Making the Most of the Partnership for Modernisation Making the Most of the Partnership for Modernisation Making the Most of the Partnership for Modernisation
byby byby Marina Larionova Marina Larionova Marina Larionova Marina Larionova
Dr. of Political Science, Head of International Organisations Research Institute of the State University – Higher School of Economics
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VitVitaly Nagornovaly Nagornovaly Nagornovaly Nagornov
PhD in Economics, Deputy Director of the Centre for International Comparative Studies of the International Organisations Research Institute of the SU-HSE
2009 witnessed Russia’s uphill struggle to overcome the consequences of the global economic and financial crisis in national, regional, and international settings. The crisis exposed, even more sharply than ever before, the fact that sustainable economic growth will not be feasible without the modernisation of Russian democracy and the establishment of a new economy. This paper explores Russia’s government push for modernisation in several interconnected spheres:
technological and economic; political system, governance and society; and reforming international political and economic institutions.
The authors review the main instruments employed for technological modernisation of the five priority areas identified by the Presidential Commission on Modernisation and Technological Development of Russia's Economy, namely energy efficiency, nuclear technology, space technology and communication, medical technology and strategic information technology. They focus on the programmes, amendments to existing laws, projects, funds allocated for their implementation, and instruments aimed at attracting both domestic and foreign investment.
In considering economic modernisation, the paper highlights the most important legal changes for stimulating investment and innovation, such as amendments to the list of strategic enterprises and acts on special economic zones. The authors believe that the support of higher education institutions, co-operation with enterprises and measures to support innovative infrastructure at the federal higher educational institutions; as well as the programme to attract leading scientists to Russian educational institutions will prove instrumental in promoting innovative development.
The analysis then turns to “work in progress” on modernising the political system, governance and society, where most recent developments include introducing amendments to the federal law on the status of judges in the Russian Federation, amendments to the federal law on political parties, and amendments to the law on the rights of citizens to participate in referendums.
Having reviewed Russia’s modernisation agenda and its ups and downs, the authors explore how Russia’s engagement with partners in international fora can promote modernisation processes.
The paper focuses on exploring initiatives and cases of success in the EU – Russia’s co-operation, such as the Environment Partnership of the Black Sea Synergy initiative, agreements for five
cross-34 border co-operation programmes, negotiations on a partnership agreement for the peaceful usage of nuclear energy and the fledgling Northern Dimension Partnership on Transport and Logistics.
Building upon these modest successes, it concludes with a set of proposals for a work plan on some of the priority areas of the Partnership for Modernisation.
INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION
At the “Meeting at Rostov-on-Don for their 25th Summit on May 31-June 1, 2010, the European Union and Russia launched a Partnership for Modernisation to the mutual benefit of their Citizens”.
The key words in the Joint Statement are: “to the mutual benefit of their Citizens”.
Another point which makes sense to the reader of the statement is the mandate to the co-ordinators of the partnership of the parties to develop a work plan, and the intention to subject the dialogue to continuous monitoring, which should enhance its effectiveness and relevance. These three dimensions raise hopes that the partnership can be made into a working tool. Otherwise, the document is too unfocused in terms of departure, the means of delivery, and very vague in defining the final destination. The objectives of promoting reform, enhancing growth and raising competitiveness are indeed shared ones, but they are shared widely beyond the EU and Russia.
The Four Spaces and sectoral dialogues intended for use as key implementation instruments have not been very productive so far; and the New EU – Russia Agreement has been long forthcoming.
The policy areas list includes 11 items and is called not exhaustive, with more to be added as appropriate. There is a risk that it may duplicate the system of sector dialogues.
There can be no doubt that the dialogues are an essential mechanism for sharing information, building understanding, bridging differences, comparing attitudes and forging common approaches. They embrace a wide spectrum of EU-Russia relations, differing in their degree of intensity and effectiveness. Several of them may become instrumental in the Partnership for Modernisation and elements of institutional framework can be used3. This will require a change of pace and pattern, bringing in other interested actors and amendments to or the development of new work programmes.
3 PPCs, certain agreements and working groups, Agreement on Cooperation and Science between the EC and the Government of the Russian Federation, Joint EU-Russia Steering Committee and Permanent Joint EU-Russia WGs on a number of themes of joint scientific interest, including the ICT, the WGs within the Space dialogue;
coordinated calls of the 7th EC FP and Russian FTS@TProgramme 2007-2012; Agreement for cooperation between the European Atomic Energy Community and the Government of the Russian Federation PPCs, certain agreements and working groups, Agreement on Cooperation and Science between the EC and the Government of the Russian Federation, Joint EU-Russia Steering Committee and Permanent Joint EU-Russia WGs on a number of themes of joint scientific interest, including the ICT, the WGs within the Space dialogue; coordinated calls of the 7th EC FP and Russian FTS@TProgramme 2007-2012; Agreement for cooperation between the European Atomic Energy Community and the Government of the Russian Federation in the Field of nuclear safety, joint Euratom-Russia WG on nuclear fission energy research in the Field of nuclear safety, joint Euratom-Russia WG on nuclear fission energy research.
35 One possibility to make the next steps more tangible would be, first to link them to the immediate and undoubted priorities of the partners, such as energy, energy security, energy efficiency, even if there are differences in approaches. Second, make them project based. Third, accept that small step by step progress can be a surer way to fast forward that towards a grander scheme. Fourth, try to regard the Russia and EU member states successful projects as foundations upon which the EU-Russia modernisation partnership can be built. Fifth, relate to shared objectives where the EU and Russia co-operate proactively in international settings, such as the G8/G20 summitry, with the latter already demonstrating positive dynamics.
RUSSIA’S MODERNISATI RUSSIA’S MODERNISATI RUSSIA’S MODERNISATI
RUSSIA’S MODERNISATION PRIORITIES AND PRON PRIORITIES AND PRON PRIORITIES AND PRON PRIORITIES AND PRACTICAL WORK UNDERWAACTICAL WORK UNDERWAACTICAL WORK UNDERWAYACTICAL WORK UNDERWAYYY THE FIVE TECHNOLOGIC
THE FIVE TECHNOLOGIC THE FIVE TECHNOLOGIC
THE FIVE TECHNOLOGICAL AREASAL AREASAL AREASAL AREAS
As the global economic crisis hit the world in 2008, imbalances in the structure of Russia’s economy were felt ever more acutely. In March, the Russian government put forward for discussion a draft programme of anti-crisis measures by the Government, which was subsequently adopted in April 20094. In May, the President outlined a plan of action aimed at modernisation. The process was launched by an Executive Order, establishing a Presidential Commission on Modernisation and Technological Development of Russia's Economy, which, in fact, set up an institutional framework for the process5. It is an important measure and is characteristic of the process’s top to bottom nature. The pace of the Commission’s activities is indicative of the intense need to act and keep the pressure on. The Commission meetings were held seven times over the course of 2009, another seven had taken place by August 2010. In the first five meetings (by October 2009), agreement was reached on the priority areas and the process of project selection was launched. By the time of the Address to the Federal Assembly in November 2009, the President reported on the decisions made and actions undertaken and announced plans for their implementation6.
The selection of the “technological breakthrough areas” was defined by four criteria. First, they should possess significant momentum and potential for Russia’s international competitiveness.
Second, these sectors of the economy should possess the capacity to produce a significant multiplier effect and act as a catalyst for modernisation in related industries. Third, they include
4 Russian Government’s Anti-Crisis Programme for 2009. URL: http://premier.gov.ru/eng/anticrisis/1.html (date of access: 29.08.2010)
5 Dmitry Medvedev issued an Executive Order establishing a Presidential Commission on Modernisation and Technological Development of Russia's Economy – 21 May 2009. URL:
http://archive.kremlin.ru/eng/text/news/2009/05/216661.shtml (date of access: 29.08.2010)
6 Presidential Address to the Federal Assembly of the Russian Federation – 12 November 2009. URL:
http://archive.kremlin.ru/eng/speeches/2009/11/12/1321_type70029type82912_222702.shtml(date of access:
29.08.2010)
36 areas concerned with defence requirements and the nation’s security. Fourth, they should have relevance to the social well-being of the people7.
The five areas of the technological focus are energy efficiency and conservation, including the development of new fuels; nuclear technologies; space technology, primarily related to telecommunications, including the Global Navigation Satellite System and the programme for development of ground infrastructure; medical technologies, especially diagnostic equipment and pharmaceuticals. Finally, the fifth is strategic information technology, including the creation of supercomputers and software development.
Each of these areas has high potential for the EU Each of these areas has high potential for the EU Each of these areas has high potential for the EU
Each of these areas has high potential for the EU----Russia partnership. The EU has a track record of Russia partnership. The EU has a track record of Russia partnership. The EU has a track record of Russia partnership. The EU has a track record of experience and technologies, which could help Russia reach the goal of raising energy efficiency
and reducing energy intensiveness by 40 per centd reducing energy intensiveness by 40 per centd reducing energy intensiveness by 40 per centd reducing energy intensiveness by 40 per cent8888 . The Russian government selected six projects in this priority area: Count, Save and Pay, New Light, Energy Efficient District, Small-Scale Complex Energy Systems, Energy Efficient Social Sector, and Innovative Energy to attain the objective. The projects have been selected based on the criteria that they must be able to be replicated throughout the whole country, produce their first measurable results within the next two or three years, be economically feasible and able to be implemented with a minimum of budget money9. The first project involves installing power meters. This project’s main objective is to change consumer behaviour patterns. The Ministry of Economic Development estimates that this project’s successful implementation would make it possible to reduce energy consumption in the housing and commercial sectors by around 20 per cent. The target is to have 80 per cent of consumers using meters within the next three years. This project will require efforts to co-ordinate and develop production of modern meters in Russia.
The second project provides for gradually phasing out technologically outdated lighting systems in Russia. According to the Ministry of Economic Development calculations, replacing all of the energy wasteful light bulbs in the country would free up as much as 10 per cent of energy generating capacity and reduce electricity and lighting costs by up to 60 per cent. To achieve this, the project proposes setting restrictions on the sale of outdated light bulbs, starting with a ban on public procurement of incandescent light bulbs. This measure should create demand for energy efficient
7 Opening Address at Meeting of Commission for Modernisation and Technological Development of Russia's Economy – 18 June 2009. URL:
http://archive.kremlin.ru/eng/speeches/2009/06/18/2019_type82913_218096.shtml (date of access:
29.08.2010)
8 Dmitry Medvedev held a joint meeting (fourth) of the Commission for Modernisation and Technological Development of Russia's Economy and the Presidium of the Presidential Council for Science, Technology and Education – 30 September 2009. URL: http://archive.kremlin.ru/eng/text/news/2009/09/221946.shtml (date of access: 29.08.2010)
9 Excerpts from Transcript of Beginning of Joint Meeting of the Commission for Modernisation and Technological Development of Russia’s Economy and the Presidium of the Council for Science, Technology and Education – 30 September 2009. URL: http://archive.kremlin.ru/eng/eng/speeches/2009/09/30/1951_type82913_221945.shtml (date of access: 29.08.2010)
37 replacement light bulbs and would demonstrate their economic effectiveness and consumer qualities to the public.
The Energy Efficient District project aims to raise people’s quality of life by bringing down energy costs and improving the quality of heating and lighting supply. The second objective is to reduce municipal budget expenditure. The Ministry of Economic Development expects that spending could be decreased by up to 25 per cent. It provides for putting in place standard mechanisms for financing energy efficiency improvement measures that can then be replicated throughout the country’s regions.
The Energy Efficient Social Sector project aims to draw up standard solutions for different types of social sector buildings, schools, hospitals and medical centres. This will result in the development of a comprehensive programme for making the social sector more energy efficient, based on the experience gained through the implementation of several pilot projects in schools and medical centres. A key part of the project’s implementation is that social sector facilities will be able to keep the money saved through reduced energy consumption and put it to other uses. A second key mechanism is long-term energy service contracts, which should make it possible to attract professional energy companies involved in energy saving technologies. The social sector facilities will benefit from lower utilities costs, and the energy companies will receive earnings in the form of a share of the savings made.
The Small-Scale Complex Energy Systems provides for replacing centralised heating supply with a decentralised system. The aim is to lower energy consumption, cutting it by 20 million tons of fuel by 2020 by replacing 4,500 of the 18,000 gas generation facilities currently in operation with more modern technology.
The Innovative Energy initiative will pursue real innovative development and technological advances in energy production and transmission: wind energy, tidal energy, biomass processing, solar energy, geothermal energy, and also superconductors.
Nuclear energy has low carbon levels and relatively stable costs, which makes it attractive from the point of view of security of supply and fighting climate change, defining its importance in the energy mix. Safeguards, safety and security of nuclear infrastructure are principles shared by the EU and Russia, and confirmed by them in international institutions, such as the IAEA and G8.
Russia intends to meet the challenge of occupying at least a 25 per cent share of the global market. This objective can be met on condition of access to the latest technologies and opportunities to carry out the entire production cycle, from mining uranium to routine maintenance and retiring old nuclear power plants. Hence the modernisation plan includes three major objectives. In the next two or three years, the operating characteristics of pressurised water reactors must be substantially optimised through the use of modern industrial and science intensive technologies. In the medium term, the objective is to create a new technology base for producing nuclear energy using a closed fuel cycle based on breeder reactors. The Government of Russia has approved a Programme, “The Nuclear Power Technologies of New Generation” where
38 the central place is accorded to the development of fast neutron reactors and closed nuclear fuel cycle. It is open to international co-operation. In the long term, the imperative is to develop and nuclear reactor implemented in Cadarache, France, co
nuclear reactor implemented in Cadarache, France, co nuclear reactor implemented in Cadarache, France, co
nuclear reactor implemented in Cadarache, France, co----operation on the ITER Project. It can operation on the ITER Project. It can operation on the ITER Project. It can operation on the ITER Project. It can nuclear complex or nuclear shield, as Russia is committed to the global ban on nuclear testing.
Information technologies are another area where there is a range of options for the EU – Russia co-operation. This ranges from working on satellite navigation systems to the implementation of joint research projects and closer co-ordination on internet governance. Russia’s objectives in the area are defined in the Information Society Development Strategy11. The priorities include development of digital networks and infrastructure, including supercomputers and grid systems; effective electronic governance, electronic provision of public services, computerising healthcare, education and training, urban management; ensuring computer literacy of the citizens and internet access12. Hence, the first task is rapid development of technology to ensure world standards of speed and quality of data transmission, as the average speed of transmission in Russia is still about 512 kbit/s; there is a digital gap with Europe, the US, Japan, despite the fact that a fair amount of progress has been made over the last few years. The second task is to modernise outdated telephone stations, to be able to offer high quality interactive services. The third task is to extend digital television and radio broadcasting to the entire country, and expand the frequency range. One of the key priorities remains the GLONASS system’s development. It is expected that once the infrastructure is in place, the information services market should become the main resource for its further development13.
Finally, there is certainly an unrealised scope for co-operation between the EU and Russian pharmaceutical companies and medical equipment producers. Demand for both medicine and new
10 Speech at Meeting of Commission for Modernisation and Technological Development of Russia's Economy – 22 July 2009. URL: http://archive.kremlin.ru/eng/speeches/2009/07/22/1848_type82913_220088.shtml (date of access: 29.08.2010)
11 Information Society Development Strategy http://www.scrf.gov.ru/documents/87.html (date of access:
29.08.2010)
12 Opening Remarks at Meeting of the Commission for Modernisation and Technological Development of Russia’s Economy – 31 August 2009. URL:
http://archive.kremlin.ru/eng/speeches/2009/08/31/2052_type82913type127286_221377.shtml (date of access: 29.08.2010)
13 Opening Remarks at Meeting of the Commission for Modernisation and Technological Development of Russia's Economy – 28 October 2009. URL:
http://archive.kremlin.ru/eng/speeches/2009/10/28/2113_type82913_222394.shtml (date of access:
29.08.2010)
39 technologies is great and growing. The pharmaceuticals and medical equipment markets are showing rapid growth thanks in large part to the state programmes and the money that has started to flow into the sector. The national project on Health has pushed the process forward. Specialists estimate, that sales of medicines will reach around 1.5 trillion rubles (more than 37.5 billion Euros) in the next ten years. Sales of medical equipment are also expected to grow rapidly14.
Currently, according to data from the federal executive agencies, annual sales of medicines and medical equipment in Russia amount to approximately 600 billion rubles (about 12.5 billion Euros).
Budget expenditures at all levels for this purpose are constantly growing and are now approximately 250 billion rubles (more than 6 billion Euros). At the same time, over the past three
Budget expenditures at all levels for this purpose are constantly growing and are now approximately 250 billion rubles (more than 6 billion Euros). At the same time, over the past three