policy, Russi a

11 :15

Economic Development in the Former Soviet UnionRichard D . Kauzlarich, Deputy Assistant Secretary of State, Bureau o fEuropean and Canadian Affairs, U .S . Department of Stat e

12 :00

Lunch

13 :30

Russia's Basic Science : New Realities and New OpportunitiesAcademician Yurii Osipov, President, Russian Academy of Sciences

14 :45

Break

15 :00

Industrial Research & Development and Economic Development in th eFormer Soviet UnionDr. Robert Campbell, Professor of Economics, Indiana University ;

Dr. Dmitry Piskunov, Director, Analytical Center for Science-Technology andProblems of Socio-Economic Development, Russian Academy of Science s

16 :30

Adjourn16 :30-

Reception, Intercultural Center Galleria Revised : October 12, 1993

12

Tuesday, April 2 8

09 :15

Research & Development and Industrial Activity in the Former Soviet Union .Dr. Maxim Alexandrov, Director General, Science and Technology corporation ,Russian Academy of Sciences, St . PetersburgDr. John Gage, Director, Science Office, Sun Microsystems Laboratories Inc . ,Mountain View, CaliforniaVladimir Semyonov, General Director, Pnevmostroymashina Industrial Association ,Ekaterinburg

11 :45

Lunch

13 :15

Innovation, Research & Development, and the Econom yDr. Joseph Berliner, Professor of Economics, Brandeis Universit yDr. Sergei Glazev, Deputy director, International Center for Research on Economi cTransformation, Moscow, and Deputy Minister of Foreign Economic Relations ,Russia

15 :00

Break

15 :15

Prospects for Cooperatio nThe Honorable George Brown, Chair, Committee on Science, Space, andTechnology, U .S. House of Representatives

15 :45

Concluding Thoughts : The View from the Moscow Embass yRobert Clarke, Science Counsellor, U .S . Embassy, Mosco w

16 :30

Adjourn

This conference is made possible by the United States Department of State and Department ofCommerce, and the Carnegie Corporation of New York.